E. Eide -- Day Burden of emissions at Eopt with constant level of activity and green tax

Transcription

1 E. Eide -- Day Burden of emissions at Eopt with constant level of activity and green tax Green tax rate (per unit of emission), level determined by MDC=MAC Tax payer (polluter): Area OFCH Injured (pollutee): Area EFC B MARGINAL COSTS D MAC MDC MDC=MAC H C Green tax rate O E F A Elow EOPT Ehigh EMISSIONS FIG. 3.6 Burden of emissions U/ELE/H12 day 2 rev3.ptt 1

2 4. Principles of environmental law (i) The sustainable development principle (ii) The integration principle (iii) The prevention principle (iv) The precautionary principle (v) The polluter pays principle (vi) The proximity principle (vii)(the victim pays principle) MD/ELE/H12 Day 4 rev1 2

3 4.1 The sustainable development principle Huge number of definitions and/or uses UN Rio Declaration, 1992 We should monitor the world such that future generations should have the opportunity to be at least as well off as we are Moderat use of oil, minerals,... Avoid deterioration of the environment (incl. climate) MD/ELE/H12 Day 4 3

4 4.1.1 Sustainablility and natural resources The availability of natural resources; neither a necessary nor a sufficient condition for sustainability (F&S, 9) Observations: some countries rich in natural resources do not do better than countries poor in resources Factors important for economic development: Capital Knowledge Technological improvements Such factors may substitute for natural resources MD/ELE/H12 Day 4 4

5 Limitium: Hypothetical example Global stock: 100 tons Current annual use: 1 ton Enough for 100 years at current use Assume: Efficiency increase in the use of limitium: 1 % per year. Use in year 1: 1 ton Remaining stock: 99 ton Enough for 100 more years Use in year 2: 0.99 ton Enough for 100 more years.. MD/ELE/H12 Day 4 5

6 4.1.3 Various views on sustainability Reasons for pessimisme: Limited resources Population growth Growth in production and consumption Resons for optimisme Techological improvements Resources do not disappear from earth, just expensive to recover Substitution of resources due to changes in relative prices Less use of limited resources MD/ELE/H12 Day 4 6

7 4.1.4 Sustainability and temperature Intergovernmental Panel on Climate Change Global temperature increases because of human activities that produce CO2, methan, Without restrictions on emissions, the life on earth as we know it may not be sustainable MD/ELE/H12 Day 4 7

8 4.2 The integration principle Politcal commitments Integrate environmental considerations into economic and other development (Stockholm Declaration, 1972; Rio Declaration, 1992; EU, Treaty of Maastrict, Art. 2) MD/ELE/H12 Day 4 8

9 4.3 The principles of prevention and precaution Prevention: Actions should be taken in order to prevent damage (before damage has occured) Precaution: Actions should be taken so that the risk of damage is avoided MD/ELE/H12 Day 4 9

10 4.4 The precaution principle Environmental policy should be based on the precaution principle EU Treaty 174 (2) National legislation UN Framework Convention on Climate Change, 9 May 1992: The parties should take precautionary measures to anticipate, prevent or minimise the causes of climate change and mitigate its adverse effects. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing such measures, taking into account that policies and measures to deal with climate change should be costeffective so as to ensure global benefits at the lowest possible cost. MD/ELE/H12 Day 4 10

11 4.5 The polluter pays principle Polluter should bear environmental costs. Environmental damages are (often) external effects of production and consumption (smoke, waste, tobacco, ) Objective: Internalisation of environmental costs. (Rio Declaration, Principle 16) Pigou (1920): Tax rate equal to the marginal damage MD/ELE/H12 Day 4 11

12 4.5.1 Coase (1960) Competing uses of the environment; Reciprocal nature of harm Irrelevant for efficiency who has the right: Right to pollute Right to clean water In the absence of transaction costs parties will agree on cost efficient measures. Allocation of rights is a question of distribution MD/ELE/H12 Day 4 12

13 4.5.2 PPP and liability The polluter pays principle corresponds to strict liability The victim pays principle corresponds to the negligence rule MD/ELE/H12 Day 4 13

14 4.6 The proximity principle Waste should be treated, and if possible eliminated, at the source. Recycled, burnt, landfills Waste should not be exported Why not? Economist: Minimize costs of treatment/disposal! Promote trade. Disadvantage: Corruption in receiving country Environmental protection can be used as an argument for protection MD/ELE/H12 Day 4 14

15 4.7 The need for economic analysis The principles do not provide for a balancing of benefits and costs. Lack of such analyses means waste of resources. Protection of the environment could be too costly require more resources than better environment is worth Protection of the environment could be too restricted stricter protection require less resources than the better environment is worth) MD/ELE/H12 Day 4 15

16 4.8 Cost-benefit analysis (CBA) Usually applied to evaluate a single (or a restricted number) of alternatives Application of the principle of Kaldor-Hicks efficiency All costs and benefits of a project or a regulation are summed up. The project is accepted if the sum is positive MD/ELE/H12 Day 4 16

17 COSTS TOTAL COSTS B A DAMAGE COSTS TC MIN ABATEMENT COSTS MARGINAL COSTS E OPT MDC EMISSIONS MDC=MAC MAC U/ELE/H12 E OPT X2 day 2 rev3.ptt X1 EMISSIONS 17