Global Environmental Market by bqg10354

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									Global Environmental Problems
                             Introduction

• The world’s population shares the use of
  global resources: troposphere, stratosphere,
  EEZ --> “Global Common”
• Common proporty, open access resources
  --> at risk of being overused, in excess of
  their “ecological carrying capacity”.
    Global Environmental Problems

•   Greenhouse effect (Global Warming)
•   Ozone Layer Depletion
•   Antartica
•   Biodiversity
•   Acid Rain
•   others
  Sources of Environmental Problem

• Market Failure, eg. Externalities, public
  goods.
• Policy Failure: Distortion; and
• Global Appropriation Failure
      Global Warming: The Science

Incoming solar radiation:                    + 340 W m -2
Reflected from clouds, earth’s surface etc   - 100 W m -2
Net incoming radiation absorbed by earth     + 240 W m -2
Outgoing radiation:                          - 420 W m -2
Greenhouse effect:                           + 180 W m -2
Net outgoing (thermal) radiation:            - 240 W m -2
Global warming: Natural?

                Without it
Global warming: Natural?

                 With it
                 Why is it a problem?

• The atmospheric trace gases (Greenhouse
  Gases) have been increasing --> reduce the
  ability of the radiation from the earth to
  travel to space --> “adding to warming
  effect”
Green house gasses:
       Atmospheric carbon dioxide (CO2) concentrations (1750 to
       present)

                                     370
                                     360
                                     350
          parts per million volume




                                     340          Mauna Loa (1958-present)
                                     330          Siple Station (1750-)
                                     320
                                     310
                                     300
                                     290
                                     280
                                     270
                                       1750   1800              1850                 1900                 1950                  2000
Data Source: C.D. Keeling and T.P. Whorf, Atmospheric CO2 Concentrations (ppmv) derived from in situ air samples collected at Mauna Loa
Observatory, Hawaii, Scripps Institute of Oceanography, August 1998. A. Neftel et al, Historical CO2 Record from the Siple Station Ice
Core, Physics Institute, University of Bern, Switzerland, September 1994. See http://cdiac.esd.ornl.gov/trends/co2/contents.htm
       Atmospheric methane (CH4) concentrations


                                    1800
                                    1700
                                    1600
         parts per million volume




                                    1500           Law Dome (1841-1978)
                                    1400           Cape Meares (1979-1991)
                                    1300
                                    1200
                                    1100
                                    1000
                                     900
                                     800
                                       1840           1890                             1940                             1990
Data Source: D.M. Etheridge et al. Concentrations of CH4 from the Law Dome (East Side, "DE08" Site) Ice Core(a), Commonwealth
Scientific and Industrial Research Organisation, Aspendale, Victoria, Australia. September 1994. Available:
http://cdiac.esd.ornl.gov/ftp/trends/methane/lawdome.259. M.A.K. Khalil, R.A. Rasmussen, and F. Moraes. "Atmospheric methane at Cape
Meares: Analysis of a high resolution data base and its environmental implications." Journal of Geophysical Research 98:14,753-14,770.
1993. Available: http://cdiac.esd.ornl.gov/ftp/db1007/cmeares.mon
Anthropogenic Cause of Global Warming
Anthropogenic Cause of Global Warming:
                    Industrial Pollution
Anthropogenic Cause of Global Warming:
                Catastrophe (Gulf War)
Sources
of GHGs
   The Effects of Global Warming

• Rise in regional temperature
• Rise in sea level
• Frequent and severe events
Rise in temperature
        Rise in Global temperature

Researchs suggested:
• Rise of 0.30C a decade, 10C 2025, 30C 2100
  (?)
• 18,000 yrs age (Ice Age) --> 40C colder
  than today.
• Mini Ice Age (Europe) 1400 ~ 1800 0.50C
  colder than today.
                       Rise in Sea Level
• Sea level rise because of:
• Ocean thermal expansion
• melting mid- and high-latitude small
  glaciers and ice sheets
• Melting the Greenland and Antarctic ice
  sheetes
• Disintegrating the West Antartic floating ice
  sheets
                       Rise in Sea Level

• Rise upto 1.5M in 2050
• 3 billion people at risk
The polar ice cap is melting
            The Impact on developing
                           countries
• DC --> more dependent on natural resources <--
  sensitif to climate changes
• Agriculture in DC based on low-lying deltaic land
  fed by rich silt from river system --> more prone
  to flooding ant saltwater intrusion
• Agriculture in DC rely on rainfall
• Many Small DC --> islands countries
• Poor people of DC --> hard to adapt
                            What to Do?

