ERE10: International Environmental Problems

1
ERE10 International Environmental Problems

• Trade and the environment
• International externalities
• Acid rain
• Depletion of the ozone layer
• Climate change

2
Trade and the environment

• International trade brings welfare to all
  countries
• However, if countries do not internalise their
  environmental externalities, trade may hurt
  welfare
• Indeed, lax environmental regulation can be a
  competitive advantage
• This is frequently quoted as a reason to restrict
  international trade, but improved environmental
  policy would be a better

3
Trade and the environment (2)

• At the moment, trade restrictions on the basis of
  product characteristics are accepted in
  principle, though frequently controversial
• Trade restrictions on the basis of production
  process are not acceptable however, ecolabels
  are
• The distinction is whether environmental damage
  is within the territory of the regulating
  government
• However, there is a tendency to restrict
  sovereignty, always in this sense

4
Prisoners Dilemma
5
Acid Rain

• Sulphur dioxide and nitrous oxide
• Fossil-fuelled power generation and, to a lesser
  extent, vehicles
• Pollutants travel for weeks, cross continents
• Wet and dry deposition
• Consequences
• Increased acidity of lakes aluminium poisoning,
  salt and oxygen starvation
• Increased acidity of soils
• Forest damage, through roots and leaves
• Human health, through acidic air and water
• Damages to some stone, metal, glass
• Loss of visibility

6
Acid Rain Policy in Europe

• In Europe, acid deposition is falling
• Why? It is a prisoners dilemma!
• Vehicles also contributed to urban air pollution
• Power plants typically operated by
  semi-governments
• There was strong public demand, and a not
  excessively expensive technical fix
• Coal, the dirtiest fuel, was becoming less and
  less competitive
• Eastern European industry collapsed

7
Ozone Depletion

• Ozone is formed by ultraviolet light, destructed
  by oxides of chlorine, nitrogen and hydrogen
• Ozone concentrations are highly variable
• Anthropogenic emissions of CFCs have increased
  the decay rate of ozone, leading to the ozone
  hole
• CFCs originate from aerosol propellants,
  cushioning foams, cleaning materials, and
  refrigerative material
• This leads to an increase of UV radiation
• Skin cancer (40 million cases, 1 million deaths)
• Affects immune systems causes blindness
• Genetic damages
• Damage to marine plankton

8
Ozone Policy

• Vienna, 1985 Threat recognised agreement on
  information sharing
• Montreal, 1988 24 mainly OECD countries agree to
  phase out production and consumption of CFCs
• London, 1990 59 nations agree to accelerate and
  extend the Montreal Protocol
• Jan 2001 Consumption and production of CFCs is
  forbidden in the OECD and in most developing
  countries
• Main instrument Substition

9
Ozone Policy (2)

• Why this success? After all, the ozone hole is a
  stronger externality than acid rain, and a global
  deal was reached
• Strong public demand
• Availability of a cheap, technological fix
  (DuPont brokered the deal at Montreal)
• Developing countries bribed with money,
  technology, WTO access
• Illegal trade and waste remains a problem

10
Climate Change

• Fossil fuel combustion and cement production emit
  carbon dioxide
• Coal mining, agriculture and organic waste lead
  to methane emissions
• Agriculture, fossil fuel combustion and nylon
  production lead to nitrous oxide emissions
• A range of other activities lead to emissions of
  other greenhouse gases
• These emissions change the radiative balance of
  the atmosphere, and thus climate

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Climate Change (2)

• Climate change affects everything that depends on
  climate
• Sea level
• Unmanaged ecosystems
• Agriculture
• Water resources
• Energy consumption and production
• Human health
• Infrastructure
• Tourism
• And so on

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Climate Change (3)

• Some of the impacts are negative, others are
  positive
• In general, poorer, hotter countries are more
  vulnerable than richer, cooler countries
• A few degrees of warming would mean positive,
  monetary impacts but negative impacts for the
  majority of people
• More than a few degrees of warming would imply
  net negative impacts

13
Climate Change (4)

• Greenhouse gas emission reduction is complicated,
  as we are dealing with a wide range of activities
  of almost everybody
• However, energy and transport are the prime
  emittors
• Accelerating energy-saving and a gradual shift to
  carbon-free energy sources (solar, wind, hydro,
  nuclear, biomass) would be fairly cheap
• More ambitious, rapid emission reduction could be
  very costly

14
Climate Change Policy

• To date, climate policy is mostly talking
• The Rio 1992 convention set-up a framework treaty
• Kyoto 1997 filled in a lot of details but left
  many crucial elements undefined
• At the moment, the international negotiations are
  stuck, and national policies are waiting for the
  world
• Whats the difference with ozone hole and acid
  rain?

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Climate v Ozone, Acid

• More countries
• More sectors
• No cheap technological fix in sight
• Significant number of people remains unconvinced
• Issue is more complex, and scientific uncertainty
  and illiteracy are greater
• Sofar, international climate policy has confirmed
  economic theory ...