Tag Archives: economics

Scaffolding substantive cooperation through transversal engagement in intersecting political-economic-environmental-scientific processes

Part of an abstract or synthesis prepared during the development of a research proposal on scaffolding, cooperation, and crises.

No longer possible to simply continue along previous lines: Scaffolding substantive cooperation through transversal engagement in intersecting political-economic-environmental-scientific processes

Let us note three aspects of the degradation of the resources and institutions (including forms of cooperation) on which livelihoods depend:

  • It is already happening in actual localities (and will be exacerbated under Climate Change);
  • it is being exacerbated by the imposition of political and economic adjustments (that is, imposed on people by governments constrained as much by finance capital as by the people who elected them);
  • it is, however, subject to countervailing initiatives.

These three aspects develop in relation to one another and can be thought of as intersecting political-economic, environmental, and scientific processes (with science standing in for knowledge-making across a range of fields).  In such intersecting processes, the resources—material, discursive, and informatic—available in any given locality are shaped by decisions made at a distance—including the decisions of researchers about what to inquire into and how to use the results.  Such translocal decisions are often made on the basis of abstractions of the economic and social dynamics that actual localities experience (separately and as an interacting social whole).  It is possible to continue along previous lines, in the sense that people, including researchers, can be passive or reactive in face of the degradation just outlined.  However, continuing along previous lines cannot be a simple orientation given the crises, current and expected, arising from and contributing to these developments and the depth, interconnectedness, and potential violence of these crises.

Let us adopt, instead, a proactive orientation, to work against the degradation of resources and institutions through engagements that are transversal in the following senses:

a) linking localities to wider decision-making and abstractions of socio-economic dynamics;

b) promoting cooperation i) across difference, including difference among fields of knowledge-making, and ii) between perspectives shaped by local solidarities and by moving across or spanning localities; and

c) contributing to theory about i) economic and ethical traditions about cooperation; and ii) intersecting political-economic-environmental-scientific processes.

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A simple, equitable scheme to reduce CO2 emissions and allow for uncertainties about effects

This scheme is designed to bring the best science into the policy making process around impacts of climate change through market means based on the standard mechanisms of insurance.  It builds on a previously posted scheme to create incentives for reduction in CO2 emissions while minimizing the harm to domestic production and employment.  As was the case with the earlier scheme, this is presented not in the expectation that its virtues alone will lead to its adoption, but to elicit responses from economists, policy makers, and others in order either to improve the proposal as is or to expose ways that the actual world departs from the ideals of the market.

Underlying principles

  1. In a genuine market there are no hidden subsidies.  All costs of pollution and uncertainty about the costs are reflected in the price of the product so that buyers can factor this into their choices of what and whether to buy.
  2. Insurance policies allow people, corporations, and governments to put a present cost on uncertain future costs.  (Insurance can ensure that future generations do not subsidize the current generation by bearing the costs of current pollution.)
  3. Policy makers may rely on different assessments of the costs and the uncertainties about future costs, but, if there is no displacement of costs to others (in different places or times — see #1 & 2), then they have an incentive to bring the best science into the policy making process — or else lose their jobs or offices to others who make more reliable assessments.

Part A.  Simple, equitable reduction of CO2 emissions

It is possible to achieve both the reduction of CO2 emissions while minimizing the harm to domestic production and employment because this part of the scheme eliminates the incentive for importing from high emitting countries or countries that are not party to the treaty. It factors in past contributions so as not to penalize current high emitters while favoring past high emitters. It allows national politics to determine the size of the carbon tax in light of the economic incentives and disincentives in the scheme. Finally, the scheme is simple and the factors are transparent.

1. Calculate an Emission Load Per Capita for each country i (ELPCi) =
Sum of (carbon fuels use over the last y years * discount factor for older emissions) / current population

  • Update ELPCi’s every x years, and make those figures available to all.
  • The discount factor might be 1/2^[(current year-year t)/positiveconstant], that is, a “half-life” for a country’s responsibility for past emissions = the positiveconstant.

2. x, y, and discount factor are agreed to by all countries signing on to the CO2 emissions reduction treaty.

  • For example, x might be 5, y might be 100, and the positiveconstant in the discount factor might be 30.

3. Each country i in the treaty imposes its own carbon tax constant, ki, and taxes each unit of carbon fuel sold at ki * ELPCi. Ditto for each unit of biomass turned to CO2 through clearing, decay, or fires. Biomass accumulation, e.g., through reforestation, is rewarded by a negative tax (but if these end up turned back into CO2, they are positively taxed when that happens).

  • These ki figures are available to all.
  • The revenue is used to support energy conservation, alternative energy production, and impact insurance (see part B).
  • Biomass burned or decayed on non-private lands is still taxed, in that case by transferring funds from general revenue to the funds to support energy conservation and alternative energy production.

