Interdisciplinary Seminar On Environmental Issues - PowerPoint PPT Presentation


PPT – Interdisciplinary Seminar On Environmental Issues PowerPoint presentation | free to view - id: c1a33-ZDc1Z


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation

Interdisciplinary Seminar On Environmental Issues


Welfare Preserving Collective Goods: The Tragedy of the Commons Debate ... North-South Trade and the Global Environment, The American Economic Review 84 (4) ... – PowerPoint PPT presentation

Number of Views:49
Avg rating:3.0/5.0
Slides: 102
Provided by: heiU


Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Interdisciplinary Seminar On Environmental Issues

Interdisciplinary Seminar On Environmental Issues
  • Profs. Urs Luterbacher and
  • Dr. Ellen Wiegandt

What Are Environmental Problems
  • Man Made Environmental Problems Originate from
    the Overuse of Natural Resources
  • Why are environmental problems complex? They
    create distorsions and inequalities
  • Left to themselves environmental problems distort
    economic and political processes

Scope of the problems
  • At the International level they appear in 3 ways
    Transboundary Bilateral, Transboundary Regional,
    and Global
  • These Problems are not specially new

Reasons to Study Environmental Problems at The
International Level
  • Transboundary and Global Nature of Environmental
  • Environmentally Related Conflicts
  • Existence of a Global Environmental Governance
    International Environmental Accords

Introduction and Historical Context of Man-Nature
Context and Approach
  • Why a course on environmental issues now?
  • Is the problem a recent one?
  • What are key substantive issues?

Evidence of current interest in environmental
  • Attitudinal
  • Scientific, intellectual
  • Policy Brief overview of climate policy

Reasons underlying environmental concerns
  • Man-made environmental problems originate from
    the overuse of natural resources
  • oil shock 1973
  • Scientific evidence of ozone hole
  • Scientific evidence of climate change
  • IPCC report 3
  • Part of general process of globalization
  • recognition that some environmental questions are
    global and can only be addressed at international
    level a new issue for international cooperation.

Mans Influence on Nature a New Phenomenon?
  • Origin of human species
  • Origin of agriculture
  • Little Ice Age 1650-1850

Focus on Society-Environment Interactions
  • What behavioral and institutional factors mediate
    relations with natural system?
  • What features create vulnerability or resistance
    to certain natural events or processes?
  • What mechanisms are available to different types
    of society to adapt or mitigate change.

Environment-Climate Issues
  • What are climate ranges we can expect from future
    climate change?
  • What will their impacts be on sea-level,
    precipitation, variability, extreme events, etc.
  • Do these impose new limits on human activity?
  • How to organize behavior to stay within these

Environment-Society Issues
  • Level of resource use
  • Population size
  • Even with constant level of use, attain limits as
    population increases

  • Population will grow to the limits of available
    food supply and will then be checked
  • Technological progress may raise the level of
    population but ultimately does not raise the
    overall standard of living because of propensity
    of population to attain limits of available

Malthusian Mechanisms
  • Positive check on population
  • Mortality
  • Preventive checks
  • Societal mechanisms to reduce fertility

Alternatives to Malthus
  • Technological progress induces or allows
    population growth.
  • Variant autonomous population growth induces
    technnological progress to meet new needs.
  • Modern exponent of these views Julian Simon

Easter Island
  • Stone Age culture created monumental statues.
  • Upon its discovery by Westerners in 1722, was
    poor and had smaller population than vestiges
  • Why system collapse?
  • Lack of knowledge
  • Lack of institutional controls

Environment and Society. A Critical Issue for our
  • At issue is relation between natural processes
    and human populations
  • To what extent does human agency matter?
  • If human choices affect natural processes, can we
    identify some problems crucial enough to address

General Issue Environmental Determinism
  • Immediate environmental influences high in past
  • Less important with technological progress
  • Some troubling aspects remain

The Assessment of Environmental Risks
  • The Brander and Taylor study of Easter Island
    shows the importance of knowing the environment
    in order to assess the risks it presents
    knowledge of two aspects are important 1) The
    evolutionary dynamics of the crucial resource 2)
    The initial resource stock (ex. climate change)
  • It also shows the importance of social responses
    to the problems involved in terms of a) control
    of access b) charging for use in proportion
  • 3 Types of risk management have therefore to be

