Environmental Economics & climatic change Essay Example for Free

Environmental Economics climatic change Essay Many approaches to green house emissions are currently being examined in the United States. In fact members of the 110th Congress (2007-2008) are actually making legislations pertaining to global changes faster than has even been experienced before having made over 235 bills, resolutions and changes by July, 2008. One such proposal is the cap-and-trade system (Paltsev et al. 4). The cap-and-trade is a piece of legislation meant to identify the greenhouse-gas-emitting bodies it incorporates. It refers to those organizations which introduces caps on the emissions they are responsible for and allows trading in the emission allowances which arise therein (Obama Biden, New Energy for America). They basically stipulate a set of accounting periods allocating allowed emissions for all the periods (Paltsev et al. 4). Cap-and-Trade Legislation; SO2 Program The permit trading programs offer pollution permits to organizations which reduce their pollution discharge lower than the target benchmarks. They are then allowed to either trade them or keep them for use in future (Ludwig 1). Following the Clean Air Amendments of 1990 the U. S put in place the Acid Rain Program to gain a reduction in sulfur dioxide (SO2) and nitrogen oxide (NOx), the main contributors of acid rain (Ludwig 1). The second program was the Hot-spots and acid rain program which basically involves regulatory tiering; embracing more than one regulatory regime at one specific time with the intention of exercising some control on the way permits are made use of (Obama Biden, New Energy for America). The goal of the acid rain program is to reduce SO2 emissions by 50%; a task meant to be accomplished through two stages mandating all organizations to reduce their SO2 emissions (Ludwig 3). The Opt-in program established by the Congress according to section 410 of the Clean Air Act Amendments of the year 1990 was designed with the intention of drawing the SO2 sources with reduced marginal costs of compliance (Ludwig 3). It is important to note however that the permit trading programs are not effectively contributing towards reducing increased emissions. Indeed the acid rain program of the United States has had less and unlikely effects on pollution hot-spots (Ludwig 10). This is quite unfortunate given the main energy challenges facing the U. S, which are foreign oil dependence and global changes in the climate (Obama Biden, New Energy for America). The safeguard the acid rain program makes use of is one of the reasons permit net flows have such a low effect on reducing emission. Alternative Method of Pollution Control It is worth appreciating that carbon trading at the markets was a positive step be it at the global, European or national fronts (NCEP, Ending the Energy Stalemate: A Bipartisan Strategy to Meet America’s Energy Challenges). It was in deed a challenge not only to the government but also to the private sector (Obama Biden, New Energy for America). If the war against carbon emissions is to be worn, a global regulatory framework would be needed (Watson et al 1). This would call for British Government and the World Bank to embrace the same views. This means that the cap-and-trade legislations can no longer offer the best solution to the problem. What is needed is a different approach, an alternative way of reducing carbon emissions. In light of the climatic changes being experienced, carbon emissions should be reduced by all chances (Obama Biden, New Energy for America). This calls for a new trading strategy; an approach which is more inclusive likely to involve all ventures emitting carbon such as aircrafts and ships (Watson et al 1). In the private sector this would call for a wider long-term market approach, voluntary in nature working to achieve public and private interests. The Kyoto Protocol should be strengthened coupled with better implementation of the Clean Development Mechanism (CDM) (Watson et al 1). Indications of progress are beginning to be seen with incentives for reducing emissions, development of alternative technologies as well as investments attraction (Watson et al 2). There is also the need for better liaison with the UN system more so in helping poor countries with their emission problems (NCEP, Ending the Energy Stalemate: A Bipartisan Strategy to Meet America’s Energy Challenges). This therefore means that carbon taxation is definitely not an alternative solution the emission problems. There is need to invest in fuel-efficient machinery, support domestic energy supply, as well as diversifying the nations’ sources of energy (Obama Biden, New Energy for America). Organizations also need to commit themselves to the course of lowering their energy consumption (Watson et al 2). The Legislation I would Support As an undergraduate in ApEc 3611, I would support the second alternative because it more inclusive, realistic and possibly a better solution since it involves many stakeholders (Watson et al 2). What I imply here is that a new alternative to America’s and indeed the world’s energy problem is an idea whose time has come (NCEP, Ending the Energy Stalemate: A Bipartisan Strategy to Meet America’s Energy Challenges). Energy