ECON372/OK2021WT2/NewsWiki4

Group 1

Link

https://www.bbc.com/news/world-europe-60229199

Summary

The European Commission declared potential plans for labeling nuclear and natural gas energy as “green energy”.

In response; Austria, Luxembourg and Spain have all threatened to pursue legal action at the European Court of Justice.

However, nuclear-dependent nations such as France have supported the potential change. This is primarily done by drawing reference upon countries such as Poland, which are mainly coal-dependent. France argues that the policy is essential in driving lower end countries to cleaner energy.

EU officials placed significant effort into emphasizing how this move can greatly enhance investor interest into both energy resources, in turn helping to research ways to improve their sustainability. Using the EU Taxonomy on such a policy would mean that heavily strict regulations could soon apply to the production of nuclear and natural gas, irregardless of investor demand.

Opposition to the policy have accused the EU of “greenwashing” harmful energy in order to generate private investment. However, at least 20 out of the 27 national leaders are required to block the proposed plans.

Analysis Using Course Concepts

EU attempts to incentivize private investment in nuclear energy and natural gas by classifying them as green energy, so that "private investors can decide where to put funds". It implies that the EU believes the new classification would encourage private investment in natural gas and nuclear energy markets, which increase their production.

The diagram above shows the market for nuclear and natural gas. MSC is higher than MPC0 because both energy resources have negative externalities of production. Natural gas still produces CO2 which accelerates climate change, and it is non-renewable resource, so its consumption in the current time period decreases benefits enjoyed by the future generations. Likewise, nuclear energy has serious safety concerns and disposal of nuclear wastes. However, the new labeling is expected to increase the number of firms that produce energy from those resources, due to the increased investment. Thus MPC0 moves to the right, which is MPC1. Hence the equilibrium quantity of the product increases while the price decreases. Compared to the original equilibrium at (Q0, P0), this new equilibirum (Q1, P1) go even further away from the socially optimal level, (Q*, P*). As a result, this change may bring more total amounts of negative externalities to the society.

Nevertheless, the article also mentions that "heavily strict regulations could soon apply to the production of nuclear and natural gas, irregardless of investor demand." in order to minimize negative externalities. The regulations would increase the cost of production, which increases MPC1 closer to MPC0, or even higher. If the cost of production exceeds MPC0, the equilibrium might approach closer to the socially optimal level, though it does not achieve the purpose of the policy to encourage production. Therefore, the social harm and the level of success depends on how responsive private investor's demand is to this new policy.

Discussion of Political Issues

This move is most likely a response by the EU to solve the lack of energy source after the energy shortage. The tension between Russia and Europe further increases the political challenges. By labeling nuclear and gas as sustainable energy, the EU now has more leverage when negotiating energy price and supply.

If this change went through, no doubt it would be criticized, thus weakening the EU’s image in protecting green energy. Environmental policy will be monitored harder than before, which will be pressure from News and government authority. Such changes may affect the amount of new environmental policy and the amount of time for policies to be approved.

Prof's Comments

Recognizing that there is an externality, and using a graph to illustrate it, are good. I would look at it as there being two different types of suppliers, one with a large externality - coal - and one with a smaller externality - natural gas and nuclear. If we can supply more energy from the source with a smaller externality, and less from the one with the large externality, then the overall externality will be reduced. Energy plants are expensive, and in most western countries a significant share of the cost is paid by private investors. These expensive plants are long lived - decades long - and as such investors don't want to invest in them unless they know that they will be able to make a return on their investment. By declaring that nuclear and natural gas are 'green', the EU is attempting to provide some reassurance to the investors. As a dynamic problem, you can think of it as reducing the investor's private discount rate, as they are more confident that they will receive payment in the future.

