Course:ECON372/OK2019WT2/Topic4
Costs/Supply
Group #1
https://www.nytimes.com/interactive/2019/04/02/climate/pricing-carbon-emissions.html
Summary
The article talks about how the carbon cap implemented by various countries and their effectiveness. It talks about how economist’s suggestion about raising the costs of burning fossil fuels has proven to be politically difficult and France and Australia’s efforts to increase carbon taxes were shelved after a backlash from voters angry about rising energy prices. The article starts by talking about Canada's new federal taxation policy on fossil fuels and its effects on already existing policies such as Quebec's cap and trade. It then also talks about the EU’s cap and trade system as well as its success in moving away from highly polluting fuels such as coal to cleaner ones such as natural gas or renewables. It then shifts its focus to the USA and its cap and trade systems, the plans to expand already existing ones to more stats and the difficulties in tightening the gap in order to drive bigger cuts in the future. The article moves on to China and and there nationwide cap-and-trade program that will begin with many years of testing before being implemented into larger sectors of the economy such as electricity, this is because China's plan is to create the world's largest carbon pricing program in the world but there are still many important details in the works. And finally the article talks about countries like Australia where changes happened too fast and price increases lead to fierce backlash and repealing of the program all together.
Analysis
The article shows that most countries who implemented the use of a cap and trade system failed to initially make significant changes in greenhouse emissions. As they were unable to properly regulate supply and consumption of carbon bonds. For example the EU had issues due to over supply of bonds in the market. As a result the cost of burning fossil fuels was not majorly impacted and emissions did not drop significantly. However later combining the cap and trade system with a tax to act as a price floor on the market eventually increased the costs of emissions. Though this was successful in decreasing emissions, it mostly forced emitters to make the switch away from carbon. As carbon is a higher CO2 emitting fuel and move towards lower CO2 producing energy sources like natural gas. Instead of truly changing the energy system towards more renewable energy sources. Likewise in California the initial attempt to set up the system resulted in a surplus of bonds on the market and as a result no change in emissions came about. China has also set its sights on implementing a cap and trade system. However these efforts have been slowed due to the conflict as to where to cap the supply of allowed emissions. This inability to properly set and regulate the supply of carbon bonds in different cap and trade systems has hindered the system's ability to decrease emissions. This is because properly allocating supply at the same time as trying to increase prices to deter emissions while not slowing the economy has been extremely difficult for most countries using cap and trade. As the system normally lets the market allocate the supply of bonds through trade, and only fixes the total number of bonds. It allows the market to determine the price of bonds and therefore the cost of burning fossil fuels. It becomes difficult to maintain allocation by competition while still moving towards a more sustainable energy sources.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 12 | Does not really summarize results. Lists countries that are talked about, but not issues faced in those countries. |
| Course Related Analysis (30-50) | 38 | Analysis is partly summary, rather than analysis. |
| Extended Analysis (10-20) | ||
| Presentation (10) | 10 | |
| Total | 80 |
Group #2
Link: https://www.theguardian.com/environment/blog/2011/oct/31/six-natural-resources-population
Summary:
The six natural resources most drained by our 7 billion world population include water, oil, natural gas, phosphorus, coal, and other rare earth elements such as scandium and terbium. Human overpopulation and overconsumption have put on severe pressure on these six natural resources and some resources are depleting to a point where reserves could no longer sustain human activities in the next 30 to 40 years. Climate crisis has also worsened the situation and sped up resource scarcity. Reducing resource consumption and environmental protection are the most urgent societal issues that must be resolved in order to sustain the quality of life for future generations.
Analysis:
This article demonstrates how current human activities and economic development have led to the opportunity cost of resource shortage for future generations. Since natural resources are scarce, there are not enough reserves to satisfy all the needs of individuals based on current rates of consumption. As mentioned in the article, developing countries like China has increased her demand for coal to prosper, leading demand for coal is outstripping its supply. As natural resources are running out, this could threaten future consumption and prosperity. Solely relying on natural resources are not sustainable, technological advancement is a new way out to the situation by reducing environmental costs and developing alternative energy sources.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 15 | A few more of the specific resource results would be good. |
| Course Related Analysis (30-50) | 25 | Incorrect use of opportunity cost, demand to supply relationship. |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 70 |
Group #3
https://www.globaltrademag.com/wave-of-global-sand-trade-may-be-depleting-beaches/
Summary:
Sand is used in a variety of construction and hightechnology applications, However, the amount available for these industries is extremeley limited. Due to the nature of the requirements for construction for example, only water weathered sand such as that found on beaches and in riverbeds can be used in construction. While weathering is an ongoing process, the timescales involved in this makes sand essentially a non-reneweable resource. In addition access to what deposits are available is becoming increasingly limited due to enviromental concerns and ongoing international diplmoacy. Singapore is one of the worlds largest importers of sand, usesd to expand the small island nation's landmass. However, increasingly the surrounding nations have moved to ban imports to singapore, though at times these bas have been lifted. For example, Indonesia, previously one of Singapore's primary suppliers, banned exports to Singapore after the dissapearence of 24 islands harvested for their sand. In the U.S, depsite inceasing use from construction and the emergence of new demand in the form of silicon based hydraulic fracking fluid, exports to other countries remains high. The value of these exports, from all countries which do so, is increasing in value. It is incresing to the point that notonly is sand beginning to be transported long distances, a divergence from historic patterns, but "sand mafias" and other elements of organized crime is beggining to emerge in countries as the profit to be made from sale of this sand begins to outway any other social cost.
