Globalization Envt

8/10/2019 Globalization Envt

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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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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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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




AnswersNo: people are theultimate resource.

No: and some formsshould be banned.

No: coercion violatesbasic human rights.


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3. Womens health advocates




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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