Group Members

Ayaka Ogawa, Elabssi Eliwa, Thomas Baxter, Yi Cai

Group 4

Article Link:

U.S. demands explanation from province over river pollution from B.C. mines

https://www.cbc.ca/news/canada/british-columbia/us-epa-pollution-rivers-teck-mines-bc-1.5564269

Summary of the Article:

This article calls into question the practices of mines in British Columbia in regards to their pollution of downstream water sources. Teck Resources owns coal mines in southern British Columbia, and pollution from their locations can be tracked all the way into rivers in Montana and Idaho. Research was done to examine this pollution, of which the main concern was toxic heavy metals. The most prominent contaminant that was detected was Selenium, which is extremely toxic to wildlife, aquatic life and humans. The monitoring stations reported Selenium concentrations four times greater than the maximum allowable amount in BC’s drinking water and fifty times greater than what is healthy for aquatic life. The U.S. Environmental Protection Agency has contacted the province to determine how they could allow such exceedances of water quality regulations to continually occur. In the media, they criticize BC’s and Canada’s environmental assessment policies for being weak and ineffective at accounting for risk associated with environmental contamination. Teck has responded to this negative press and claimed that they plan to spend more than $1 billion by 2024 to clean up its discharge, although there are no regulations in place yet to hold them accountable for this.

Explanation of Context:

The Coase Theorem can be used to understand how externalities may be negotiated between the United States and British Columbia regarding pollution as a result of BC mines.  The Coase Theorem states that when externalities create inefficiencies in the market, private entities are able to negotiate a mutually beneficial agreement to eliminate the externality.  While costless negotiation is almost never the case, it helps to illustrate how solutions may be reached in instances of inefficiency such as the one seen in the article.  

We can understand that there is an acceptable, or at least efficient, amount of pollution resulting from the BC mines, and can be considered to have a ‘right’ to pollute a certain amount.  However, loss of wildlife due to elevated selenium levels from the mines indicate that to some parties this level of pollution is beyond what is efficient when considering the effects on the environment and other industries, living conditions, and a number of other factors.  Moreover, the US has an equal right to minimally disturbed or polluted waterways.  

While the Coase Theorem has shortcomings, it can be applied to the example from the article to understand market-based resolutions to problems created by externalities.  Without government intervention, the parties could negotiate an agreement where the US pays the BC mines an amount less than the cost of cleaning the waterways, in exchange for the mines polluting less.  Alternatively, the mines could pay the US an amount less than the revenue they generate from producing with a higher level of pollution in exchange for being allowed to continue polluting.

However, the Coase Theorem is rarely a viable solution, as negotiations are not costless, and there are other significant environmental considerations in cases like this one.  Instead, the externality could be reduced through a subsidy provided to the mines for investing in more efficient technology, or the mine could be taxed at an increased rate to compensate for the remediation required for the pollution it is producing.

Political Challenges:

As with all long-running issues concerning any area of politics, as time goes on, tensions rise. This is exactly what happened with the Teck mining plant in Trail BC. Although Teck maintains that they spend millions of dollars on reducing their pollutants in the past, little progress has been seen in terms of water quality. After almost 20 years of pollution into the cross-border rivers, the Supreme Court has made the decision to stop hearing Teck's appeals and awarded $8 million in legal costs to the affected tribes. In light of this decision, Teck has put forth new technology to combat pollution, but the U.S. still worries about the effectiveness of this technology and remains cautious towards future pollution.

The political challenges of this can be seen in both the United States as well as Canada. In the U.S., the EPA is now tasked with assessing and managing the years of pollutants that have filled the streams and rivers, which can cost upwards of millions of dollars and unless another case is opened, this money will come out of America's pockets. There's also the possibility that if actions like this continue, the United States might resort to more drastic responses than an $8 million legal fee. Trust plays a large part in international political relations, and without it, many challenges are sure to arise, much like we have seen above.

In Canada, Teck, with the help of the government, will have to refine their technology to produce fewer pollutants into the river, in the long run, to ensure situations like these do not happen again. In the short run, the challenges will be deciding on what to do with the pollution until it can be regulated, as well as rising penalties for those companies who do not follow the guidelines put in place by protection agencies.

Prof's Comments

Recognizing that there are two key players, the USA and Canada, and thinking of the Coase Theorem is a good approach. A key issue in the Coase theorem is that property rights be clear. All else equal, the property right would seem to lie with Canada, as there is no international body that oversees property rights between nations. In other words, all else equal, and absent any payment from the US, Canada would require Teck to reduce emissions to the point where the marginal damage to Canadians equals the marginal cost to Teck of cleaning up the pollution. However, as you note, international relations are more complicated, and don't involve just one issue. So, we would expect Canada to require Teck to clean up to the point where the marginal cost of further cleaning equals the direct marginal benefits to Canadians, and the marginal contribution to the likely damage that the US can do to Canada in retaliation if Canada does not require Teck to clean up its emissions. There are more things involved in the relationship between Canada and the US than selenium pollution in one river.