is a real challenge facing the world and for America, there is even greater need to address the issue because of foreign oil dependence (Obama Biden, New Energy for America). Therefore I support the new alternatives to reducing carbon emissions. The private sector needs to embrace a wider long-term market perspective but within the confines of both the public and the private interests (Watson et al 2). This new perspective calls for more research into the areas of innovative technology as well as new investments. Indeed one of the mid-to-long term proposals to the energy crisis in America is to make investments towards the secure energy future of the nation alongside creating more than 5 million jobs all with the intention of lowering foreign oil dependence (Obama Biden, New Energy for America). Such efforts will greatly reduce carbon emissions besides contributing towards the reduction of the country’s dependence on foreign oil (NCEP, Ending the Energy Stalemate: A Bipartisan Strategy to Meet America’s Energy Challenges). There is need to strengthen the Kyoto Protocol and the implementation of more stringent governance and accountability systems (Watson et al 2). The Emissions Trading System (ETS) needs to be reviewed (Hertel, Global Trade Analysis: Modeling and Applications). This is because for it to be successful, it needs to put caps on emissions. This will create both markets and prices for carbon emission permits (Watson et al 2). I therefore fully support these new alternatives since they offer a more proactive approach to the nation’s energy problems. Cost Benefit Analysis The lake in question is private property if the home owner has the property rights to it. This would mean that as a private good it can only be used by another party if it is paid for. It is the lake owner who would decide whether or not another party uses the lake. For this to happen, the total benefits accrued from the use of the lake will have to supersede the costs of using the same lake thus a Pareto improvement (Oka 18). The lake owner will have to carry out a cost-benefit analysis before he can allow fishing in the lake. This is an evaluation tool to determine if the use of scarce resources will generate efficiency (Fuguitt Wilcox 2). Efficiency is in relation to the lake will be the benefit of peace and quiet at $2,000 per season. It means the benefit of allowing Walleye Wally to use the lake will be $ 2,000. With $ 2,500 he can meet the $2,000 and secure the fishing deal meaning that there will be fishing in the lake. However, with only $1,200 per season, he cannot meet the cost of foregoing the peace and quiet thus there will be no fishing. Assume Walleye Wally had the property rights and the benefits of peace and quiet to the home owner remain unchanged at $2,000. With $2,500 there would be fishing in the lake. The lake owner cannot however pay Walleye Wally not to fish since the cost of paying Walleye would supersede the benefit of peace and quiet, hence there will be no Pareto improvement. If Walleye got $1,200 per season there cannot be fishing in the lake since the benefit of the fishing will be less than the cost and hence no Pareto improvement. This transaction cannot be termed as efficient since one party will suffer loss in the transaction. The principle that by which the concept of efficiency is applied is here is the cost benefit analysis (Oka 19). Conclusion There are factors that would hinder the cost-benefit analysis. For public goods, it is difficult to measure the efficiency concept and the Pareto improvement concept is lost. The consideration of potential value that would be attached to sustainability would make it difficult to make an accurate cost-benefit analysis (Oka 26). In conclusion, cost-benefit is an economic tool used for gauging the efficiency of a transaction in the market economy (Oka 17). With regards to CO2 emissions, there is need for a new direction which will require a more centralized regime; a continual and joint effort between the government, businesses and the people (Obama Biden, New Energy for America). Works Cited Fuguitt, Diana and Wilcox, Shanton. Cost-Benefit Analysis for Public Sector Decision Makers. Accessed 17 February 2009 from http://www. csus. edu/indiv/w/wassmerr/CBAOverview. pdf Hertel, Thomas W. Global Trade Analysis: Modeling and Applications. Cambridge University Press, Cambridge, MA: 1997. Ludwig, Lindsay C. The U. S Acid Rain Program and Its Effect on SO2 Emission Levels. Issues in Political Economy 13 (2004):1-11. Accessed on 17 February 2009 from http://org. elon. edu/ipe/Ludwig_Edited. pdf. NCEP [National Commission on Energy]. Ending the Energy Stalemate: A Bipartisan Strategy to Meet America’s Energy Challenges, Washington DC: 2004 Obama, Barack and Biden, Joe. New Energy for America, 2008. Accessed 17 February 2009 from http://www. barackobama. com/pdf/factsheet_energy_speech_080308. pdf Oka, Tosihiro. Effectiveness and Limitations of Cost-benefit Analysis in Policy Appraisal Government Auditing Review 10 (2003): 18- 26 Paltsev, Sergy, et al. Assessment of U. S Cap-and-Trade Proposals. Report number 146, 2007. Accessed 17 February 2009: 1-71 from http://web. mit. edu/globalchange/www/MITJPSPGC_Rpt146. pdf. Watson, Bob. , Grubb, Michael. , and Stuart, Marc. Dinne