Risk management types
  • 1. Risks due to nature
  • 2. Risks due to the consequences of uncoordinated
    and non-cooperative human activities, present and
  • 3. Risks due to problems of coordination and
    cooperation of social institutions present and

Risks due to nature can be assessed in terms of
expected utility
  • 2 elements uncertainty measure p (probability)
    of an outcome and its subjective value or utility
  • P(o)U(o)
  • This formulation suggests a cost benefit
    analysis. Suppose there are only 2 outcomes, o1
    and o2 Total value is
  • P(o1) U(o1) (1 p) U(o2)
  • Present value P(o1) U(o1) (1 p) U(o2)/i,
    where i is a discount rate (interest rate)
  • Ex. Climate change and controversies

Welfare preserving collective goods
  • In welfare preserving (rival) collective goods,
    users represent a negative externality with
    respect to each other. The risk comes from
    others! The purpose of institutions is to limit
    use. This is difficult to achieve because there
    is a first mover advantage of non cooperation
    with the institution which then often leads to
    conflict and coercion
  • This model cannot be followed at the
    inter-institutional level

(No Transcript)
Problem 2 strategies
  • Adhere or not to a strategy depending on what
    others are doing.
  • This problem can have a stable (Nash )
  • The equilibrium is only efficient if a sufficient
    numbre participate.
  • Non- Efficient Accord Efficient Accord

Coop. Strat a(t)
Non Coop. Strat b(t)
Stable Nash Equ.
Non Coop. Strat b(t)
Coop. Strat a(t)
Stable Nash Equ.
Min fraction of total to sustain accord
Min fraction of total to sustain accord
0 t
0 t
Risks due to social interactions are more
difficult to present
  • As seen from the Stephens text in Cashdan, risk
    analysis can help us understand animal behavior
    and thus raise our knowledge about nature
  • Human behavior is more complex. One can usefully
    however analyze it with the help of general
    concept such as the one of collective good. A
    collective good situation is characterized by two
    aspects Non excludability and some times
    non-rivalry. There are however collective goods
    that are rival, so called commons, thus 2 types
    of collective goods welfare generating and
    welfare preserving

Welfare Preserving Collective Goods The Tragedy
of the Commons Debate
  • Hardin (1968) introduced the question of welfare
    preserving collective goods with his article on
    the tragedy of the commons
  • Coases articles (1960)
  • Dasgupta and Heal Economic Theory and Exhaustible
    Resources (1979)
  • Graciela Chichilniskys Trade Theory between
    Regions with Different Property rights Regimes
  • The choice is not really only between different
    types of property rights but between different
    types of hierarchies of collective goods Even
    private property rights have to be protected!

Theory of Collective Goods and Theory of the
  • The importance of jointness Behavior driven by
    average product F(Nx)/N(x)
  • Common as opposed to private marginal product
  • As emphasized by Dasgupta and Heal Commons
    problems are not PD problems


The production function depends on a fixed
factor with constant returns, a variable factor
or input x with diminishing returns F(x) where
usually F(x)gt0 eventually F(x)lt0 as x
increases, and among N producers each producer
will introduce an input x, producer i
maximizes  Maximizing with respect to
xi while assuming that here x xi x, yields
Open access marginal product
Private Marginal Product
F(Nx) p and
Graphical Illustration
  • There are several ways of solving the commons
  • Markets for externalities, the most efficient
    solution might not always be possible
  • The structuring of authority associated with the
    commons problem is quite important

Role of Property Rights
  • Mechanisms developed by society
  • to set limits on resource use before diminishing
    returns set in
  • to meet needs across space and through time with
    greatest efficiency

Property Rights solutions
Standard economic view of property rights
  • Well-defined property rights
  • Market mechanisms and a pricing system
  • No transaction costs
  • No income effects
  • Assumes collective action problems solved

Private property solves production (and
environmental) problems
  • Can anticipate diminishing returns incorporate
    foregone benefits into present production
    decisions (Hotelling)
  • Private property rules provide means to maintain
    efficiency even when environmental externalities
    exist (Coase)

Possible problems
  • Definition of the property itself
  • Enforceability of exclusionary rights

(No Transcript)
Common Property Tragedy of the Commons
  • Resource that is
  • Depletable
  • Non-exclusive
  • Rival

Common Property
  • Resource unit defined
  • Well-delineated user group
  • Multiple users
  • Explicit rules of extraction