Analysis:
This article displays a common struggle between the desire to exploit natural resources and the desire to preserve them. In several instances in this article it is clear that many governments, at least in southeast asia, are taking a firm stance on the position that the opportunity costs involved, most importantly the enviromental costs, outweigh any financial gain from trade in sand. Non-state actors often have different motivations however. Unlike a national government, they are not motivated by preservation of territory, preservation of pulbic goods like ecosystem or landscape quality etc. Different natioanl governments who may not be in an entirley antagonistic relationship might also otherwise have competing goals that within the local scale of reference for humans on earth is essentially non zero. For Singapore to expand it's territory without militarilly conquering someone elses land, it requires material whose removal inversly impacts the terriorial extent of the nation from which it is extracted.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-50) | 50 | |
| Extended Analysis (0-20) | ||
| Presentation (10) | 4 | Spelling errors. |
| Total | 94 |
Group #4
Nature's law: Business will pay the costs of depleting natural resources
Summary:
The article Nature’s Sting by Richard Anderson is part 2 of a series of 3 on the economic cost of human activity on the natural world. The article presents statistical data and examples on the implications of increased costs for business owners as a result of depleting natural resources. It goes to show that for some, there simply aren't enough fish left to catch, while for others the quotas and restrictions on time at sea designed to prevent the total collapse of fish stocks are hitting incomes hard. Tour guides to the great barrier reef are experiencing higher costs of operating their business and ski resorts see their seasons get shorter. Furthermore, the article presents additional data on the increased costs of larger companies operating internationally. Examples include that of Unilever who saw themselves forced to take action to secure the water supply to its tea plantation in Kenya’s Rift Valley and Volkswagen’s commitment to invest $430,000 in re-planting forests and digging rain water pits to secure the water supply to its factory in the Mexican town of Puebla.
With the inevitable rising costs as resources are coming under greater pressure, Anderson suggests finally that “More and more major corporations are waking up to the fact that they have to pay to protect or replace the earth's natural resources and services that have, until now, been seen as free” and that “big business will be forced to adapt, but many smaller businesses and individuals will not have that luxury.”
Analysis:
While Nature’s Sting reports on the dwindling bee population and its impact on local communities, Anderson writes more specifically on the ramifications imposed on business owners in part two, Nature’s Law. While the article reports strictly on natural resources coming under pressure, it becomes important to emphasize that business governance is forced to adapt or disappear. It gives private business owners and large companies an incentive to take action to secure the natural order of things. It goes to show that being environmentally conscious in the world of business can present greater opportunities and reduced costs for production.
John Kirkwood's story was very interesting because it directly shows the costs business face as supply changes. There is a negative correlation between fisherman and number of restrictions put in place. Regulations were imposed in 90s which restricted and considered fishing. Within 10 years the amount of fisherman was cut in half predicated on the the regulations decreasing profit margins. As well as Large fishing boats decreased from 20 to 1. John, being the last large fishing boat says his wage hasn't changed for 12 years. This means when you adjust for inflation he ends up making less every year, despite his knowledge and skill increasing.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-50) | 45 | Not certain that regulation reduced profit. How much would it have been reduced without regulation, if fishery collapses? |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 95 |
Group #5
Summary:
Humans are over-consuming natural resources to the point where in 2030, two planets will be required to preserve life on earth. Specifically, people are consuming 30% more resources than the earth can sustainably reproduce every year leading to high levels of pollution, soil degradation, deforestation and extinction of animal species. From the article, “World is facing a natural resources crisis worse than financial crunch” written by Juliette Jowit in 2008, there was a $4-4.5 trillion-dollar ecological debt accumulated; we can expect today’s debt in 2020 to be much higher since then. This ongoing issue is increasing due to continuous growth of human populations and consumption. If human demand exceeds what the planet can supply, society will exceed ecological limits and experience a worldwide resource shortage.
