Course:ECON372/OK2019WT2/Topic1
Important Issues in Natural Resource Economics
Group #1
Summary
The article by Emily Holden "US states face water crisis as global heating increases strain on supplies" discusses rankings of regions that are facing high strains on their water supplies. The rankings released by the World Resources Institute rank a number of US states very high on the list with new mexico ranking the highest among US states followed by Arizona, Colorado, and New Mexico. Experts state that the data released by the World Resources Institute is indicative of a "global water crisis". However, Betsy Otto, WRI's global water director makes an important point stating "The picture is alarming in many places around the globe, but it’s very important to note that water stress is not destiny". This is an important concept to remember as there are steps that can be taken to mitigate the effects of water scarcity. The article continues to discuss how water shortages can exacerbate violence, increase migration, and pose risks to water dependent industries. One example used to illustrate this point is the connection drawn between a drought and the resulting water shortage in Syria to the violent civil conflict that has erupted in the nation. Researchers stress that there is a difference between stress on a water supply and a total drought. However, it is important to note that regions facing stress on their water supplies are located at mid-latitudes which are geographic regions that are expected to see greater frequency of droughts and dry periods as global warming continues to alter the globes climate. This will lead to greater water use in these areas further stressing water supply eventually leading to a irreversible shortage of safe water for personal and commercial use.
Analysis
This article touches on a major implication of climate change and the how important the role of natural resource economics is to manage the stressed water supplies we have now. As climate change reduces the amount of precipitation in these regions we will see conflict develop between different water users in particular between urban and rural residents. It will be very difficult to find the correct balance between the two primary user groups as each group has significantly different uses and expectations for the water supply. Urban dwellers expect water to be abundant and readily accessible at all times which will put stress on the amount of water available to rural users fur uses such as irrigation which is critical to the survival of the United States economy. This issue can be defined as a macro-level resource adequacy issue which makes it very difficult to model accurately. Water as a resource is interesting as there is a fixed amount in the world that is constantly altering states making it more or less useful to humans (i.e. fresh water, ice, vapour etc.). In addition, utility curves for water vary significantly for different users making natural resource accounting very difficult. These factors will make it difficult for economists to develop effective policy recommendations to alleviate the issue of water shortages. However, It is important to remember that it is relatively easy and possible to change the water use habits as was evidenced by the drastic reduction in water consumption that occurred in Johannesburg (https://www.theguardian.com/world/2018/may/04/back-from-the-brink-how-cape-town-cracked-its-water-crisis) after it was announced the city was going to run out of fresh water. In conclusion we are likely to see the effects of water shortages precipitating serious global change and conflict in the near future as climate change continues to alter our planet.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-40) | 30 | |
| Extended Analysis (10-20) | 10 | |
| Presentation (10) | 10 | |
| Total | 100 |
Group #2
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 0 | |
| Article Relevance (10) | 0 | |
| Summary (20) | 0 | |
| Course Related Analysis (30-40) | 0 | |
| Extended Analysis (10-20) | 0 | |
| Presentation (10) | 0 | |
| Total | 0 |
Group #3
https://www.cnn.com/2019/05/27/world/fishing-boats-overfishing-study-scn/index.html
Summary
The article "The global fishing fleet has exploded and that could be bad for The planet" from CNN reporter, Jen Christensen, discussed the effect of technological revolution to fishing industry, as well as the impact of growing number of fishing fleet on the world economy and environment. Since 1950, the number of fishing fleets in the world has more than doubled because of changes in navigation technology. To be sure, as fishing technology matures, the fishing industry contributes to the economic well-being of countries, especially coastal ones, by providing jobs and increasing sales. However, this economic improvement is not sustainable and that overfishing and other climate changes caused by human economic activities have led to the depletion of fish stocks. This phenomenon will not only affect the world's biodiversity, but also have a huge impact on the food health industry and national economies. The researchers deemed that governments need to control the overfishing phenomenon to sustain the long-term development of local environmental and economic conditions.