Why Common Property?
  • Nature of resource
  • Economies of scale
  • Maintenance or capital demands
  • Enforcement

Relevance of different property regimes to
current environmental issues
  • Confrontation of regimes is occuring
  • South/North
  • Common property characteristics of environmental
  • Institutional solutions are adopting common
    property arrangements

Problems of environmental regulation solution
through definition of property rights
  • Atmosphere rival at global level
  • Consumption interdependent
  • Command and control difficult to achieve because
    deal with countries
  • Introduce market solution to create incentives
  • Raises problems of initial allocation

Sustainability and exhaustible resources
  • In some basic sense nothing is truly sustainable
    since finite resources are continuously exhausted
    by man but also by nature
  • Sustainability has thus evolved to mean a
    correct relationship between generations
  • Sustainability means that resources should be as
    much as possible preserved for future
    generations use
  • Clearly this means that slowly renewable and
    exhaustible resources should be depleted at an
    optimal rate.

Theory of slowly renewable resources
  • Slowly renewable resources have to be evaluated
    as an evolving stock such as a population minus

Evolution of z Natural Dynamics of z minus
Slowly renewable resources Production
  • Producers will be drawn into using the stock by

Evolution of inputs x, if average profits are
positive, if F is production, q unit price, p
unit costs
Equilibrium conditions
  • In equilibrium there should be an optimal level
    of the resource z if

Is maximized subject to the relation before and
where r is a discount rate The discounted sum of
all future profits is maximized with a discount
rate r, the spot price of the resource is thus
dependent on availability of z in nature and the
discount rate
Exhaustible Resources
  • Hotelling Principle
  • An exhaustible resource is an asset and its net
    price (market price - extraction costs) should
    increase exponentially with the interest (or
    discount rate, to some extent a socio-political
    construct), i.e.
  • P(t) P(0)eit
  • or
  • (dP/dt)/P i

Hotellings Principle
  • Competitive resource owners will deplete at a
    socially optimal rate
  • Take r the rate if return to the owner of natural
    resources. In equilibrium r i
  • Whenever, r i, we have a conservationists

Conditions for Hotelling principle
  • 1. No externalities
  • 2. No uncertainty about future sales, exploration
    prospects, etc.
  • 3. No extraction with environmental externalities
    (ex. Gold Rush).
  • 4. Not too big differences between private and
    market (social) discount rate (for instance due
    to dangers of transfer within society)

ExampleDeforestation processes
  • According to Hotelling principles a forested area
    is a particular type of asset whose capitalized
    value should grow with the interest rate. If this
    growth is not achieved other assets including
    agricultural ones will be closer and the forested
    land will either sold for development or
    transformed into another agricultural asset.
  • In particularIf the income flow stemming from
    the forest is lower than the income flow from
    other activities then deforestation will occur!

This can be due to
  • subsidies for agricultural production
  • income subsidies or welfare
  • cost of property rights enforcement
  • prohibition of trade
  • unclearly defined property rights

Graphical analysis
Population Dynamics
  • Fundamental problem of global environmental
  • Balance supply of resources from physical system
    with demand for these resources from human
    populations over time

Measuring Population
  • Static characteristics
  • total
  • age distribution
  • genders
  • urban/rural
  • geographic distributions
  • Dynamic use various extrapolation techniques to
    predict future trends

Measuring Population
  • Challenges in achieving accurate assessment
  • completeness and accuracy
  • census comparability
  • different interpretations of categories
  • different areas/levels of aggregation
  • different time periods
  • size of area
  • units

  • Dependent on accuracy of initial conditions (i.e.
  • Need techniques of projection
  • postulate relationships among the different
    aspects of population so you can have internally
    driven system.
  • But projections assume smooth path. Also need to
    introduce mechanisms to account for changes in

Malthusian theories of population
  • Assumptions
  • constant "passion between the sexes"
  • finite earth
  • Argument
  • left unchecked, population grows and, by
    definition, grows exponentially (passion)
  • after an initial period of strong growth, output
    as a function of population (labor) exhibits
    diminishing returns

(No Transcript)
Preventive checks
  • Late marriage
  • Low marital fertility (spacing)
  • Contraception
  • Migration

Alternatives to Malthus Boserup/Simon
  • Relate technological progress to population
  • Population concentration leads to higher
    likelihood of technological advance.
  • Population growth º longer hours,
  • More labor-intensive techniques º eventually
    leads to more sophisticated technology.

