Week 3-4: Global Air pollution: Ozone Layer Depletion and Climate Change Flashcards
What is the prisoner’s dilemma?
What is a Nash Equilibrium?
Without cooperation, the outcome will be a Nash Equilibrium
- A situation when no player has anything to gain by changing his/her own strategy unilaterally.
- No incentive to change, unless other players change.
In the prisoner’s dilemma, the Nash equilibrium is to both confess. P1 will not deviate as the alternative is 7 years, instead of 5.
How does the ozone layer deplete?
Stock pollutants accumulate and modify basic atmospheric chemistry.
Unilateraly action is negligible, thus needs cooperation.
What are the 3 market failures of the ozone layer and climate change?
Public Goods:
- Ozone and climate change are all ‘global commons’ or public goods.
- Individuals cannot be prevented from benefiting from a good climate.
Negative Exteranlities:
- Production pollution and energy generation are the main activities that gnerate negative externalities to society.
Imperfect Information:
- Individuals do not fully understand the impact of the goods and services they consume (or sell).
- Assessing the ‘carbon footprint’ or ‘ozone impact’ of the G&S is difficult and cannot be easily done by buyers and sellers. (MISSING INFORMATION)
- Difficult to differentiate between low emission or low environmental impact G&S in the marketplace (CREDENCE GOODS)
What is the Ozone layer comprised of?
Comprised of 2 layers:
- Stratospheric Ozone (upper atmosphere)
- Naturally occurs, blocks UV light and radiation
- Tropospheric Ozone (lower atmosphere)
- Created by chemical reactions with pollutants
What causes Ozone Depletion?
Ozone is destroyed when it reacts with molecules containing nitrogen, hydrogen, chlorine, or bromine.
Main man maid contributor was:
- Chlorofluorocarbons (CFCs) and halons. Invented in the 1930s:
- Used in refrigerators, air-conditioners, aerosol propellants, packaging and insulation foams, etc.
How do CFC’s cause Ozone segregations?
CFCs are inert (non-toxic and non-flammable), however act as a catlyst for chemical reactions with the molecules that degrade the ozone.
CFC’s take 5-10 years to drift upwards, 50yrs to break down.
Ice crystals accelerate the reaction à more significant breakdown in Artic and Antarctica à Ozone hole
Seasonal, Ozone hole grows and contracts depending on the season.
What are the repercussions of ozone layer depletion?
4 impacts:
- Health: Cataracts and skin cancer
- Agricultural: Yields worsened
- Ecosystems impact: Phytoplankton are very sensitive to ultraviolet radiation, they are the foundation of oceanic life
- Materials: can accelerate deterioration.
What is the policy response to combat ozone layer depletion?
Montreal Protocole 1987:
- 24 signatories (50% of gases), to restrict production by 1998
- 5 amendments followed (London, Copenhagen, Vienna, Montreal and Beijing)
- Went to 196 countries, 96 substances covered.
Due to public good dynamic, there was need to support developing countries:
- 10 year longer timeframe than developed
- Developed countries helped with cost of phase-out and provided technical support.
Why was the cooperative agreement (Montreal Protocole 1987) successful?
- Strong scientific evidence
- Lower cost of eliminiting CFC than the damange (cancer research and treatment)
- Close substitutes for CFCs as propellants.
- USA and EU both dominate (concentrated area of focus).
What policies did countries set up to achieve the targets?
US, tradeable permits and tax.
Why did we need 2 policy instruments:
- Demand is inelastic: high willingness to pay at high prices
- Supply is fixed: supply is given by total amount of permits (lack of competition)
Higher prices make way for ODS producing firms to make a profit.
Ozone should return to normal around 2050-2075
What is climate change and how does it work?
Climate change operates through the accumulation of greenhouse gases in the atmosphere. These gases trap long-wavelength (infrared) radiation that would normally escape from the earth’s atmosphere into space.
The capture of this radiation means greater capture of heat and thus climate warming.
The policy response to climate change?
Market failures associated with climate change?
- Public good and negative externality.
Two main international efforts:
- 1992 The United Nations Framework Convention on Climate Change (UNFCCC)
- 1997 The Kyoto Protocol
What was the UNFCCC 1992?
United Nations Framework Convention on Climate Change
- Developed countries have accumulated the most greenhouse gases.
- Share from developing countries is low, but will grow to meet social and development needs.
US refused to make terms legally binding – so still voluntary.
What is the Kyoto Protocol?
Agreed to 5.2 % below the 1990s level.
Protocol was put into effect when:
- At least 55 nations of the world signed and ratified the treaty AND
- The emissions level of the nations must account for 55% of the 1990s emissions.
Developed countries and Eastern Europe (Annex 1 countries): Binding limits
Developing countries (Annex II countries): no binding limits in first period.
To adjust for the negative exterality of ‘cost of emissions reduction’, flexibility mechanisms were put in place:
- Emissions trading Scheme (ETS): allowed countries with surplus emission units to sell this to countries not reaching their targets
- Joint Implementaiton (JI): “bubble’ allowed Annex 1 countries to pay for emissions of another Annex 1 country. This would get credit for reduced emissions.
- Clean Development Mechanism (CDM): allws for limited trading opportunities between Annex 1 and 2 Countries.
Kyoto protocol measure emissions in ‘Assigned Amount Units (AAUs)
- Measure of C02 equibalent C02e
- Calculated using GWPI
- Each country receives AAUs equivalent to their cap.
Credits and offsets:
- Removal unit (RMU): Based on land use, land-use change and forestry (LULUCF) activities such as reforestation
- Emission Reduction Unit (ERU): generated by a joint implementation project.
- Certified Emission Reduction (CER): generated from a clean development mechanism project activity.
