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Hugh Gooding
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In the debate over the most effective policy for controlling emissions, carbon dioxide in particular, I found this paper especially informative when discussing the issue from a global perspective. Toman's paper that we read for Tuesday touched on it briefly, but I see the biggest obstacle for ultimately lowering our carbon dioxide emissions arising from a global acknowledgement that we are on an unsustainable path and the willingness to take effective action. In this paper, Aldy, Ley, and Parry explore this issue to conclude that a successful international climate agreement will include criteria addressing cost-effectiveness, equity, broad participation, ease of reaching agreement on taxes or emissions targets, verification of member compliance with the agreement, and domestic institutional capability to implement the policy. They remark, as we touched on in class on Tuesday, that reaching a universal solution will be more difficult for emerging and developing countries to accept. Simply put, these emerging and developing countries would bear greater costs as they are more reliant on emissions and energy for continuing GDP growth. Aldy, Ley, and Parry compare and contrast the effectiveness of a revenue-neutral carbon dioxide tax versus a cap-and-trade system. As one would expect, there are mitigating factors and complications that arise from both solutions. The story continues where there is no one size fits all solution to the global management of emissions control. The findings suggest that a revenue-neutral carbon dioxide tax appears to be the closest and most effective and realistic solution for developing and emerging countries. In my opinion, both solutions have obstacles that seem very unlikely for many countries with developing and emerging economies. The goal is to involve the most countries possible and punish those that deviate from the plan. This in mind and hopeful that the United States and Western Europe will assume the driver's seat in this endeavor, the revenue-neutral carbon dioxide tax is the starting point for the most effective multilateral, top-down, climate policy agreement approach for controlling and reducing emissions.
Toggle Commented Mar 30, 2016 on ECON 255 for next Thursday at Jolly Green General
When looking at the Pacala and Socolow article in particular, their research takes an unorthodox perspective when addressing the proper action that must be taken to handle the carbon and climate problem. Pacala and Socolow argue that the carbon and climate problem can and must be addressed with our current technological advancements. I got the feeling that Pacala and Socolow see the argument of waiting for future technological progress to address climate change and carbon emission as a 'cop-out' for not wanting to put forth the effort to handle the situation now. Their research and analysis uses the idea of ‘wedges’ to represent “an activity that reduces emissions to the atmosphere that starts at zero today and increases linearly until it accounts for 1GtC/year of reduced carbon emissions in 50 years.” There are seven wedges in the stabilization triangle, and a good portion of Pacala’s and Socolow’s paper is spent describing the currently available technologies and lifestyle changes that must occur in order to fill all seven wedges. It is evident that we are heading down an unsustainable road. Furthermore, I was most surprised by Pacala and Socolow’s options to achieve the seven wedges; they all seemed very much attainable. However as we have discussed in class, many of the options require absorbing private costs which are falling on society’s shoulders. With the available technology and information, education will become a key component for people to realize the social burden of low private costs. Government and corporate America must, at some point, wake up and acknowledge the benefits to society from absorbing some of these manageable costs.
Toggle Commented Mar 15, 2016 on ECON 255 for next Thursday at Jolly Green General
Although significant strides and efforts are taken every year to counter threats to biodiversity, the article by Rands et al. states that we are not keeping up. I found it interesting that although the article called for more action, it was largely a critique of the ways in which we tackle problems to biodiversity. Much like many problems in environmental economics, there is not one right answer. This situation is no different. Our efforts to alleviate biodiversity threats are unorganized and often involve financial support without direction. Furthermore, these unorganized and financially driven efforts are burdened by knowledge gaps, new problems arising out of climate change and human resource demands, and extraordinary amounts of money continuing to be spent on environmental damage subsidies. Rands et al. says the greatest feat, however, may be achieving the three tiers together which they lay out to be the strategy for targeting global biodiversity loss. The second tier, the enabling stage, understandably, continues to be the most difficult to achieve. In a world where technology allows for globalization and rapid exchanges of information, I agree with the article's conclusion that it is our responsibility to "require conservationists to join with wider civil society groups pressing for governance reform and institutional change." As long as we fail to recognize the economic and welfare benefits stemming from healthy biodiversity, the tragedy of the commons will continue to plague any efforts.