4. Each country in the treaty imposes duties (or provides an import subsidy) in its own currency on goods from country j equal to (ki-kj) * ELPCi per unit of carbon fuel used in the production and transport of the goods.

  • The subsidy reduces the cost in country i of goods from country j when ki < kj. This subsidy is paid out of carbon tax revenue.  If the subsidy is not paid, then country j imposes additional import duties on goods from country i and uses these to subsidize costs of exports to country i.
  • For countries j not party to the treaty kj is taken as equal to the lowest of the the values among the treaty signing countries.
  • kj is converted to the currency of country i using the exchange rate at the date of arrival of the import.

Notes

a. If country i sets its ki too low, goods it exports will have import duties imposed on them. Such countries will not have tax revenue to support energy conservation and alternative energy production so their ELPCs will stay high.

b. Equally importantly, the differences in ki’s and ELPC’s will be visible to all, so countries can be shamed into action as the effects of CO2-induced climate change become apparent.

c. Foreign owners of lands and fuel-using production are subject to the within-country taxes, but there are no offsets of their home country’s carbon usage. Markets for cross-national investments may continue as usual, subject to the usual uncertainties about exchange rates and, in this case, about changes that might be made in ki values by future governments.

d. This part of the scheme does not inhibit population growth; that has to happen by some other means.

e. This part of the scheme does not provide support for adaptation to or mitigation of the effects of CO2-induced climate change; that has to happen by some other means.  For example, a separate treaty could impose a levy on the carbon tax revenue to support adaptation and mitigation. After all, the effects of climate change on countries will not be proportional to their ELPCi.

f. This part of the scheme may be duplicated in treaties that address other greenhouse, such as methane, and possible linked to them via equivalencies.

g. This part of the scheme does not prevent a “race to the bottom,” where in every country sets a ki too low to prevent CO2 increases that lead to destructive climate change. At the same time, it does not harm countries that set a high ki. Which way things go depends on political pressure within countries based on a global responsibility or national interest for countries affected directly or indirectly by climate change and on the insurance part of the scheme, to follow.

Part B. Insurance-policy-science connection

1.  Each entity (household, corporation, state) takes out insurance to cover the costs of climatic events, whether or not those events are linked to CO2 and other emissions.

  • Insurers will provide lower premiums to entities that have taken measures to reduce the costs of such events.

2. If the insurance taken out does not cover the costs, a larger entity might bail them out but only on the proviso that they take out more insurance for the future and that the bail out is paid back over time (i.e., no hidden subsidies).

  • Insurance companies will anticipate such bail outs and increase the costs of the insurance to the larger entity (just like auto insurance includes an amount for accidents caused by uninsured drivers).

3. Insurance companies will have an incentive to base their assessment of any entity’s risk on the best science available.  Similarly, entities paying insurance will have an incentive to take preventive measures (and to pressure entities that they may have to bail out to do likewise) so as to be rewarded with lower rates.

4. Insurance companies investing the premiums in enterprises conducted by entities will factor in the full costs of production (including insurance [which will rise as the country’s population to be insured grows] and duties or subsidies that follow from the country’s carbon tax level).

5. If an entity cannot pay its premiums or payback for a bail out, then a larger entity can take over its obligations, set its policies, and allow for migration of people and production to less vulnerable areas.

Notes

a. Insurance companies buffer risks in ways that have been subject to speculation and manipulation. Within-nation and international policies would be needed to address this possibility (e.g., non-profit insurance authority).

b. Part B checks the race to the bottom that is possible under Part A because any country that sets a high carbon tax constant will have funds to pay for adequate insurance and to take preventive measures that end up lowering their insurance rates.

Gender, Race, and the Complexities of Science and Technology: A bibliography

In a 2011 graduate course on “Gender, Race, and the Complexities of Science and Technology,” students were asked to add an annotated reference or resource (=person, organization…) to the evolving googledocs bibliography each week.  (Annotations were to convey the article’s key points as well as its connection to the student’s own inquiries and interests.)  The result is as follows: Continue reading

A modified three E’s for sustainable development: Economy, Equitable governance, Engaged populace

Ten years ago the Three E’s were promoted for sustainable development: environment, economics, equity.  I applauded the equity goal, but I wondered what its logical connection was with sustainabilty.  What follows was my take, as prepared for an education for sustainability initiative in 2003 (which proved not, alas, to be sustainable).

The vision of sustainable economic and social development expressed in the 1987 United Nations’ Brundtland Commission report, Our Common Future — development that “meets the needs of present generations without compromising the ability of future generations to meet their own needs.”