Group Member Names: Taylor Bouchey, Nathan Deng, Tyler Langtry, Christine Semeniuk, and Marshall Young

Group #5

Link

https://us.whales.org/our-4-goals/stop-whaling/whaling-in-japan/

Summary

The article highlights the decision that the Japanese government made to continue commercial whaling after they left the International Whaling Commission (IWC) in 2019 to focus on hunting sei, minke, and bryde’s whales in Japan's coastal waters. By leaving the IWC, they plan to set long term plans of commercial whaling without international interference, despite the opposition of most of the world's countries as well as a shrinking market. In the IWC’s founding treaty, they permit counties to issues “special permits” for scientific research, it states that “Any whales taken under these special permits shall..be processed and the proceeds shall be dealt with in accordance with directions issued by the Government” which means that whales caught for scientific research, can be sold. So several countries, including Japan, have exploited the article to either avoid the ban or to ‘top up’ quotas. Japan claims that four of their communities have a longstanding history of, and dependence on hunting minke whales in coastal waters, they also claim that the IWC’s ban caused cultural disintegration and financial hardship on these communities, so the IWC should allow them to conduct minke whaling in their waters. However, low profits for the sale of whale meat isn't sufficient to cover “scientific  whaling, and since the ICR is dependent on sales as its main source of income, the decreasing trend makes it hard for their “scientific research” programmes to continue without government subsidies.

Analysis Using Course Concepts

The issue of commercial whaling has been a controversial and emotionally fuelled political topic for nearing half a century in Japan. According to the article the Japanese whaling industry skews its data to appear more environmentally conscious to the public. Although, historical data demonstrates often more killing of whales than it has admitted to catching or using for scientific research. The Institute of Cetacean Research (ICR), outlines that the importance of selling the meat from whales killed for “research” in the Antarctic and North Pacific is clear. Whaling must be conducted to provide whale meat that must be sold to provide funding for the whaling industry. Evidence suggests that whaling is an unprofitable business that can only survive with substantial subsidies and one that caters to an increasingly shrinking and ageing market. The demand for whale meat has drastically decreased after growing wealth and modernization. Yet fisheries and government figures continue to collect millions of taxpayer yen to prop up an industry that is effectively done. Commercial whaling in Japan is an industry that is not profitable, that is able to exist only because of taxpayer subsidies, and that provides a product catering increasingly to a shrinking and ageing market. There is one whale-based industry in Japan that is profitable and has tremendous scope for growth. That industry is whale watching. However, whale watching does not receive the massive government subsidies that are funnelled to whaling. If the government of Japan genuinely want to generate income and benefit coastal communities, it should support whale watching, not whale hunting. Whales are not only better off alive than dead; they are more valuable that way. Animals, people, and coastal economies all do better when whales are seen and not hurt.

Discussion of Political Concepts

     The lack of enforcement power from the international community is not new. Failing to monitor and enforce whales protection treaties highlights the international community's ineffectiveness in regulating whaling. The problem, however, lies within state consents. What makes a state covered is its capacity to enforce jurisdictions among members within its territory. Hence, for the international community to sanction Japan's fishing practices within its territory is more than an ethical problem, but a breach of Japan's legal international sovereignty. Under the IWC convention whaling for an industrial purpose has been banned since 1988. However, the time has shown that much-needed efforts were made by the international community to influence Japan to consent to this treaty. Because Japan is bound to this customary law, it has a legally responsible to respect the treaty in good faith, and can be prosecuted if a breach of the treaty is made.

   However, as the article mentions there were 40 added provisions to the treaty to ensure that article 8 would not be abused. Article 8 states that whaling is only permitted for scientific purposes to avoid waste. However, because Japan has been able to make reservations to this added provision, Japan, therefore, is not bound to this new provision. Because international law is governed by state consent, Japan having made reservations to these added provisions, has no legal responsibility to respect these provisions and can not be prosecuted for a breach of these provisions.