Pre-industrial Western European Demographic Regime
  • High mortality
  • High Fertility
  • Fertility Controls
  • Celibacy
  • Age at marriage
  • Spacing behavior

Limits to Malthusian Approach
  • Explaining emergence of new demographic regimes
  • How technology might explain shifts
  • These considerations important, because new
    regimes have emerged.
  • Synthesis argument Lee, Ronald, Malthus and
    Boserup A Dynamic Synthesis, In David Coleman
    and Roger Schofield, The State of Population
    Theory, Oxford Basil Blackwell, 1986.

Demographic Transition
  • Characterized by a drop in marital fertility
    achieved through "stopping" behavior, i.e.
    controlling births after having the desired
    number of children
  • Puzzle
  • Not linked to decreased mortality
  • No obvious link to Industrialization
  • No Maltusian population response to income growth

Fertility Declines, Real and Projected
Stabilization Remains a Challenge
Sub-Saharan African Fertility Regime
  • Low age at marriage
  • Polygyny men have many wives, leaving few women
  • Acceptance of pre-marital and extra-marital
    sexual relations
  • Remarriage after widowhood or divorce is the norm
  • These are all factors that make women susceptible
    to childbearing throughout their reproductive
    period of 15-49.

Differences Pre-industrial European and African
  • Europe reduce "exposure"
  • Africa spacing behavior

Characteristics of Sub-Saharan African Social
  • Poorly defined or poorly enforced common property
  • Children reared communally (polygyny)
  • share costs in time or responsibility
  • Weak conjugal bonds
  • Lineage holds land
  • large families have access to larger share
  • References Dasgupta Partha, The Population
    Problem Theory and Evidence Journal of Economic
    Literature, 33, 4, 1995 1879-1902 Chichilnisky,
    Graciela, North-South Trade and the Global
    Environment, The American Economic Review 84 (4)

Changes in life expectancy in selected African
countries with high and low HIV prevalence 1950
- 2005
with high HIV prevalence
South Africa
with low HIV prevalence
1950 1955
1955- 1960
1960- 1965
1965- 1970
1970- 1975
1975- 1980
1980- 1985
1985- 1990
1990- 1995
1995- 2000
2000- 2005
Source UN Department of Economic and Social
Affairs (2001) World Population Prospects, the
2000 Revision.
Predicted loss in life expectancy due to HIV/AIDS
in children born in 2000
Predicted life expectancy
Loss in life expectancy due to HIV/AIDS
South Africa
Côte d'Ivoire
Life expectancy at birth (years)
Source U.S. Census Bureau, 2000
Environment and Migration
  • Migration constitutes, as mentioned before, a
    significant factor in population dynamics
  • Migration and the environment are linked in 2
    important ways
  • Some migrations are environmentally induced ex.
    The dust bowls in the US, the Sahel
  • Migrations create environmental problems
    crowding effects

Before we look at these links lets consider
theoretical approaches to migration
  • There are two basic theoretical considerations
    about migration which emphasize either push or
    pull factors
  • Voluntary migration migrants decide to move from
    one place to the other on the basis of some
    incentives, wages, quality of life
  • Involuntary migrations migrants are excluded
    from a given society and are forced to leave
  • This 2 causes can combine themselves

Involuntary migration
  • A description of the multiple aspects of
    involuntary migration is included in the Zollberg
    article political, racial or religious reasons
  • The collective good literature helps to
    understand exclusion processes
  • Other countries often are reluctant to accept
    these populations which are then concentrated in
    relatively small areas and cause environmental

Voluntary Migrations
  • Since voluntary migrations are based on
    incentives to move, these incentives have to be
    made explicit in the form of wage differentials
    for instance
  • Migration due to wage differential constitutes
    the main explanation for migrations in economics
  • A standing puzzle lies in the explanation of
    overcrowding of big developing country cities

Harris Todaro Model
  • These 2 authors postulate a 2 sector rural
    (agricultural) and industrial economy
  • Wages in agriculture are WAP.q
  • Wages in industry are dependent upon a minimal
    wage Wmin They are

Equilibrium conditions
  • As long as the following is gt0, migration will

Is a time evolution (derivative)
Other incentive models The Owen land use model
  • The land use model developed by Owen assumes only
    two types of land use, agriculture and dwelling
    and examines the special case of areas around
    urban centers
  • Whether land will be transformed into dwelling
    will depend on income streams generated by both
  • Arrival of newcomers increases income streams
    from dwellings especially if migrants get

Conclusions of Owen model and further development
  • Even under normal conditions, as long as there is
    an attraction to moving into an urban area such
    as a subsidy or the hope of a job, farm land will
    be urbanized down to a critical value which can
    be very close to zero.
  • Higher interest rate for agricultural investments
    as opposed to investments for urban dwellings
    will accelerate the process.

