Interdisciplinary Seminar On Environmental Issues: Environment and Development

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Interdisciplinary Seminar On Environmental
IssuesEnvironment and Development

• Profs. Urs Luterbacher and
• Dr. Ellen Wiegandt

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Agriculture, Natural Resources, Property Rights,
and Trade

• Link natural resources, production systems,
  population and environment.
• Look at global food supply and impacts of climate
  change
• Regional conditions that highlight welfare
  differences
• Look at possible means to reduce disparities
  trade

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Agriculture, Trade, and Environment

• Future of Global Food Supply
• Climate change
• Population
• Tastes
• Institutional aspects

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Model of Future Global Food Supply Rosenzweig,
Parry et al.

• In context of direct CO2 effects from climate
  change
• Provide a global assessment of the potential
  effects of climate change on crop yields, world
  food supply and regional vulnerabilities to food
  deficits.

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Methodology

• Evaluate potential changes in national crop
  yields using crop models and climate change
  scenarios
• Data integrated into world food trade model
• Uncertainties about climate change
• Different levels of adaptation

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Example Sub-Saharan Africa

• The Nexus
• Population
• Extensive farming practices
• Institutional factors
• Land tenure systems
• Government policies

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Maya Collapse and Deforestation

• General problem explain flourishing society and
  its decline
• Relative role of socio-cultural factors and of
  climate

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Environment in the Yucatan peninsula

• Not strictly tropical rainforest
• Rainy season seasonal rainforest
• Dry season more like seasonal desert
• Rainfall variable and unpredictable risks of
  crop failures

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Puzzle of Maya civilization

• During the 9th century A.D. many sites in the
  Southern May lowlands were abandoned
• Carvings and monuments disappeared
• Population dwindled
• Sites in north and east continued to flourish but
  also decline beginning about 1200 A.D.

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Explanations

• Climate change
• Monocropping
• Increased population
• Environmental degradation
• Foreign invasion
• Internal warfare
• Increasing competition
• Peasant revolt

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Overview of climate and culture
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Climate change and deforestation

• Models suggest long-term climate change
• Particularly impact of balance between wet and
  dry seasons these cycles have impact on
  agriculture
• Deforestation and link to climate

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Impacts of deforestation on climate

• Removal of trees affects local climates
• Warmer
• Drier

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Causes of deforestation

• Farming practices Slash and burn
• Forests cleared and burned
• Land farmed until soil exhausted
• Land left fallow 15-20 years until nutrients
  restored
• Generally supports low population densities
• Mystery how high densities supported in Yucatan

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Slash and burn-population interaction

• Slash and burn with low technology is labor
  intensive
• Immediate family as labor pool
• Dependency on family labor
• Fertility economically rational when wealth flows
  from children to parents
• Population increase need to clear more land

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Causes of deforestation, cont

• Production of plaster for monuments and buildings
• Produced from gypsum (calcium sulphate) found in
  rocks
• Heated
• Need fuel wood
• More construction, greater need for plaster, more
  deforestation for fuel

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Other society-environment interactions Role of
water

• Importance of controlling water resources
• Because of seasonal variability, importance of
  control of water during drought season
• Areas where rulers came to monopolize water
  resources grew to large regional centers
• These collapsed when drought reduced quantities
• Other areas that did not develop large centers
  also less vulnerable to climate change

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Migration and big city crowding

• 2 big categories
• Voluntary
• Involuntary

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Involuntary migration

• A description of the multiple aspects of
  involuntary migration is included in the Zollberg
  article political, racial or religious reasons
• The collective good literature helps to
  understand exclusion processes
• Other countries often are reluctant to accept
  these populations which are then concentrated in
  relatively small areas and cause environmental
  problems

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Voluntary Migrations

• Since voluntary migrations are based on
  incentives to move, these incentives have to be
  made explicit in the form of wage differentials
  for instance
• Migration due to wage differential constitutes
  the main explanation for migrations in economics
• A standing puzzle lies in the explanation of
  overcrowding of big developing country cities

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Harris Todaro Model

• These 2 authors postulate a 2 sector rural
  (agricultural) and industrial economy
• Wages in agriculture are WAP.q
• Wages in industry are normally also WUfNu But
  they are in fact an expectancy dependent upon a
  minimal wage Wmin They are

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Basic Assumptions of HT model

• The min wage sends a signal to a partially
  informed rural population
• Thus too many people migrate since the signal is
  not equivalent to the marginal product of labor

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Equilibrium conditions

• As long as the following is gt0, migration will
  occur

Is a time evolution (derivative)
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Merging voluntary and involuntary explanations

• If the above formulation is for a subgroup of the
  population whose wages are maintained
  artificially low or cut altogether
• Then migration for that group will occur

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Other explanatory factors If a productive
process has this shape, then marginal product of
labor varies
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Consequences

• Labor might be influenced by initial marginal
  product and starts migrating
• But when it arrives, crowding starts and marginal
  product, thus wages are lower, hence unemployment

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Urban problems and the environment

• Urban centers are characterized by crowding
• Entails health and pollution problems
• These are made worse by poor housing conditions
• Which are the conditions for such processes to
  occur?
• The H-T model provides a first answer but ignores
  land use questions

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The Owen Model Basic Assumptions

