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
(4) Sustainable Technology: Development and Transfer
Identify Sustainable technology:
- Tech judged sustainable only afted field testing
- May only be sustainable under certain conditions
(4) Sustainable Technology: Development and Transfer
Developing Sustainable Technology:
- Nongovernmental organiztaions (NGOs) help finance programs
- Users of tech must be closely involved in design
- Private sector and multinational corporations now play dominant role in diffusing new tech
Ex: Kenya forefront e-money transfer
- Why need to develop traditional banking system? Costs difficult cover
Can BYPASS tranditional systems: best place for CT
- Own path does not create problems → First World Countries help (and profit-incentive)
(5) Conservation and Sustainability Yield Development
How do development vs. economic struggle play out in poor countries?
- Development vs. environmental struggles play out poor countries
- Protecting natural resources requires addressing economic needs of poor - who depend and treathen - resourcesEx: Pay not cut down trees
- OR … forgive debt (pay keep resources where they are)
Public good …
- Incentive to free ride
- Fewer funds raised than society willing pay
- Private efforts inefficiently low on benefit-cost basis
Government intervene provide adequate quantity of public good
(5) Conservation and Sustainability Yield Development
Rainforst as a Public Good:
- Gene pool medication and agriculture
- Carbon sink
- Rainfall regulator
- Biodiversity hotspots
- Cultural diversity
- Existence value
Public good …
- Incentive to free ride
- Fewer funds raised than society willing pay
- Private efforts inefficiently low on benefit-cost basis
Government intervene provide adequate quantity of public good
(5) Conservation and Sustainability Yield Development
Sustainable Yield Resource Development
- Using available renewable natural capital in ecological sustainable way
- Harvests cannot exceed regenerative capacity of land or fishery
- Profitability sustained yield farming and ranching methods suitable for tropical forst soils
- Harvesting of wild products could generate higher income than clear-cutting or cattle-ranching
(5) Conservation and Sustainability Yield Development
Debt-For-Nature Swao: Preserve for Existence Value
- Relieves debt burden and investment in resource conservation
- Rich countries organizations pay off portion of loan
- Poor countries agree invest money in resource conservation program
Royalty program
(6) Trade and The Environment
WTO:
Enforcement organization for series of treaties that promotes global trade and investment
(6) Trade and The Environment
NAFTA:
Free trade agreement between Canada, Mexico, and US (1994 and renegotiated in 2017)
- Help increase standard of living → increase demand environmental protection
- Catch: political
(6) Trade and The Environment
Arguments for free trade:
Trade reduces poverty, transfers clean tech, promotes more open flow of ideas
Bottom Line on trade:To Reduce poverty, tade must increase percentage of resource rent invested productively in develping country
- (Protectionism) Tying environmental protection too trade agreements: restrictive (poor countries too poor to care) → get into agreement → increase living standard → want environmental protection on their own
(6) Trade and The Environment
Arguments against free trade:
- Increases, not reduce poverity
- Weak environmental enforcement in poor countries
- Environmental reguations in rich countries weakened as
- Businesses mobility increases
- Foreign gove issue trade based challenges to environmental laws
- Regulations face “race to bottom”
Bottom Line on trade:To Reduce poverty, tade must increase percentage of resource rent invested productively in develping country
- (Protectionism) Tying environmental protection too trade agreements: restrictive (poor countries too poor to care) → get into agreement → increase living standard → want environmental protection on their own
Bottom Line on trade:
Bottom Line on trade:To Reduce poverty, tade must increase percentage of resource rent invested productively in develping country
- (Protectionism) Tying environmental protection too trade agreements: restrictive (poor countries too poor to care) → get into agreement → increase living standard → want environmental protection on their own