In this spirit, we envision three interrelated strands of sustainability:

  • a sustainable Economy, ensuring that members of future generations have equivalent — or enhanced — capacity for living, being healthy, making a livelihood, gaining environmental services, and harnessing natural resources.
  • Just and Equitable governance — decision-making procedures and institutions that do not permit one group’s access to resources to be ensured at the expense of others.

(Equity is linked with sustainability because, if we are concerned not to degrade the conditions for people in future generations, it makes sense to be concerned with improving the conditions of other people with degraded conditions in the present. Movement towards a sustainable, equitable society impels us to resist any growth of the gap among the capacities of different groups.)

  •  an Engaged populace, one in which people’s commitment to sustainability and equity motivates them:
    • to appreciate and monitor the state of the environment, social structure, human health;
    • to understand linked social and environmental processes;
    • to transform practices that makes those processes unsustainable and inequitable; and
    • to cross boundaries and collaborate with others in the pursuit of understanding and transformation.

A simple, equitable scheme to reduce CO2 emissions

This scheme is designed to create incentives for reduction in CO2 emissions while minimizing the harm to domestic production and employment. Both can be achieved because the scheme eliminates the incentive for importing from high emitting countries or countries that are not party to the treaty. It factors in past contributions so as not to penalize current high emitters while favoring past high emitters. It allows national politics to determine the size of the carbon tax in light of the economic incentives and disincentives in the scheme. Finally, the scheme is simple and the factors are transparent.

This scheme is presented not in the expectation that it will be adopted, but, because it is simple and fair (especially, it does not forget past contributions to CO2 emissions), it can be used to challenge proponents of schemes that are far more complicated and invite gaming the system (including economists’ favored emission trading systems).

1. Calculate an Emission Load Per Capita for each country i (ELPCi) =
Sum of (carbon fuels use over the last y years * discount factor for older emissions) / current population

  • Update ELPCi’s every x years, and make those figures available to all.
  • The discount factor might be 1/2^[(current year-year t)/positiveconstant], that is, a “half-life” for a country’s responsibility for past emissions = the positiveconstant.

2. x, y, and discount factor are agreed to by all countries signing on to the CO2 emissions reduction treaty.

  • For example, x might be 5, y might be 100, and the positiveconstant in the discount factor might be 30.

3. Each country i in the treaty imposes its own carbon tax constant, ki, and taxes each unit of carbon fuel sold at ki * ELPCi. Ditto for each unit of biomass turned to CO2 through clearing, decay, or fires. Biomass accumulation, e.g., through reforestation, is rewarded by a negative tax (but if these end up turned back into CO2, they are positively taxed when that happens).

  • These ki figures are available to all.
  • The revenue is used to support energy conservation and alternative energy production.
  • Biomass burned or decayed on non-private lands is still taxed, in that case by transferring funds from general revenue to the funds to support energy conservation and alternative energy production.

4. Each country in the treaty imposes duties (or provides an import subsidy) in its own currency on goods from country j equal to (ki-kj) * ELPCi per unit of carbon fuel used in the production and transport of the goods. (The subsidy reduces the cost in country i of goods from country j when ki < kj. This subsidy is paid out of carbon tax revenue.) For countries j not party to the treaty kj is taken as equal to the lowest of the the values among the treaty signing countries.

  • kj is converted to the currency of country i using the exchange rate at the date of arrival of the import.

Notes

a. If country i sets its ki too low, goods it exports will have import duties imposed on them. Such countries won’t have tax revenue to support energy conservation and alternative energy production so its ELPC will stay high.

b. Equally importantly, the differences in ki’s and ELPC’s will be visible to all, so countries can be shamed into action as the effects of CO2-induced climate change become apparent.

c. Foreign owners of lands and fuel-using production are subject to the within-country taxes, but there are no offsets of their home country’s carbon usage. Markets for cross-national investments may continue as usual, subject to the usual uncertainties about exchange rates and, in this case, about changes that might be made in ki values by future governments.

d. This scheme does not promote population control; that has to happen by some other means.

e. This scheme does not provide support for adaptation to or mitigation of the effects of CO2-induced climate change; that has to happen by some other means. For example, a separate treaty could “tax” the carbon tax revenue to support this. After all, the effects of climate change on countries will not be proportional to their ELPCi.

f. This scheme may be duplicated in treaties that address other greenhouse, such as methane, and possible linked to them via equivalencies.

g. This scheme does not prevent a “race to the bottom,” where in every country sets a ki too low to prevent CO2 increases that lead to destructive climate change. At the same time, it does not harm countries that set a high ki. Which way things go depends on political pressure within countries based on a global responsibility and/or national interest for countries affected directly or indirectly by climate change.

Extracted from http://ptaylor.wikispaces.umb.edu/GlobalEmissions, 13 March 2010 version.