For example, three-quarters of the planet’s population consumes more than the environment can replenish and biodiversity has decreased almost a third since 1970 but the overall human population has doubled. The average global consumption is estimated to be 2.7 hectares per person but in order to be sustainable, it should be equal to 2.1 hectares per individual. Destroying and overusing natural resources threatens human life as we consistently rely on these resources and need them to survive. The amount of costs built from overconsumption should be a constant reminder of the negative affects of not changing and understanding our consumption habits.
Analysis:
The basis that the article in question discusses is the comparisons between the different costs that we face within the economy. Whether that is the marginal cost that a company must face for producing one more unit, or the environmental cost that the world must face from the production of said unit. With the way the world is going now, humans are producing too much and using far too may resources for the Earth to continue to function properly. This is prevalent within the article whenever the author discusses the idea of “overshoot”. Overshoot meaning when countries go over their allocated amount of resources required throughout the year. While in chapter 4 the discussion arises around opportunity costs and maximizing the profitability of production, we cannot forget the possible outcomes that will be present in the environment if we do not balance these costs with environmental and social costs.
While there are many people who fight for change when it comes to our environment and climate change, not much can be done until the largest factors and polluters help to stop the problems that they are creating. As the human population continues to rise, and the Earth’s resources continue to dwindle, it is difficult to understand what the future costs of our actions may be. That is why finding this balance between the environment and the economy can be so key in today’s world.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-50) | 50 | |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 100 |
Group #6
https://www.theguardian.com/environment/2012/jul/31/rare-earth-greenland
Summary:
Many thing in our life are made by natural resource, and some of them would use rare earths. As long as the countries developing, the rare earths become more hot product and the demand from every country increase, which causes reserves of these essential elements and supplier of rare earths reduced. The over exploit will destroy the ecological environment and renewable resource. According to geological estimates, below Greenland's vast ice sheet has enough rare earths to satisfy a large number of countries, however it is not allowed to exploit right now. By global trading, some developed or underdeveloped countries, such as China and South Africa can make a lot of money and control the development of high technology product by reserves of these essential elements. There is anther big problem with exploiting, like Greece, some of potential mining areas remain under exploited because they more focus on using the area as tourism, or some other factors. Mining should be controlled, we cannot only satisfy current life to overdraw the future.
Analysis:
This article discusses the relationship between mining and environment protecting in Europe. It states that as the global economic growing, the demand of rare earth is continuously increasing. Since China is decreasing its limit on rare earth export, Europe needs to find more resources to support its economic growth. This article clearly states the conflict between economic growth and environment protection, especially in the Arctics. Greenland and the Arctics have huge potential reserves of rare earth and oil. To support the economy, new natural resources need to be collect, but mining industry could harm the fragile arctic environment. Urban mining is also another way to gain more natural resources. As mining technology improves, mining can be more efficient and more environment-friendly than before. However, developing on Greenland's ice sheet and in the Arctics should still be very careful since the environment is too fragile.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 7 | Missed much of the content of the article. |
| Course Related Analysis (30-50) | 25 | A key element is that until now, expensive resources like the rare earth in Greenland, difficult to operate mines in urban areas, etc. have not been considered. Scarcity is driving up prices and technology is driving down costs, making these resources now valuable. |
| Extended Analysis (10-20) | ||
| Presentation (10) | 8 | Some grammar issues. |
| Total | 60 |
Group #7
[1]
Summary:
This article, titled “Resource depletion is a serious problem, but ‘footprint’ estimates don’t tell us much about it” emphasizes how global ecological footprints – the most commonly used metric to illustrate human environmental impacts, are relatively inaccurate and fail to consider external factors. Each country’s ecological footprint is a representation of the natural resources required to sustain their consumption rates and the country’s ability to offset carbon omissions. The term National Biocapacity, refers to each country’s ability to produce natural resources and to dispose of human waste; when the global national biocapacity is surpassed by our ecological footprint, we inevitably reach the Earth’s Overshoot Day.
Based off of a 2013 academic paper, the author of this article implies that the analysis of ecological footprints underestimates the complete magnitude of human impacts on the natural environment. The article asserts that when analyzing certain underlying influences within the properties used by the Global Footprint Network, negative externalities such as soil erosion, nutrition runoff and water overuse are overlooked as contributors to natural destruction. Therefore, the calculated ecological footprint score is not a complete representation. Additionally, the Global Footprint Network does not factor in global trade. The amount of natural resources a country imports and exports may create an imbalance between the amount of resources actually consumed and produced verses the amount traded across the world. The ecological footprint may provide a solid foundation of how unsustainable consumption may impact the planet, but in order to form environmental policies, much more intensified data and research will be required.