     The solution may require some time as it did with the process of achieving the consent of Japan to be bound to the IWC in 1988. The task lays on the international community to put pressure on Japan to limit its abuse of article 8 and to ban whaling within its territory. Japan states practices contradict what is considered to be law for the international community. History has shown that practices that contradict opinio Juris have failed to persist over time. This is due to the high pressure applied by the international community to change a state practice. Japan is conflicting with a general principle of customary law, therefore if international pressure remains high Japan’s practices are likely to disappear over time.

Prof's Comments

I like your political assessment, particularly commenting on the challenges of international law, which is governed by state consent. This, in effect, means that absent some basis to influence how nations choose to regulate their fishers, the international ocean is an open access resource. For the people of most nations, the existence value of whales is large and that has made its way up the political system to governments seeking to put an end to all whale hunting. However, there are a few nations, most notably Japan, have a politically influential industry and a public that is not strongly opposed to whaling. That industry, which is as noted not really that economically important, is able to strongly influence the Japanese government. That influence has resulted in the industry receiving substantial subsidies, and the Japanese government removing its government from the IWC. As a marine resource, whales tend to be slow breeding. This creates a further challenge for an open access situation. It will be very easy to drive the whale population so low that it becomes very vulnerable to extinction. There is actually an article that used an economic model to show that it may be optimal to fish whales to extinction, if their market value his high enough relative to the discount rate and the growth rate of the population. Now this of course does not consider the rights of whales themselves to continue to exist and enjoy their own lives in the ocean without undue interference from humans.

Group Members

Omar Katul, Zeenat Nisa, Julien Pieters, Drake Snitynsky

Group #6

Link

https://www.nytimes.com/2019/08/08/climate/climate-change-food-supply.html

Summary

Experts on the relation of climate change on food supply prepared a report where they address the issue that the “window is closing”, because the rate of exploitment is at higher rates than ever. The challenges to feed the world population are that to this day, half a billion people live in desert areas where the soil is not propitious to produce food and depends on imports. Also, floods, droughts, storms and other extreme environmental disruptions, which affect the food production and supply. Some of the experts' proposals include reducing food waste and educating people to the benefits of switching to less or no meat diets, better soil management and crop diversification and fewer restrictions on trade and reducing greenhouse emissions. The point these experts are assering is that to mitigate the effect of climate change, two ways could be utilised; however, these options contradict each other. If you encourage afforestation, the land available for agriculture is diminished and that will strain food supply and cause the prices of food to surge by almost 80% by mid century.

Analysis Using Course Concepts

Essentially, the article harkens to many class concepts due to its main concern being with the unsustainable current management of food supply, especially considering the climate change consequences. The main problem is necessarily the heavy discount on the future value of land management, as some producers are not being as efficient as can be in regards to sustainable production. Additionally, the article also provides various hypothetical solutions, some of which are of a strictly economic sense like lowering trade barriers or investing further in agricultural technology (to farm more efficiently with crop rotation or land management) and others are more moral solutions, like compelling people to modify diets or consumption. Equally as important is the issue of opportunity cost for many of the producers, as they require a strong incentive, usually as valuable as the profit being made, to switch how they produce. This could be in temporal subsidies to ease into new production (supply) curves with different technology (either producing more or less) or with outright investment by the market, either from public or private sector, to motivate new production techniques. Either way, a major point made by the article is that the current (or near current period) period is crucial in tackling this problem while it is still manageable, because the more it is postponed, the more harrowing the trade-offs that will be made in the future period.

According to the article over half a billion people are already living in areas which are being turned into a desert, this change will only increase the number of refugees and internally displaced people. These extreme weather conditions will have an adverse effect on the livelihoods and living conditions of people all around the world as these extreme acts can take place in different corners of the world at the same time.

Discussion of Political Issues

Some of the political challenges presented in this article relate to the idea of personal choice. As we know climate change is most definitely linked to our level of consumption, bearing this in mind the article suggests that one option which would have to take place worldwide is the change in agricultural practices as well as a decrease in the consumption of cattle and other types of meat which are extremely resource draining. While many have adopted more eco-conscious diets, this change would have to become prevalent on a worldwide scale, something that would take immense cooperation and is therefore also highly unlikely. Those in developed economies that are less susceptible to the issues brought forward by climate change would be the hardest to as they evidently have the most to lose. More so, food production in these countries may increase due to better temperatures, however, this same increase will cause the destruction of other countries' food supplies.