Analysis
This article describes how open access resources such as fishing have been used or abused for nearly half a century. Unlike other resources, fish is an open-access resource that can be obtained and harvested by anyone who invests the most energy first. Fish is also a renewable resource that can be naturally regenerated through the ecosystem without being depleted. However, with the increase in the number of fishing boats, the problem of overfishing caused by human beings for their own interests has become more and more serious. Compared to elsewhere, overfishing in Asia has surged in recent years. First, population growth in Asia has increased the demand for food, and diverse marine life has provided the conditions to fish. However, Asians may lack knowledge of marine ecosystems and fishing regulations are weak in most regions. As a result, fishing rates in Asia have risen sharply. To address the issue of overfishing, the individual transferable quota (ITQs) has been used to address this issue and create property rights in the fishing industry. For ITQs, the regulator sets the total allowable catch (TAC) for a given fisherman to the weight at a given time. This method can reduce the problem of overfishing and increase the efficiency of the fishing industry, but due to limited productivity, it may affect economic efficiency. Therefore, TAC should find a balance between economics and biology. In fact, local governments should set better conditions and restrict regulations to prevent overfishing. In short, regulations on fishing can reduce the problem of overfishing and increase the efficiency of fishing resources.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 17 | Some errors, such as referring to navigation when article talks about motors. |
| Course Related Analysis (30-40) | 30 | Good looking into ITQs, but your analysis suggests you are not clear how they work. |
| Extended Analysis (10-20) | 0 | |
| Presentation (10) | 7 | Some grammatical issues. |
| Total | 74 |
Group #4
https://www.cnn.com/2019/12/05/perspectives/climate-change-economy-david-attenborough-christine-lagarde/index.html?fbclid=IwAR0vjIMIy4CEP30osyoYhMllJSfpcLEk_gDRfC6vsuQNGs6YICEOddYGKKs
Summary:
The article “We Need to Protect the Environment Like We Protect Our Economies” by Sir David Attenborough and Christine Lagarde illustrate the significance of natural resources and how a healthy environment and a healthy economy are connected. In the current model, nature (a stable climate, reliable freshwater, forest, and other natural resources) is what makes industries and economies to grow; therefore, a steady climate and a healthy natural world are necessary to have long-term human development. Moreover, a rise in sea levels and an increase in the average temperature of the planet are projected, and these damages will trigger mass climate-induce migration, and the whole country will become uninhabitable. Since damaging the natural world is also damaging the economic world, we must take care of the natural world as we would the economic world. Protecting the natural capital will lead to long term benefits of the future. The very first step to preserving our planet is to recognize that waste is the enemy (importance of minimizing waste). For instance, plastics are fated to end up as waste and often polluting oceans. Furthermore, the private sector should invest in sustainable development, and governments can introduce new policies to fight climate change and the destruction of nature. There are many ways to reverse some of the damages. Ultimately, in order to make a difference, the actions have to be made within the next 10 to 20 years, and all the people need to take action to create a healthy economy and environment for the next generation.
Analysis:
The main issue that the article mention is the connection between the healthy environment and the healthy economy. If we have a sustainable nature, our economy will be healthy due to natural resources is what makes the industry. Moreover, the article emphasizes the importance of sustainability and how to prevent the negative consequences that arise from economic development. In our textbook “Natural Resource Economics,” chapter one also mentioned that the contemporary world economy is one of the causes of climate change and air pollutants. In the current economy, damaging the mother earth is somewhat inevitable. However, as the book mentions, great use of allocating renewable resources and nonrenewable resources will be able to archive a healthy future environment and economy. The natural resource policy is an excellent example of government policy, which refers to “public actions taken to influence the rate at which natural resources are used.” Ultimately, it is evident that developments in the economy or humankind are significantly connected to climate change. Thus, it is essential to raise awareness of the consequences and spread more ways or information about the sustainable use of natural resources.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-40) | 35 | |
| Extended Analysis (10-20) | ||
| Presentation (10) | 10 | |
| Total | 95 |
Group #5
https://www.cbc.ca/news/politics/climate-change-bank-of-canada-financial-system-review-1.5137625
Summary:
As it is evident through physical and statistical evidence that climate change is continuing to deteriorate ecosystems within Canada and around the world, global warming is also taking a toll on the financial stability of the country. “Climate change threatens 'both the economy and the financial system,' says Bank of Canada” by Karina Roman from CBC News, explains that the Bank of Canada has recently published a report outlining Canada’s financial resiliency and susceptibility of coping with climate change. The bank became a member of the Network for Greening the Financial System in 2019; an association of banks and financial system supervisors who create resolutions and future plans to reduce financial risks resulting from climate change. Such risks include costs of insurance claims due to physical damage caused by extreme weather (ex. Fires and floods) and risks associated with switching to a lower-carbon economy (Roman, 2019). Joining this organizational team allows for the bank to research and predict future threats climate changes causes to Canada’s economy further allow for forecasting economic growth, setting monetary policy and to help guide corporate Canada in the right direction (Roman, 2019).
Through the Paris Accord, Canada agreed to decrease overall greenhouse gas emissions and restrict temperatures from rising more than 2 degrees. As this demands a more ‘environmentally-friendly’ economy, businesses in the fossil fuel industry will be negatively affected by reducing overall operations further resulting Canadians to alter where they hold investments. Canadians will lack safety and security about where investments are held due to the uncertainty of which investments will be subject to future costs of climate change. Displaying transparency to shareholders by disclosing impacts of the company on the environment and impacts of climate change on the company is crucial as it shows a sense of urgency and that the business is working towards improvements. The Bank of Canada has been stagnant with making operational changes to reduce the effects of climate change and have failed to keep stakeholders informed of current stability and future risks.