Further conclusions
  • Mass migration which can result from climate
    change will accelerate this process.
  • Foreign aid and relief can accelerate the process
  • An Ill-defined property right regime will
    initially slow but then accelerate the process.
  • Climate change might reduce net profits made from
    agricultural production and accelerate the

Analysis of Countries with Ill-Defined Property
  • These countries are sensitive to price
    fluctuations due to substitution effects or
    taxation policies
  • Lower prices lead to more extraction of natural
    resources due to alowering of the opportunity
    cost of labor
  • This lowers their bargaining power at the
    international level
  • Their bargaining power is lowered further by the
    cost of the artificial "comparative advantage" in
    terms of natural resources on the society as a
    whole which might lead to social upheavals.

Conflict, cooperation, and the environment
  • The relations between conflict, cooperation and
    the environment are numerous but cannot always be
    clearly established
  • Quite clearly early cooperative structures such
    as early agricultural states were driven by the
    necessity to better control the human environment
  • Resource driven conflicts are probable in this

Relationships between the environment and human
  • As technology evolves, the relations between the
    environment and human activities become more
  • 2 types of relations can be emphasized 1.
    Cataclysmic Events such as volcano eruptions
  • Long term changes such as deforestation trends
    and climate changes the 2 may be linked

Conflicts over environmental resources may exist
but they are difficult to show
  • Difficulty to disentangle environmental form
    other conflicts, ex. Rwanda
  • Similar for conflict over resources Central Asia
    and Water in the Jordan river water basin,
    conflict between Turkey, Syria and Iraq over the
    Euphrates and Tigris waters

The Central Asian Water Question
Symmetric and Asymmetric Access to Resources
The Example of the Middle East
2 Middle Eastern Conflicts The Jordan and
Euphrates River Basins
  • Jordan River Israel plus Palestinians use about
    2300 million cubic meters per annum, only 1950 is
    considered sustainable
  • Jordan uses 740 to 750 million cubic meters per
    annum. Only 730 is considered sustainable
  • Euphrates Turkey reduces Euphrates flow to 500
    to 300 cubic meters per second, 700 are demanded
    by Syria

Some Theoretical Notions
  • Goal tackle problems analytically and suggest
    responses that tend to promote strategies to
    minimize conflicts and promote cooperation
  • All social interactions and conflicts are not the
    same. They have to be analyzed according to their
    incentive structures
  • Water problems are also common problems
  • Commons lead to asymmetries Lack of dominant
    strategies lead to first mover advantage
  • First, (or second) move advantage can be enhanced
    by geographic or technological circumstances

Fundamental Questions to Address
  • What are the nature of the conflicts
  • How can one find optimal solutions to solve them?

(No Transcript)
(No Transcript)
Water competition has technological and economic
  • Price of Water from Sea fundamental
  • Given by the cost of a m3of water from sea water
    or possibly from pipe lines
  • Around 65 per m3
  • 70 of all consumed water is for agriculture
  • In the Middle East this proportion can reach 80
    to 90
  • Is it worth it?

Symbolic aspects
  • The sharper the conflict and the demands around
    it, the more is at stake
  • Giving in on little things is perceived as signal
    to give in on big ones

How to get out of the conflict spiral?
  • Emphasize limited worth of conflict
  • Franklin Fisher approach using pricing
  • Problem Symbolic aspect
  • Policy of mutual voluntary restraint in use
  • Reduce conflict extensions to other areas through

(No Transcript)
Difficulty The Mid-east population explosion
The Mid-East Demographic Boom
Per capita GDP diminish in the Mid-East
(No Transcript)
Environmental Negotiations
  • The Common problem makes it difficult to carry
    out international environmental negotiations
  • Often countries try to free ride on each other
  • It is difficult to exclude from environmental

Unit veto problem
  • Unit Veto makes agreements even more difficult
  • Particular importance of players
  • One has to find ways to exclude
  • Side payments have to be provided