Prof's Comments

I agree that addressing these issues requires understanding the incentives faced by farmers and by consumers. There are at least three resource issues here. One is that soil is a resource, and at present we are 'mining' soil fertility much faster than it is naturally restored. This is a dynamic issue. Under our current practices, soil fertility will fall, and with it crop yields. A second resource issue is climate change. The biosphere has a certain capacity to recycle the carbon dioxide we release into it back into oxygen and plant material. We are far exceeding that capacity, increasing the amount of carbon dioxide in the atmosphere, and with it increasing global temperatures. A third resource issue is the finite amount of land. Land can be used to grow food, to grow trees that remove carbon dioxide from the atmosphere, or to grow crops for biofuel, reducing our need to use fossil fuels. Using more land to address climate change means less land available for food production, and correspondingly higher prices for food. The key question is how do we do something about this? If we are able to increase land productivity, then we can get more food per unit of land. If we can change diets, we can reduce the amount of land needed to produce the food we consume. For farmers to invest in increasing land productivity, they need to have secure tenure on their land, and high enough prices for what they produce to justify the investment. For people to recognize the environmental impact of meat in their diet, the price they pay for meat should reflect that, which would reduce the demand for meat. These changes clearly impact on the interests of different people differently (e.g. the meat industry), with those who stand to loose expected to push hard not for such actions to be taken.

Group Members

Latif Qureshi, Diego López, Carlos Real López, Flavia Pinto

Group 8

Link

https://www.independent.co.uk/climate-change/news/uk-weather-wildlife-national-trust-b1982795.html

Summary

The National Trust, a conservation charity in the UK, carried out their annual review of wildlife and nature which details the impact of extreme weather changes on various species. Sixty percent of butterfly species are decreasing in number as compared to the previous year, making this year's butterfly count lower than ever before. The extreme cold also affected bird nests which reduced the future bird count. Wildfires and storms cause significant landscape changes and many animal  species found it difficult to adapt. This is exemplified by the death of starving guillemots and razorbills along the east coast. On the other hand, these weather changes have been beneficial to the growth of some species of fungi, orchids and grey seals. Due to the results of the analysis, the National Trust calls for the protection of the species inhabiting the UK. The perpetual effects of climate change on the landscape is a big threat to the survival of many different living organisms.

Analysis Using Course Concepts

As the climate changes more rapidly than at any point in human history, many animals and plants are facing extinction. Britain's wildlife of plants and animals are in danger from the rapid warming of the planet, with potentially disastrous results for some species. According to the article, the UK could lose more than half of-its butterfly species and 20 -30 % of its plants by 2050. Even though the loss of species like; butterflies, other animals, and forests have no direct value to the economy, they have an indirect value to us. Animals in the wildlife have an "existence value" to nature and the economy. Nature is in perfect balance and as more species get extinct, other species with consumptive use are also in danger due to the balance in nature. Along with this, as more forests and wild areas are destroyed due to climate change, the external benefits that come from those areas also get depleted without anyone even realising it. Because we can not put a real value on the existence of nature, we don’t see the passive use-value of it. Because the economic benefit of these non-consumptive sources is never established clearly, people do not see what is the real damage that global warming is causing on each area of life. With different valuation methods like; direct and indirect price analysis, travel cost methods, contingent analysis, and other valuation methods of nature, the real value of wildlife can be established more clearly. And maybe we can be more cautious about our impact on nature because of the indirect return of it on us and our economy. If we don't stop global warming soon it'll be too late and many species will be lost forever. Fortunately, it is still possible for us to change our ways and prevent further damage, however drastic changes we might need to make.

Discussion of Political Issues

The issue of severe weather affecting wildlife as a result of climate change raises various political issues in a chain of complication. The long-term effects of human actions have been deemed to be the issue regarding this weather change. With Britain already suffering from pressure of wildlife species decline by half, climate change becomes an issue that is out of their hands as there are many countries and their interests involved to have significant change that would reduce events as such to occur. Regardless of the involvement of other countries, within the U.K., their conservation work is necessary to protect the extent of damages that are caused to the landscapes. It is of the country’s interest to invest in the conservation of their wildlife and landscapes, as they believe continuing to support it will strongly benefit nature’s survival.