Toggle Commented Mar 1, 2016 on ECON 255 for Thursday at Jolly Green General
In a non-valuation market framework, Schuhmann, Casey, Horrocks, and Oxenford present the current situation in Barbados as a real-world example of the "short-term imbalance between costs of conservation and the immediate gains from activities that deplete and/or degrade the environment." The research reveals that Barbados, like many other popular tourist destinations with exotic natural environments, suffers from a knowledge gap. This knowledge gap prevents Barbados from realizing the true economic value of its rich environment and biodiversity. This study uncovers the fact that tourists, in particular SCUBA divers, will go to great financial lengths because they highly value a particular set of environmental attributes. In saying this, I believe one of the most important and telling takeaways from the paper was the idea that divers do indeed differentiate between levels of quality, and for the more experienced divers, they are willing to pay for higher quality dives with lower levels of site crowding, higher levels of coral quality, fish species diversity, and sightings of sea turtles. By itself, this finding is enough evidence for me to believe that Barbados should take more measures to protect these natural environments. Proper funding and resources aimed at protecting Barbados' natural environments will ensure the longevity of these resources required for SCUBA divers and other tourists to continue spending money to visit the area. The researchers present an example in turtle exploitation, and the fact that there are greater economic gains from eliminating turtle exploitation than there are from allowing "illegal or unsustainable harvest." If Barbados neglects its environment, these natural resources may lose the attributes required to keep tourists returning. It is in their best interest to put forth the initial capital to protect these environments if they hope to continue to economically benefit from them.
Toggle Commented Feb 3, 2016 on ECON 255 for next Thursday at Jolly Green General
Although written nearly fifty years ago, Krutilla's insight into human nature and tendencies toward natural and limited resources remains accurate and relevant. I found his discussion of technology and its connection with natural resources especially intriguing considering the time at which he wrote this piece. In the 1960s, Krutilla points out that although technology plays an important role in extracting and depleting natural resources, it is also a vital component in protecting and replenishing these resources. He says that technology continues to progress at a rate which allows extraction of resources to be more efficient and less intrusive and harmful to the natural environment. He hints that technology's goal is aimed at the ability to extract with minimal to no harm to the environment. He warns that we run into danger by seeing technology as more than a preservation tool. Technology will never have the power to reproduce or replicate a natural habitat, as the "supply of natural phenomena is virtually inelastic." I view this as a message for us to not overstep our bounds with the powers afforded to us by technology. We must use technology for what we know it is capable of, and that is providing protection for these natural resources so that future generations are able to also use and benefit from it. If we lose sight of technology's capabilities, there will be "significant limitations on reproducing it in the future should we fail to preserve it [now]." As important and useful as technology is at providing protective amenities to these natural habitats and resources, we must utilize its abilities to preserve rather than reproduce. This is a revolutionary insight for the 1960s, and it remains strongly relevant today.
Toggle Commented Jan 21, 2016 on ECON 255 for Friday at Jolly Green General
When I was reading through this report from the World Bank, I felt that every sentence was astonishing and quite frankly, terrifying. I thought back to class last Thursday when we defined sustainability and that at its core, sustainability revolves around the idea of acting in ways that will leave the world's environmental health in the same way that we received it from the previous generation. Beginning with the factual evidence that we can observe over the last century and considering the previous centuries actions in addition to our current actions, the World Bank's report explains the consequences of our current path on the future of the health of the climate, the oceans, the coastal habitats, and the ecosystems. In doing so, I believe the article hits home with me when it describes the costs that will incur to developed and developing nations alike. Unfortunately, I watched the GOP debate last night. This article and the evidence supported would have been great rebuttals to many of the environmental positions taken by Ben Carson, Ted Cruz, Donald Trump, and Rand Paul. Despite all of this evidence, we still have lawmakers who believe these facts to be untrue and blown out of proportion. We're talking about people who are in line to possibly hold the most powerful and executive position in the world who still refuse to believe the science behind global warming. As the wealthiest country in the world with the greatest access to technology and capital, we must be heading this movement to enact policy that aims to prevent these catastrophes from occurring. Only then can we look to support and aid the developing countries to follow suit. I firmly believe that it is the United States that must spearhead this pursuit, and I hope that we begin to see more proactive changes in policy. Voters must take this into consideration in the upcoming election process.
Toggle Commented Nov 11, 2015 on ECON 280 for next Thursday at Jolly Green General
The Sachs and Malaney article dives into areas of society and the economy that I was not aware malaria impacted. When I think about the impacts of malaria, I am narrow minded when I solely focus on the health and education ramifications when the disease has profound effects on so many other aspects of life and the economy. From the negative effects on trade, to travel, to investment domestically and foreign, and to physical and human capital, the evidence and research is remarkable in its impacts on malaria ridden countries. The one thing I noted when reading the paper was the catch 22 that exists between malaria and poverty. They are both so closely correlated that one cannot seem to benefit without improvements in the other. The poor are susceptible to contracting malaria with little expenditure on pesticides and health, and because they are located in rural climates where agriculture and malaria thrive. On the other hand, malaria "impedes economic growth" through constraining human and physical capital, trade, tourism, and investments. In attempting to cure this problem, we must look to tackle the disease itself while also allocating resources and help to those impoverished.
