Chapter 20: Environmental Policy in Low-Income Countries Flashcards
What is the distribution of income in thrid-world countries?
Why is this n problem?
(1) Small political elite in most counties
(2) Distribution wealth very uneven
(3) Compounding Government Failures:
- Colonial history
- Small political-economic elites
- Undemocratic governmental structures
- Poorly trained and paid bureaucrats
How do government failures compound population distribution issues?
(3) Compounding Government Failures:
- Colonial history
- Small political-economic elites
- Undemocratic governmental structures
- Poorly trained and paid bureaucrats
Business influence in developing countries:
- Domestic firms
- Multinational businesses:
- Strong presence resource-based industires in less developed countries
- Invested heavily manufacturing in poor countries
- Best interest curry interest small elite
- Business influence on environmental policy goals is powerful: -ve or +ve
What can governments do to improve economic-environment policy?
- Eliminate Damaging Subsidies
- Strengthen property rights
- Regulate to internalize externalities where feasible
- Promote clean (sustainable) technology transfer
- Work for debt relief
- Insure gains from trade (resouce rents) reinvested locally
What is the issue with subsidies in low-income countries?
- Massive subsidies basic goods → enough to live not stive (inefficient)
- Remove subsidies: offer lump sum payment (compensation)
Ending Environmentally Damaging Subsidies
What are the environmental impacts of subsidies?
- Unsustainable declines natural capital
- Environmental damage
- Loss biodiversity
- Lost acccess subsistence for indigenous people
Examples Subsidies:
- Special tax breaks
- Privileged access to imported parts and materials
- Protection international competition
- Low-cost access natural resources
- Provision of subsidized or interest-free loans
- Investment in supportive infrastructure
Example of Subsidies
Examples Subsidies:
- Special tax breaks
- Privileged access to imported parts and materials
- Protection international competition
- Low-cost access natural resources
- Provision of subsidized or interest-free loans
- Investment in supportive infrastructure
Why are some government subsidies problematic?
- Infrastructure development and subsidization of raw materials processing industries → natural capital exploitation {Ok is resource rent reinvested]
- Financed through borrowing, enforcement and monitoring borrowing weak ⇒ bad collect taxes for money
- Result in debt problem ⇒ hand over natural resources (exploit)
Ex: Chinese Bridge-and-Road initiative
- Rainforest colonial projects
- Cattle ranching in forested area
- Interest in capturing value-added
- Value (later on) turn natural resource into consumable product But how?
- Therefore, offer subsidies to lower industries:
- Compounding problems but subsiding everything: removing subsidies hard
- Value (later on) turn natural resource into consumable product But how?
Why is eliminating subsidies challenging?
- Elimination requires some form compensation losers
- Compensation required on fairness grounds when subsidies benefit poor
What is the problem with borders?
Problems with borders: LACK clearly defined property rights (ex: open bar)
How is the “Open Access Problem” one major underlying source of environemntal degradation worldwide?
Open Access Problem: Major underlying source environmental degredation worldwide
When property rights not clearly defind, people little incentive negage in profit-based conservation
- Establishing hard: monitoring issue
- If legal system weak: property rights meaningless & judges and elites in ruling elites
- Protect own self interest not extend property rights
What are the government’s options?
In establishing and enforcing property rights …
-
Communal ownership
- Economists favorite example: CAMPFIRE program in Zim
- Challenge: requires well-functioning community level governance
- Must provide way to move into middle class
- Economists favorite example: CAMPFIRE program in Zim
-
State ownership
- Requires investment in monitoring and enforcement
- Danger: **if everyone owns something, no one is personally responsible and management structures may break down**
- Therefore, assign property rights people in power to begin with
- Requires investment in monitoring and enforcement
-
Private ownership
- Not free: require government resource and enforcement
- Hurts those had access under traditional law: can increase poversity → compensation required
- Directly reduce environmental damage by internalizing externalities
(3) Regulatory Approaches:
How does monitoring and enforcement compare between rich and poor countries?
-
Monitoring and enforcement is weaker in poor countries than rich onesIf property rights in place (IB vs. CAC):
- Could use CAC in LIC: state strong (Decide best society or for themselves)⇒ Incetive based best option for the poor:
- Enforcement issue
- Could use CAC in LIC: state strong (Decide best society or for themselves)⇒ Incetive based best option for the poor:
(3) Regulatory Approaches:
How can montoring and enforcement be improved?
-
Monitoring and enforcement is weaker in poor countries than rich onesIf property rights in place (IB vs. CAC):
- Could use CAC in LIC: state strong (Decide best society or for themselves)⇒ Incetive based best option for the poor:
- Enforcement issue
- Could use CAC in LIC: state strong (Decide best society or for themselves)⇒ Incetive based best option for the poor:
- Ensure enforceability
- Seek administrative simplicity
- Poor country start basics: not administrative power for complicated (tax) system
- (1) Builds confidence, (2) transparency ⇒ then make more complicated
- Indirect pollution tax (Gasoline, royalties on timber)
- Direct Taxes → Complicated* (imperfect information)
- Indirect easier and transparent
(4) Sustainable Technology: Development and Transfer
How can clean technology help developing countries?
Clean technology in developing countries:
- Increase employment
- Improve economic position of poor (especially women)
Sustainable tech: CT help reduce poverty
