Common Access Resources (CARs) Flashcards
What are common access resources (CARs)?
Resources that are not owned by anyone, do not have a price, and are available to anyone to use
What is the tragedy of commons?
The lack of ownership and non-excludability of CARs creates an incentive for potential users to exploit them to the fullest possible extent, to extract as much benefit as possible (and before others do the same, due to its rivalrous nature)
What is sustainability?
The use of natural resources at a rate that allows them to reproduce themselves, thus resulting in environmental preservation over time, so that future generation are able to meet their needs and wants
What is sustainable development?
Development that meets the needs of the present without compromising the needs of the future
What is the threat to sustainability?
Due to the nature of CARs, they may be overused, depleted (lower in quantity) and degraded (lower in quality).
Caused by the conflict between environmental and economic goals
How are the affluent a threat to sustainability?
Pollution of affluence arises mainly from production and high-income consumption patterns which rely on the use of fossil fuels. This results in the depletion of sources and the degradation of oceans, rivers, and other ecosystems due to increased CO2 levels.
How are the poor a threat to sustainability?
According to the Brundtland Report, poverty is the most important cause of environmental destruction due to the overexploitation by poor people of their scarce environmental resources
- deforestation, soil degradation as farmers cannot afford appropriate tools, soil erosion as they move to fragile lands for living space
What are the four responses to threats to sustainability?
- Legislation and Regulations
- Carbon taxes
- Cap and trade schemes
- Funding for clean technologies
How does legislation and regulations limit threats to sustainability?
- Restrictions on emissions from cars and factories
- Requirements for cars to use catalytic converters to reduce air pollution
- Banning use of harmful substances
- Issuing licenses or permits for activities like hunting
What are the advantages of legislation and regulations?
- Easy to implement
- Avoids technical difficulties of market-based solutions
- In some cases of regulation (such as banning), there is no choice to pollute given to firms
What are the disadvantages of legislation and regulations?
- Does not differentiate between high polluting and low polluting firms
- Hard to monitor
- Deciding on penalties is difficult due to imperfect knowledge on extent of pollution
- No incentive to switch to cleaner technologies (simply pay the penalty and continue polluting)
- May limit competition by discouraging new firms from entering market
What are the arguments for carbon taxes over cap and trade schemes?
- Carbon taxes make energy prices more predictable as they fix the prices
- cap and trade schemes rely on market, which can fluctuate - Carbon taxes are easier to design and implement
- for permits, one must decide on the number of permits which is a hard task - Carbon taxes do not offer opportunities for manipulation by governments and interested groups
- Do not require as much monitoring or enforcement
- easier to cheat and pollute more than what permit allows - Less likely to be used to restrict competition between firms
- for cap and trade schemes, firms can buy more and sell at higher price therbey restricting new firms from entering the market
What are the arguments for cap and trade schemes over carbon taxes?
- Carbon taxes cannot target a particular level of carbon reduction
- Carbon taxes are regressive
- Carbon taxes must be adjusted for inflation (administratively difficult)
Funding for clean technologies
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