The Environment and the Economy
The Environment and the Economy PSC2439
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This 6 page Class Notes was uploaded by cwalterman on Friday October 9, 2015. The Class Notes belongs to PSC2439 at a university taught by Christopher Mitchell in Fall. Since its upload, it has received 84 views.
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Date Created: 10/09/15
The Environment and The Economy Social Costs Pigouvian Tax Green Industrialization Leakage 42315 externalities l when others pay the costs of pollution or other environmental issue caused by a producer direct spillover from economic activity Original focus on direct soillover from economic activitv Essential dilemma is private oains some producers is getting the gains of economic activity but they aren39t getting the social costs Producer gets the bene ts of production Others pav the costs of pollution l39l externalities Leads to overproduction and full cost not re ected in the sale price quotSparks from trains starting firesquot how much crop yields will decline D producer pays for damages Superfund sites Arthur Cecil Pigou Solution is to force producer to pay full price of production Superfund Act of 1980 after Love Canal in New York Tax equivalent to cost of pollution Higher price lowers demand Tax revenues reimburse victims quotPolluter Paysquot Principle The logic of Superfund sites Love Canal Cost of cleanup is alwavs more than not dumping in the rst place If cost is diffused such as air pollution it s highly debated so hard to calculate cost D victim pays polluter to not produce Ronald Coates pay them the equivalent of the money they would gain in overproduction Victim could pay polluter not to produce Limits production same amount as Pigouvian tax Yet it ionores prooertv riohts of victims not a market solution because markets are about exchanging property rights More relevant in absence of a state Domestically Polluter Pays dominates Generally seen as fairer Complicated by diffuse social costs More complicated internationally Monitoring and enforcement issues pay to not have pollution done Trade issues I Environmentalism as hidden protectionism l Different evaluation of environmentgrowth tradeoffs Development issues I quotDirtyquot development is already hard enough it39s expensive and dirty If you want to do clean develooment it39s even more exoensive Shared Rivers and Fisheries multiple states have claim to either have winner take all or a system to divide it Becomes more complicated with true international resources ie international waters Upstream states have leverage Shifting weather patterns create tension True International Resources International waters Moon and Antarctica Nile River and Colorado River Basin Colorado River is all diverted before it reaches the sea or even Mexico lssues because multiple states claim these rivers for water use Silala Con ict Bolivia and maybe Chile River that starts around the continental divide in Bolivia and ows through channels into Chile a part that used to be part of Bolivia CrossBorder Pollution Upstream polluters reluctant to curb behavior for downstream bene ts don39t want to hurt economy to help peoole who are downstream Acid rain in the NE from the economic activity from the Midwest they aren39t getting the economic bene t from the Midwest externalities More Subtle Costs Somali oovernment collapses including the Somali Navv Now there are unprotected coast that becomes a toxic dumping ground Side effect kills off Somali sheries and the economy is heavily depended on shing D hurts Somalian economy This leads to the Somali piracy so the shermen have a job since they need a new livelihood CrossBorder lssues Relatively straightforward social costs problems Generally managed by bilateral treaties l The more parties involved the more complicated I Fisheries international resources especially dif cult Weak downstreamers may be at a disadvantage D ie Chile can39t force Bolivia to capture the headwaters in the Silala Or in Colorado River can iust let everybody in Nevada Cali and Arizona have the water and let the Colorado River dry up Development Issues Industrialization is expensive in the best of circumstances quotGreenquot Industrialization is even more expensive and is controlled by some companv or countrv that doesn39t want to iust give the technoloov awav l Protected by intellectual property laws Dirty Western Development Britain s 19th Century quotSatanic Millsquot and the Peppered Moths D dissipated the peppered moth because the coal ash turned the trees black and the black moths had an advantage If West deve0ped quotdirtvquot whv should late deve0pers have the greater burden Also an issue for sustainable aoriculture and forestrv ie border between Haiti and DR no environmental regulations in Haiti so it looks a lot more desolate NonEconomic Environmental Issues PostMaterial Values in mostDCs clash with economic growth in DCs social and environmental issues start to form once everybody has enough money to dht about other