• Assume a situation around an urban area in a
  developing country, the land area around the city
  is assumed to be quite fertile.
• There are two types of populations in the area,
  farmers and city dwellers
• Farmers sell agricultural products and the
  dwellers depend to a large extent on their
  production
• The two populations get fixed subsidies

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The Owen Model Basic Questions

• Given the arrival of a sizable number of would be
  city dwellers (refugees, people looking for a
  better life), under which conditions does an
  individual farmer have an incentive to sell his
  land for city lots?
• The answer depends on the relative income streams
  generated by the two types of activities,
  farming and using the subsidized income as a city
  dweller
• Whatever activity generates the biggest income
  stream will eventually prevail.
• As we will show, in most cases farming will
  shrink in favor of urban expansion.
• These conditions could be further enhanced by
  climate change and ensuing mass migration

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The Mathematical Structure of the Owen Model

• Assume subsidies amounting to one unit of
  numeraire per household
• Total income of the region is Agricultural
  Production P Subsidies
• If there is a total agricultural production P and
  N households, total income is P N
• The price of a unit of food is then (P N) / P
• One unit of numeraire buys P / P N units of
  agricultural goods

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Mathematical Structure Continued

• A farmer making a net (net production minus
  costs) profit of b units of goods will receive b
  amounts of numeraire and buy goods equivalent to
  b P / (P N)
• Each household receives independently of any
  productive activity, P / (P N) either in goods
  or in the equivalent numeraire
• The quantity b, which is fixed for the moment,
  is the average net profit per farm at a given
  time.
• A plot can contain l b urban lots, the number of
  urban lots is proportional to the average net
  profit of the farm
• H is a maximum number (or production) that would
  support households in the region.

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Decision Making Process of a Farmer

• a landowner is willing to sell his land if
• He gets (b 1) P / (P N)
• If he sells he will allow l b households to get
• P / (P N)
• where P P b and N N l b.
• the stream of revenues of transforming the land
  into dwellings will be
• l b (P b) / (P N l b b)
• (b 1) P / (P N) lt l b (P b) / (P N l b
  b)

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Deductions from the Model

• The previous inequality reduces to
• (l b b 1) (P2 PN) (b2 b 2 l b2 l b)
  P l b2 N gt 0
• N and P are not independent since when N
  increases, P decreases. This relationship is
  expressed by
• N l (H P)
• With substitutions one has
• (l 1)2 b (l 1) P2 l (l 1) b H (l
  1)(b2 b) - l H l2b2H lt 0

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Critical Values

• The right hand side of the previous inequality
  can be written as a quadratic function in P. One
  can now compute the two roots of this function
  which will give two critical values for P, P1 and
  P2 , the agricultural production with the
  following conclusion if P1lt P lt P2 , selling
  will occur otherwise for P lt P1 or P gt P2 ,
  selling will not take place.
• Under considerable simplifying assumptions, 1
  critical value obtains (the other one is not
  relevant)

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Critical Value
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4 Extensions

• Streams of income should be discounted
• Subsidies depend on more than agricultural
  income, for instance foreign aid
• Migration can be represented by an increase in H
• b is a constant neither in space nor time,
  moreover it is affected by property rights regime

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Extension 1

• Discounted values of income streams are present
  values, i.e. divided by discount or interest
  rates which might be different for agriculture
  and urban housing. This give the following
  inequality
• 1/r1 (b 1) P / (P N) lt 1/r2l b (P b) /
  (P N l b b)
• if r1 gt r2, urbanization will be accelerated

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Extension 2

• Subsidies could be given in the form of some
  other income (aid)
• P P-b Ys where Ys stands for
  other kinds of subsidies
• In this case, Ys could more than offset the loss
  in agricultural production (the -b term) and
  enhance the inequality
• 1/r1 (b 1) P / (P N) lt 1/r2l b (P b
  Ys) / (P N l b b Ys)

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Extension 3

• If we have migration, if H is increasing, then P1
  will be marginally smaller

So that
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Extension 4

• b is a net profit (revenues minus costs) which is
  neither a constant in space nor in time. b is in
  fact a distribution b(., s) where s is a surface
  measure and where other variables might be
  important such as for instance labor on the farm
  and ecological parameters (micro-climate,
  availability of water, exposure, soil, etc.)
• In a study on the effects of climate change on US
  agriculture, Mendelsohn and Nordhaus (1994)
  claimed that from a Ricardian point of view
  (David Ricardo, British economist of the early
  19th Century), such ecological variables should
  be reflected in the price of agricultural land at
  a given moment. Potential climate change will
  shift land prices (not necessarily decrease or
  increase them across the board), since some land
  will become more suitable to certain cultures and
  other land will diminish in productivity.

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Extension 4 continued

• The various bs could also be affected by
  property rights
• This aspect deserves special investigations
• Since the b's represent yields, under ill-defined
  property rights these should at first increase
  then decrease

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Conclusions

• Even under normal conditions, as long as there is
  an attraction to moving into an urban area such
  as a subsidy or the hope of a job, farm land will
  be urbanized down to a critical value
• Mass migration will accelerate this process.
• Foreign aid and relief can accelerate the process
• An Ill-defined property right regime will
  initially slow but then accelerate the process.