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Economics 308:
The Political Economy of theEnvironment
James K. Boyce
Lectures 16 + 17:
Globalization & the Environment
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What is globalization?
Integration of economic activity worldwide
economic activity includes:
markets
governance
worldwide includes: global North
global South
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The global South: Poor countries
?
% population in poverty
Source:UN Food and Agriculture Organization.
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OrPoor people?
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Income inequalityoften is
higher in low-income andmiddle-income countries
Lorenz curves
Brazil:top
quintile gets>60% ofincome
USA:top
quintilegets 50%of income
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Preview:
Amazonian deforestationIn poor countriesthere are poor people
!and not-so-poor people.
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Amazonian deforestation: 3 questions
Q: Who benefits?
A: Cattle ranchers; beef exporters.
Q: Who bears the costs?A: Rubber tappers (seringueros); quilomboresidents.
+ current and future generations worldwide via loss of ecological services of the forest.
Q: Why are the winners able to impose costs
on the losers?
A: Power disparities between winners and losers.
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Level of deforestation
$Power weighted MC tolosers beforetheseringuero movement
Power-weightedMB to winners
before
Power weighted MC tolosers aftermovement
after
PWSDR: Amazonian deforestation
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How does environmentaldegradation differ betweenpoor countriesand richcountries?
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Environmental Kuznets Curve
(EKC)
EKC hypothesis: An inverted-Ushape relation may exist(in some cases) between environmental degradation andper capita income.
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Why might EKC relationships exist?
How does environmental degradationchange as per capita income rises?
Three effects:
1. Scale effect
2. Composition effect3. Technology effect
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Scale effect
If the aggregate pollution/output ratio isfixed, higher output -> higher pollution.
output
pollution
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Composition effect
If pollution/output ratios vary across sectors ofthe economy, and if the relative size of sectorschanges with rising income -> the aggregate
pollution/output ratio will change.
Q: Which sector produces more SO2pollution perdollar output?
agriculture?
industry?
services?
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Composition effect contd
Q: Which sector produces more SO2pollution per dollaroutput?
agriculture?
industry? services?
A: Industry.
Q: How does the industrial sectors share of outputchange as per capita income rises?
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Composition effect contd
A: First it rises, then it declines:
At low levels of income, agriculture dominates.
At medium levels, industry dominates.
At high levels, services dominate.
Q: How does the industrial sectors share of outputchange as per capita income rises?
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Composition effect contd
Q:Can the composition effect account for the inverted-U
relationship?
A:If production and consumption take place
within the same country, the composition effectcan result in a concave relationship asservices sector grows faster than industrialsector.
But:To pass the turning point at which theslope turns negative polluting industriesmust be outsourcedto other countries as dirty industriesare relocated to other
countries.
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Technology effect
If pollution/output ratios can be reduced bytechnological change andif pollution-reducingtechnological change is correlated with income ->rising income can lead to lower pollution in eachsector and economy-wide.
Q: Why might pollution-reducing technologicalchange be correlated with income?
A: Induced policy response.(Grossman &Krueger QJE1995)
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Q: What induces a policy response?
A: Vigilance and advocacy(Grossman & KruegerQJE1995)
Aka: Politically effective demand.
Aka: Power-weighted costs of environmental
degradation.
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Wheres the Environmental
Kuznets Curve?
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Recall:
Pollution dispersion spectrum
uniformly mixedpollutants: e.g.,
CO2, CFCs
non-uniformlymixed pollutants:
e.g., air toxics,nuclear waste
SO2
Q: At which end of the spectrum is the EKC inverted-Umore likely to occur?
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A: In the middle.
At the uniformly mixedend of the spectrum(e.g., CO2), global public good problem impedesnational solutions.
At the non-uniformly mixedend, harm can be
concentrated in localizedhot spots
again
impeding national solutions (especially if hot-spotresidents lack power).
Q: At which end of the spectrum is the
EKC inverted-Umore likely to occur?
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PWSDR EKC
If more equal distribution of power iscorrelated with rising incomes (e.g.: via
greater literacy, more political rights & civilliberties, more equal income distribution) ->rising income can lead to more vigilanceand advocacy& more politically effective
demand for environmental protection.
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Per capita income
and power distribution
But some countries have high per capitaincome andlow democracy (relativelylarge power inequities).
While others have low per capita income andmore democracy (relatively narrow powerinequities).
See: http://www.cseindia.org/
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EKC - revisited
Environmentaldegradation
Democracy = equality in the distribution of power
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Current population growth rates
world 1.2%China 0.5%India 1.2%US 0.7%Tanzania 3.0%
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Sharply declining global birth rate
Source: Go forth and multiply a lot less, The Economist, 29 October 2009. Onlineat: http://www.economist.com/opinion/displaystory.cfm?story_id=14743589.
Total fertility rate (TFR):theaverage number of childrenborn to a woman over herlifetime.
Replacement-level fertility:
TFR at which births =deaths and population isstable:
2.1 in high-incomecountries
3 or more in low-income
countries (due to highermortality rates)
2.3 worldwide
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The move to replacement-level fertilityis one of the
most dramatic social changes in history. - The Economist (29 Oct 2009)
Source: Go forth and multiply a lot less, The Economist, 29 October 2009. Onlineat: http://www.economist.com/opinion/displaystory.cfm?story_id=14743589.
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aka population explosion
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Why do people have kids?
children as a source of family labor
children as source of old-age security
infant & child mortality
son preference
lack of access to birth control
love lack of female education & employment opportunities
Q: How do these change as living standards improve?
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Q: How do these change as living standards improve?
children as a source of family labor
children as source of old-age security
infant & child mortality
son preference
lack of access to birth control
love lack of female education & employment opportunities
?