Prof's Comments

I agree that many of the species mentioned have existence value for humans, either directly, or through the role that they play in supporting other species that humans value. I.e., birds eat butterflies. While it isn't clear that we should preserve other species only because of their existence value (or non-consumptive use values like wildlife viewing), knowing what these values are can justify spending resources to protect them. One overarching challenge is that the UK cannot stop climate change on its own, and the habitats that support these species are going to change, as a result of changes in temperature and precipitation, whether or not they are formally protected. Conserving species may require protecting corridors so that they can move as the environment changes. Politically, the main issue is how the costs and benefits are divided. Who will be adversely affected if an area is protected? Who will benefit? Are those who benefit fairly compensating those who are adversely affected? For example, if conservation means limiting what farmers can do with their land, are they provided with some sort of payment, or some sort of support to get more value from the rest of their land?

Names of Members

Marwan Abdel Raouf

Eren Bahar

Khush Bhagchandani

Group 2

link to article missing!!!

Summary

This article talks about New Brunswick Maple Syrup Association’s proposal for additional 12,000 hectares of Crown land, over five years to increase production, while Forest N.B., The organization which represents forest products producers who are advocating to allocate that land for hardwood manufacturing. Currently The New Brunswick Maple Syrup Association has 14,000 which is less than one per cent of total Crown lands in the province. The need for expansion rose as the demand for maple syrup is rising with increasing Canadian population. The last expansion of 2015 increased the land allocated for maple trees by 4,400 hectares. Maple producers are also concerned about selective cutting in maple zones, which reduces the forest density which in turns leaves the land inefficient for tap. The maple association awaits the final yes from the government on their 2019 growth plan.

Analysis

This article is dealing with scarcity of resources which in this case is land. Maple producers are facing higher willingness to pay from their consumers and this provides a big incentive for them to produce more maple syrup. However, since land is limited for maple producers, they are seeking more share of the land that the timber industry currently has a hold of. In order for the maple producers to gain rights over more land, the loss in revenue for the timber industry must be less than the marginal benefit gained by the maple industry. This can be shown in the graphs below. The alternative would be for the maple industry to find another piece of forest land to cultivate maple trees on and this definitely increases the overall benefit without touching the land used by the timber industry. However, considering the environmental factors, like increase in carbon emissions and the loss of additional biodiversity, this is not a sustainable alternative in the long run.

Political Discussion

Maple trees are an integral part of the Canadian identity and maple syrup is a keystone of the eastern Canadian culture and economy. However, as with all land use decisions, there is conflict between those who want to protect the sugar maple trees and those who want to harvest more hardwood timber. Inevitably these issues of development and resource management makes its way into the political arena as these competing interests vie for the favor of politicians. Both the sugaries and timber operators make similar arguments in favor of their case, that the other already has enough land for their operations and that any additional encroachment will pose a threat to their livelihood. Despite this both sides seem to remain optimistic that their two industries are not incompatible and that with proper political bargaining and equitable public policy it is possible to manage forests in a way that is beneficial for both the timber and sugary operations.  

Prof's Comments

You do not have a link to the article. As such, I cannot evaluate the summary. Based on your summary, particularly the reference to crown land, the issue seems to be the allocation of public (crown) land to hardwood timber or maple syrup production. A maple tree has (at least) two uses. One use is tapping it for maple syrup, and another is cutting it down for timber. If it is cut down, it can no longer produce maple syrup. It seems that the core question is how much land should be allocated to timber harvesting, and how much to maple syrup production. Your summary also mentions the tree density issue. When maple trees are widely spaced, which is what would happen if some of the trees were harvested, then it is more difficult to tap the sap. In a 'sugar patch', hoses are run between the trees to collect the sap. If there is more distance between the trees, then this becomes more difficult. I agree with the part of your graph showing that the demand for maple syrup has shifted out. It isn't clear what has happened to the demand for timber. There is a fixed supply of land that can be devoted to one use or the other. If the land is provided to the maple syrup producers, then they will be able to shift out their supply, while the supply of timber shifts in.

Group Members: Akanksha Sumanth, Avaneendra Sathivada, Izak Olson, Partesh Ramana