Toggle Commented Nov 5, 2015 on econ 280 for Thursday at Jolly Green General
Gitter and Barham's paper analyzes the Social Safety Net program in Nicaragua. In their study, they hope to test the effectiveness of providing stipends to households for more frequent healthcare visits and educational participation for the household's children. The interesting aspect of the Social Safety Net program is the idea that the stipends flow to the mother of the household which lends better results to the children's nutrition, health, and education. Gitter and Barham find that this is just the case and the theory behind the Safety Net Program holds true. However, in certain cases, the theory may strengthen and weaken. For example, when the mother possesses greater human capital, the effects tend to be stronger correlating to better healthcare, nutrition, and educational participation for the children. On the other hand, when the mother is unusually more powerful or less educated in the household relative to the father, the daughters' level of educational participation decreases. This is best explained by an increase in utility that the mother gains from the daughter spending less time at school and more time in the household. This relationship applies to part of Todaro and Smith's research in Chapter 8 that "if we were able to raise incomes without ta large improvement in health and education, we could not count on that income increase being used to adequately invest in children's education and health." This is exactly the issue that Gitter and Barham experience in their research. Mothers possessing little education tend to have a negative impact on the children's educational participation and healthcare depending on the mother's level of power within the household. For policies and programs like the Social Safety Net program to succeed, countries like Nicaragua must look for other policy measures and strategies to ensure that the parent receiving the funds, in this case the mothers, contain appropriate levels of education in order for society to benefit. Gitter and Barham's research show that it is the daughters in particular who are negatively affected by the mother's lower education. Immediately, I thought to myself that these daughters will likely be mothers one day who will also receive the stipend. And if they are not reaching the proper level of education and healthcare as children, then their daughters will not benefit from the transfer system either. It is imperative for the program to break this cycle if it hopes to succeed in the long-run for all children.
Toggle Commented Oct 21, 2015 on Econ 280 for Tuesday at Jolly Green General
Dani Rodrick ended with the idea that "economics is full of big ideas on the importance of incentives, markets, budget constraints, and property rights. It offers powerful ways of analyzing the allocative and distributional consequences of proposed policy changes. The key is to realize that these principles do not translate directly into specific policy recommendations. That translation requires analyst to supply many additional ingredients that are contingent on the economic and political context, and cannot be done a priori." These couple of sentences resolve Rodrick's argument throughout the paper that there is no universal growth strategy, institutionally, financially, or policy driven, that can apply to each country's situation. Although there are social drivers such as education, infant mortality, and life expectation that prove to accompany many growth stories, there is no one-size-fits-all method that is proven to enact growth in both developing and developed countries. Dani also mentions the differing level of difficulty and the different approaches that should be taken for "igniting economic growth and sustaining it." He uses examples drawn from China's two-track reform, Mauritius' export processing zone, and South Korea's system of financial restraint in arguing that many of the plans and strategies have taken unorthodox routes to produce orthodox results. From this, we learn that "sound economics has often been delivered in unsound form." In the end there is no given answer for reform geared toward growth strategy. As a result, Rodrick argues, "successful reforms are those that package sound economic principles around local capabilities, constraints and opportunities."
I found Banerjee and Duflo's research report extremely insightful and thorough. From topics ranging on the poor's living arrangements, how they spend and earn their money, the market and economic environment available to them, and then their infrastructure choices, Banerjee and Duflo give a description of the choices and sacrifices that the poor encounter everyday and their numerous wise and thoughtful solutions to survive at such low income levels. While we take so many things for granted in our day-to-day routines, nothing is guaranteed for the poor and their ability to run a quick cost-benefit analysis can be the difference between life and death. I was obviously fascinated to learn the different reasons that the poor and extremely poor are pushed to act in certain ways based on their situation, however, I found the psychological aspect, the fact that "the poor certainly feel poor, [but] their levels of self-reported happiness or self-reported health levels are not particularly low," extremely uplifting and powerful. The little stress reported throughout a year was a result of health problems, mainly from needing to cut meals, and not because of their situation. It definitely sent a powerful message to me for the stresses and unhappiness that I face in no way parallels the pain that these individuals endure on a daily basis. I also believe that the facts reported in this research will help to debunk many misunderstandings and stereotypes of the poor. After reading the stories and statistics, these individuals are dealt a terrible situation in which they work countless hours, making very little money, in order to provide for their families, all while living relatively happy lives. Economically speaking, these peoples' actions and mindset are fascinating.
Krugman touches on an aspect of economics that I have always had a hard time dealing with even as an economics major. It is the idea that we must use simple and almost methodological approaches to discuss complex issues. It has always bothered me that we must make so many assumptions and keep so many variables constant (ceteris paribus) when dealing with complex issues, because there is simply no way to account for everything. And it was comforting to read in Krugman's paper that I have not been the only one thinking about this, and that this issue has proven to be very problematic in high development theory especially. However, I think Krugman makes a good point that puts me at ease when he notes that a model is not meant for the purpose of solving a complex issue immediately but instead, "it is a good model if it succeeds in explaining or rationalizing some of what you see in the world in a way that you might not have expected." In saying this, I believe Krugman to be saying that models show us the smaller picture. We simply need to be patient and not expect to solve the most complex problems in one sitting. Instead, models are intended to provide us with clues and answers to smaller problems of a larger issue.
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Sep 16, 2015