Analysis:
The implications of global trade parallel the concepts discussed in chapter four “Costs/Supply.” Importing and exporting goods around the world is certainly beneficial from an economic standpoint. Countries are able to operate based off of their competitive advantage and ultimately, there is an increase in the supply of resources available at efficient prices. However, when countries operate beyond their own consumption levels, hidden costs of over production will affect the environment in the long run. An important opportunity cost that countries must consider is, to what existent, should a country produce natural resources (past their own consumption levels) to sell to other countries for economic gain? Careful analysis must be placed on the environmental costs that are associated with over exploiting these natural resources. Another critical cost consideration focuses on how to transition to more eco-friendly alternatives as climate change continue to pose a serious threat. The economic trade off between paying substantial upfront costs to implement green infrastructure verses analyzing the present value of future costs. The discount rate is a crucial factor as it will help determine which period better supports large cash outlays and whether or not deferring payments into the future is a reasonable decision.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-50) | 50 | |
| Extended Analysis (10-20) | ||
| Presentation (10) | 10 | |
| Total | 100 | Interesting contrast with group 8 |
Group #8
https://www.cnn.com/2019/07/29/us/earth-overshoot-day-trnd/index.html
Summary
"Earth Overshoot Day" is the name given to the day on which humans across the world have used up more natural resources in the year than the Earth can regenerate in said year. In 2019, this day was on July 29th, the earliest date Earth Overshoot Day has ever been on, according to the Global Footprint Network. As the article dramatically summarizes, "If Earth's resources were a bank account, [Earth Overshoot Day] would mark the date we'd officially be in the red." This article relates to chapter four of the textbook because it addresses the economic supply of natural resources and explains that globally we are exploiting this supply faster than the natural resources can be replenished. The Global Footprint Network calculates that 1.75 times more resources are consumed per year by humans than the Earth can produce.
The article, "As of today, humans have used more resources than Planet Earth can regenerate in a year," chastises the United States as one of the worst culprits in regards to their natural resource use. It states that if the entire world lived the lifestyle of an average American, it would require five Earths worth of resources to sustain the demand. This excessive use has increased the effects of climate change. The article's author, Leah Asmelash, uses the examples of deforestation and carbon dioxide buildup to demonstrate the costs of overusing the natural resources supply. Data from a United Nations report predicts that if humanity was to continue at its current pace, we would create a "global health emergency." This emergency could potentially entail millions of deaths from air pollution and "microbial-resistant infections" directly caused by freshwater pollution.
Analysis
When primarily focused on economic improvement and increasing one's current well-being, humans often neglect the important opportunity cost of environmental costs. Often these costs are non-monetary and can be overlooked, but to encompass the total costs of our decisions/actions, environmental costs need to be factored in as well. One of the most fundamental economic concepts is the interactions between supply and demand. The article focused on the supply of Earth's natural resources and emphasized how our demand has surpassed the amount produced by the environment. Extracting 1.75 times more natural resources than the Earth produces each year may make the world more prosperous today, but the Global Footprint Network strongly suggests that we are not properly considering the future costs of these actions. By not considering the environmental impact costs, the marginal cost curve of natural resource use is lower than it should be.
Some wealthy countries such as the United States, do not consider the global, all-inclusive social costs when consuming natural resources. Research presented in the article shows that the future costs of climate change will fall more heavily on many poorer countries before significantly affecting wealthier ones. This leads wealthy countries acting in their own best interest to consume more natural resources than would be economically efficient on a global scale. If one was able to successfully up all of the world's social costs regarding natural resource depletion, the marginal social cost curve would be higher than the global economy currently perceives it and consumption would be reduced. The United Nations is a helpful platform when considering environmental costs because it attempts to incorporate the costs and benefits of all nations when deciding on its objectives and policies.
Technological changes that allow people to produce and distribute natural resource goods/services more efficiently, create greater social benefits without increasing the monetary or environmental costs. This was not mentioned in the article but is a helpful consideration. Although the United Nations says a sustainable future will likely require lower natural resource consumption, people generally do not like to reduce their comfortable lifestyles and level of well-being. Making sustainable substitutions that utilize technological advancements is an easier way in which humans can start reducing their environmental impact costs while maintaining a similar level of well-being. The article presented some alarming potential consequences of overconsumption, but if people view these looming costs as distant or unavoidable, they will not make any personal changes to reduce future costs.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-50) | 50 | |
| Extended Analysis (10-20) | ||
| Presentation (10) | 10 | |
| Total | 100 | Interesting contrast with group 7. |