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Effects of population growth on
living standards
Negative effects:
more mouths to feed
Positive effects:
more hands, more brains
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Malthus and the dismal science
Reverend Thomas Malthus(1766-1834)
First edition: 1798
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Neo-Malthusianism
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How does population growth affect
per capita food supply? Denominator effect:holding food supply
constant, more people -> less food/person.
Labor supply effect:more people -> more labor forfood production -> increases the food numerator!but as land frontier is reached, diminishingreturns set in so food/person falls.
Induced technological and institutional change:productivity increases (induced + autonomous) ->possibility of more food/person.
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Population policy debates
Three big questions:
1.
Is population growtha problem?
2. Should governments ensure access tobirth control?
3. Is coercionever justified?
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Population policy debates cont
d
Three broad campsdifferentiated by their answers to the questions:
1. Population controllers.
2. New right.
3. Womens health advocates.
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1. Population controllers
1. Is population growtha problem?
2. Should governmentsensure access to birthcontrol?
3. Is coercioneverjustified?
AnswersYes: its the #1problem.
Yes: they shouldpromote it to limitpopulation growth.
Yes: the end mayjustify the means.
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Coercion in a good cause?
When he[a senior government official in India]suggested sterilizing all Indian males with three or more
children, we should have applied pressure on the Indian
government to go ahead with the plan. We should have
volunteered logistic support in the form of helicopters,
vehicles, and surgical instruments. We should have sentdoctors to aid in the program by setting up centers for
training para-medical personnel to do vasectomies.
Coercion? Perhaps, but coercion in a good cause!
. Wemust be relentless in pushing population control around
the world.
- Paul Ehrlich, The Population Bomb (1968), pp. 165-166.
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Chinas one-child family policy
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2. New right
1. Is population growtha problem?
2. Should governmentsensure access to birthcontrol?
3. Is coercioneverjustified?
AnswersNo: people are theultimate resource.
No: and some formsshould be banned.
No: coercion violatesbasic human rights.
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3. Womens health advocates
1. Is population growtha problem?
2. Should governmentsensure access to birthcontrol?
3. Is coercioneverjustified?
AnswersIts not the mainproblem.
Yes: people have aright to reproductiveself-determination.
No: coercion violatesbasic human rights.
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Population politics spectrum
Populationcontrollers
New rightWomens
healthadvocates
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THREE QUESTIONS
on globalization & the environment
1.
Will globalization lead to environmentalconvergence orpolarization?
2.
If convergence, will it be harmonizationupward orarace to the bottom?
3.
What is up: the global Northor globalSouth?
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Globalization
s double movement
Globalization: the worldwide integration ofeconomic activity. Economic activity isstructured by (i) marketsand (ii) governance.
Polanyis double movement:
expansion of the market
expansion ofsocial protection
aiming at the conservation ofman and natureas well asproductive organization
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The globalization of market failure!
trade at market prices that do not capture
external costs external benefits
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!and globalization of
governance failure?
Governance institutions may fail to remedymarket failures due to:
inability(e.g., bureaucratic competence);and/or
unwillingness(e.g., the political influence
of those who would bear the costs ofinternalization relative to those who wouldbenefit from it).
Globalization can exacerbate both.
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Trajectory #2:
Environmental protectionism
The scenario: free tradeleads to a race to the bottomas countries compete for competitive advantage byexternalizing costs.
E.g.: NAFTA opponents: Laxenvironmental standards in Mexico will
put pressure on the U.S. and Canadato weaken regulations and becomemore like them.
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Trajectory #3:
Greening the global North
The scenario: transformations of production andconsumption will reduce environmental impacts in theglobal North, so that it converges towards the moresustainable levels of the global South.
E.g.: organic farming; urban andcommunity-supported agriculture; slowfood.
NB:Per capita income in the richest quintile ofthe worlds countries is 67 times greater than in
the poorest quintile (for details, see Bob Sutcliffe,
A More or Less Unequal World?2003).
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Trajectory #4:
Environmental imperialism
The scenario: transformations of production andconsumption in the global South will worsen environmentalimpacts, so that the South converges towards the moreunsustainable levels of the global North.
E.g. #1: displacement of milpaagriculture in Mexico and Central
America by cheap corn (maize)imports from the U.S.
E.g. #2: displacement of natural fibersby synthetics (e.g., displacement ofsisal by polypropylene).
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Trajectory #5:
Environmentalpolarization
The scenario: globalization will lead to widening disparitiesas environmental costs are shifted from the global North tothe global South.
Example #1:
Tropical deforestation coupledwith forest protection in the
global North.
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EnvironmentalpolarizationExample #2: Toxic waste trade
The measurement of the costs of health-impairing pollution depends on the forgone
earnings from increased morbidity and
mortality. From this point of view a given
amount of health-impairing pollutionshould be done in the country with thelowest cost, which will be the country with
the lowest wages. I think the economic
logic behind dumping a load of toxic waste
in the lowest-wage country is impeccableand we should face up to that.
- Lawrence Summers memorandum, publishedin The Economist, 8 February 1992.
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Five trajectories: green& brown
1.
Ecological modernization
2.
Environmental protectionism
3. Greening the global North
4. Environmental imperialism
5. Environmental polarization
Convergence
Harmonizationupwards
Race to thebottom
Divergence
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Which trajectory?
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Prospects for global
environmental governanceFormalgovernance
creation of a world environment organization
issue-specific international agreements
greeninginternational institutions
Informalgovernance
e.g. #1: advocacy-led third-party certification(such as the Forest Stewardship Council)
e.g. #2: the international right-to-knowmovement
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