• Do nothing
• Anticipatory prevention
• Adaptation
                            How much will the Kyoto Protocol reduce
                                        Business-as-usual emissions?
                            8                        Kyoto Protocol scenario                           8.0
                                                                                                       7.6
   Billion tons of carbon




                            6                                       6.4
                                5.8

                            4


                            2


                            0
                            1990      1995                     2000                       2005       2010

Data Sources: United States Department of Energy, Energy Information Administration, International
Energy Outlook, 1998 and 1999.
                                 Greenhouse gas emission
                         14                    scenarios
                         12                           Stabilization Targets
Annual Emissions (GtC)




                         10

                         8

                         6

                         4                     450 ppmv     550     650     750

                         2

                         0
                          1950   2000   2050   2100       2150    2200    2250
          Cumulative carbon emissions, 1950-1996
                     China                                 15,715
               Germany                               11,651
                    Japan                      8,504
     United Kingdom                          7,415
                     India                 4,235
                  Canada                   4,054
          South Africa                   2,331
                  Mexico                 2,118
               Australia                 2,080
                     Brazil             1,557
            Korea, Rep.                1,361
              Indonesia                966
        United States                                                                                      50,795

                              0            10,000           20,000              30,000   40,000   50,000     60,000
                                                                     Million tons of carbon

Data Source: Marland et al, 1999. Carbon Dioxide Information Analysis Center.
                    Per capita emissions of carbon from
           Australia
                                industrial sources, 1996
                                               4.63
Russian Federation                                                         2.91
          Germany                                                          2.87
   United Kingdom                                                    2.59
              Japan                                                 2.54
        Korea, Rep.                                                 2.46
            Ukraine                                          2.10
      South Africa                                       1.88
             Mexico                           1.02
               China                        0.76
               Brazil                0.46
         Indonesia                0.33
               India              0.29
     United States                                                                         5.37

                        0               1                2             3           4   5      6
                                                             Thousand tons of carbon
 Data Source: Marland et al, 1999. Carbon Dioxide Information Analysis Center.
                                    Percentage Change
                Australia                   8
        Kyoto   Bulgaria
                Canada
                                            -8
                                            -6
     Protocol   Croatia
                Czech Republic
                                            -5
                                            -8
                Estonia                     -8
   Target: By   European Union (15)         -8
                Hungary                     -6
2012 emission   Iceland                     10
                Japan                       -6
     of GHGs    Latvia                      -8
                Liechtenstein               -8
   reduced by   Lithuania
                Monaco
                                            -8
                                            -8
         5.2%   New Zealand
                Norway
                                            0
                                            1
                Poland                      -6
                Romania                     -8
                Russian Federation          0
                Slovakia                    -8
                Slovenia                    -8
                Switzerland                 -8
                Ukraine                     0
                United States               -7
Cost and Benefit of Combating
             Global Warming
Cost and Benefit of Combating
             Global Warming
 Instruments for achieving global
                 warming targets

• Command and control
• Pollution taxes
• Tradable permits
                        Market Based
                         Incentives
                             Cost of Kyoto

•   Without trade: $346 billion
•   Double Bouble trade (EU & others): $234
•   Trade in Annex I countries: $161
•   Global trade: $75
•   Potential gain from carbon trade: 346 – 75
           DICE model of Nordhaus

• DICE: Dynamic Integrated Model of
  Climate and the Economy
• Maximize Present Value of Percapita Utility
  (Social Welfare Function) Subject to
  constraints : standard dynamic optimization
  problem
Ozone Layer Depletion
                    Biodiversity Loss

Concept of Total Economic Value (TEV)
TEV = UV + OV + XV
UV = Actual “Use Value”
OV = Option Value
XV = Existence Value

								
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