Analysis:
In the article discusses one of the world’s most pressing issues right now on the use of natural resources and its implication on the contemporary economic aspect of the financial stability of Canada. This author of the article highlights the Bank of Canada’s perspective on the level of Canada’s perspective on the level of preparedness of the country’s financial system in addressing the risks posed by climate change. The author discusses how the economic activity of any country and its environment and natural resources are intertwined and highlights the role of natural resource policy in determining the optimum use of financial resources of the country for sustainability.
The central bank as explained by Roman acknowledges the fact that “climate change continues to pose risks to both the economy and the financial system” (par.3). As suggested in Chapter 1 and explained in this article, the unsustainable and depletive use of natural resources as “inputs” in production and consumption in contemporary economic life often threatens the sustainability of future standard of living. The problem of climate change, through its “disruptive weather events” such floods and fires are a critical threat to the economy and the financial system. The transition from a high-carbon economy to a low-carbon ecnomy has an undeniable negative economic effect on corporations and businesses that are in some way related to the fossil fuel energy and industry. Such effect reaches out to the financial system as such businesses collapse because of the greening economy or as investors and civilians shifts their investment choices following government regulations. Part of the effect of such climatic changes is felt in the financial system through the unprecedented costs of insurance claims by businesses.
The article proposes some resource (capital) use policies in controlling the problem of climate change. The Network for Greening the Financial System is probably a great approach to ensuring sustainability in the financial system. Additionally, the article reports the central bank’s possible economic and monetary policy requiring companies to undertake climate disclosures before being listed in the Canadian stock exchange, particularly highlighting their risks and vulnerabilities to climatic changes. Therefore, this information is vital in guiding the investor’s decision-making process in determining the optimum use of resources that achieves economic and financial system sustainability for the good of all.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-40) | 40 | |
| Extended Analysis (10-20) | ||
| Presentation (10) | 9 | |
| Total | 99 |
Group #6
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 0 | |
| Article Relevance (10) | 0 | |
| Summary (20) | 0 | |
| Course Related Analysis (30-40) | 0 | |
| Extended Analysis (10-20) | 0 | |
| Presentation (10) | 0 | |
| Total | 0 |
Group #7
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 0 | |
| Course Related Analysis (30-40) | 0 | |
| Extended Analysis (10-20) | 0 | |
| Presentation (10) | 0 | |
| Total | 20 |
Group #8
https://www.thehindubusinessline.com/opinion/why-do-environmental-markets-fail/article22995789.ece
Summary
This article written by Nilanjan Ghosh is all about why environmental markets fail. It highlights two major factors that make people enthusiastic which are the conscious national environmental policy movements towards market-based instruments, and rising demand for environmental goods and services. This article brings up 5 different reasons for setting up markets, they include helping discover the right price for the environmental resource and aid their allocation and distribution, help raise funds for sustainable development financing, market institutions are supposed to make the common man understand the value of services that the ecosystem provides, as scarcity of ecosystem services comes to the fore, the roles of creating markets and market values become important and markets work well at providing rewards and encouraging resource managers to properly manage natural resources.
The main market this article talks about is the carbon market as it has been lacking basic safeguard fraud and has not helped with reducing emissions within the market. From there goes on to discuss how the environmental market is different from other markets in the way that prices work. Scarcity value and prices are the main points that have been discussed in detail throughout the article and talks about how ecological scientists have failed to decipher the amount of ecosystem services provided by nature which is important information to have and figure out. The article finishes with the conclusion that without the information needed about the environment and ecosystem it is impossible to discover the right prices in the market. This is a big issue and creates risk within the market as to not knowing the full non-extraction value of the resource.
Analysis
This article directly relates to chapter one as it talks about price and the value of services in the ecosystem. Properly managing natural resources and the scarcity of resources is another thing that correlates between the article and chapter one. The article talks about how an efficient market price should ideally reflect the scarcity value of a resource. For the environmental market it works differently because information is a missing element. Within the chapter it relates to extraction and non-extraction value of a resource. The non-extractive value is unknown and is needed in determining the cost benefit analysis.
In chapter one, one of the topics discussed is the importance of valuation of a natural resource. Saying natural resources were historically used as raw materials to be converted to support economic growth and viewed as inputs to further develop the economy and produce goods and services desired by consumers. As the resources moves through the markets and between the interactions between buyers and sellers, it establishes a price, which could be interpreted as the value of the resource. In relating to the article, it says that there is in not enough information or lack of knowledge and research to properly valuate a price for the resource and it is difficult for market prices to reflect the true scarcity value which is one of the reasons why environmental markets fail.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-40) | 40 | |
| Extended Analysis (10-20) | ||
| Presentation (10) | 10 | |
| Total | 100 |