issues other than economic l US EU lapan are much more concerned about environmental issues than just economic issues Should biodiversity be protected for its own sake Pandas have no economic value and cost a lot to keep them alive At what point do economic gains trump environmental costs or vice versa Exporting PollutionLeakage exporting pollution Most DCs ban environmentallvcostlv production US EU lapan Shifting that production and pollution to DCs D don39t limit pollution just move it somewhere else raises global emissions Hidden Protectionism Do states really care about the environment it s iust trade protectionism Or want an excuse to bar imports Economic activity is clearly linked to emissions and other environmental conditions If environment is being damage to increase goods for trade then clearly linking trade with environmental issues The leakage problem can only be solved if states can bar imports on environmental grounds quotwe don39t want your goods because it39s made in a dirty fashionquot they wont say that so no states can actually reduce emission levels or raise emission standards Trade barriers a powerful incentive to push develooino countries to act on environmental issues Linking risks delegitimizing the free trade consensus creates jobs economic growth At an enormous economic cost to all parties DCs will sav thev39re done with free trade and it39ll affect everybody Trade is good for the environment Because it means more ef cient production If you want to have lower environmental damage then move to where the energy costs is lower efficiency and trade goes handinhand Linking is MDCs imposing their values on DCs via economic blackmail And MDCs did worse when they were DCs Why should the WTO consider environmental issues 1 Disoute Settlement Mechanism works While most int l agreements don39t because WTO enforces those rules WTO could actuallv compel states to change their behavior 2 Clear links between pollutionintensive production and trade Why shouldn39t the WTO consider environmental issues 1 Trade links not clear enough create an international body that deals with environmental issues it39s not their iurisdiction 2 DSM works because of its narrow focus on generallyaccepted principles and goals Proenvironment consensus weaker than freetrade consensus And alt to DSM is costly trade wars 3 WTO is understaffed and lacks the necessary expertise staffed with trade efforts and not environmental staffers Current WTO Jurisprudence 1 Environmental governing language spread across ve different treaties that have some lanouaoe about the environment and some of it is contradictorv Some provisions expired because it was supposed to be replaced with clearer language Was to be clari ed or extended in later revisions Reform stalled with rest of the Doha Round back in 1999 since it39s stalled out it remains ambiguous 2 Generally accepted that states can an things seen as toxic in themselves a if a good itself is determined by a state is toxic then it can be barred in that state 3 Le France can bar Canadian asbestos 1 French generally showed asbestos was toxic so it wasn t a rouge 2 they established the same policy for all producers of asbestos so WTO ruled it being legal D wasn t discrimination How things are made Principles of NonDiscrimination importers can39t be held to a higher standard than domestic producers can39t bar quotlikequot products from WTO states can39t bar a US car while not barring a Brazilian car Do PPMs change quotlikequot status Are identical nished goods quotlikequot if they were made in different ways ie have 2 pencils that are identical but can39t tell how they were made Can states establish trade barriers on production methods D sweatshops vs factories US requires shrimp oats to use quotTurtle Excluder Devicesquot TEDs Bars imports from states not using TEDs A PPM standard not a nal product standard Can the US bar shrimp because of the way it was caught and not the quality of it India Malaysia Pakistan Thailand bring a WTO case WTO rules aoainst US for other issues But because subsidies for Caribbean states to adapt not available to Asian states Refused to rule on PPMs Somebody will be unhappy Can make it political More expansive regulations expired in 1999 were to be replaced by new ones WTO wants states not Dispute Settlement Board to settle the likeness question Deciding either way alienates some members States can t come to an agreement Because of broader stalemate over agricultural subsidies PPMs include carbonintensive production Depending on whether PPMs can be used for trade barriers it will have a huge impact on WTO39s position on climate change If states can discriminate on PPMs the WTO is a powerful ally in ghting carbon emissions bv limiting leakage If states can39t discriminate on PPMs the WTO becomes a massive barrier to states that want to protect the climate because now there will be a lot of leakage Thisis an important question because the WTO will either become a tool to ght climate change or a barrier for states who want to ght climate change