Environmental Econ: Crash Course Economics #22

So, if economics is about choices and how we use our resources, econ probably has a lot to say about the environment, right? Right! In simple terms, pollution is just a market failure. The market is producing more pollution than society wants. This week, Adriene and Jacob focus on the environment, and how economics can be used to control and reduce pollution and emissions. You'll learn about supply and demand, incentives, and how government intervention influences the environment.

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[Mixi]

Here are some notes, hope they are helpful:
Economic solutions:
1. Identify the sources of the most air pollution (factories that burn fossil fuels for energy; industries that use oil and coal to produce things; vehicles with internal combustion engines)
2. Decrease the supply of these technologies and products or decrease the demand for them
There is a certain imbalance that comes with this. Some counties will harm the environment as there is no way to police every country, already established resources will be hard to demolish as people already got used to them and they are cheaper. That is until a new technology comes that is both effective and cheap. Or manipulating the markets with government subsidies, taxes, and regulations.

Pollution represents a market failure – a situation where markets fail to produce the amount the society wants.
Government interventions are advised. Another way to encourage people to pollute less is by providing price incentives (taxes, subsidies). Those incentives can encourage individuals to make choices that are better for the environment.
Permit market – Setting a limit how much firms can pollute and allowing those firms to buy and sell pollution permits (Cap and Trade)
Alternative energy sources usage is growing, but for the most part, they aren’t cheap enough yet, so the majority of our energy is likely to continue to come from non-renewable sources, at least for now.
Since there is no time, efficiency with the usage of fossils is advised, but still unsure. The rebound effect says the benefits of energy efficiency might be reduced as people change their behavior. Leading to more usage and more pollution.
There is still hope as there are constant ongoing discussions about this matter. Private companies and governments are also funding research into green technology. In the U.S. the American recovery and reinvestment act of 2009 allocated billions to fund renewable energy. China is also participating, being among the leading countries in renewable energy investments.
Companies, as well as consumers, need to be mindful to reach an effective solution.

[chillsahoy]

This is why I wasn't 100% sold on the 5p charge for supermarket plastic bags. They ARE a way to reduce our impact on the environment, but this policy is being used merely as a political strategy: one year after the legislation was effective, politicians can point at graphs showing a huge decline in the use of plastic bags, which is a good thing. What they might not show you is the tiny dent this has made on the country's environmental impact. Reducing the use of supermarket plastic bags is a good thing, but when you are a government, with the power to make policies that will have a very large positive impact, shifting the brunt of the burden to consumers seems like the safest and least effective course of action.

[edralone]

Environmental economics - how do we best deal with our natural resources?

I. what can the government do?
1. enforce specific rules outside the market (just limit how much firms can pollute)
2. influence the market through price incentives
a. add tax on products that cause pollution. (gasoline)
b. subsidize products that reduce pollution (electric cars, renewable energy)

1 and 2 example: permit market such as cap and trade which set limits on how much firms can pollute and allow them to buy and sell permits (money goes from heavy polluters to lighter polluters)

II. how can technology help?
-since our current technology doesn't provide cheaper renewable energy, we can maximize the use of non renewable energy (energy-efficient cars)
- hindrances:
rebound effect - efforts to increase energy efficiency creates more available energy that only gets spent into something MORE and MORE.

III. what actions are the world taking?
1. International treatys in which countries commit on reducing greenhouse gases emission. (UN negotiations)
2. funding "green" research into renewable energy.
3. changes can be brought by individual consumers, along with changes by the government and producers. (turn the lights off when not in use! and other small things).

[christopherround]

I just finished off a dual masters program in environmental policy and environmental science out of IU and I just wanted to say awesome job! This was my focus in grad school and you nailed it. The only thing I would have added was a discussion on discount rates. I now have something fun I can show my family when they asked what I did in grad school.

[perlaeyvars]

For anyone actually interested in this topic I recommend reading an article in ecological economics (2015) “In Markets We Trust? Setting the Boundaries of Market-Based Instruments in Ecosystem Services Governance” by Erik Gómez-Baggethum and Roldan Muradian

[jonathankardonski]

Hello Adriene and Jacob! I’ve been watching the entire course. Everything totally awesome! I own a permaculture farming business. I would love to hear your thoughts on this concept and the multiplier effect it could have:

In climate change there are two sides: pollution, and the degeneration of the biological systems that act as buffers, filters, and fertility regenerators.

Focus could be drawn to:
1. The potential of carbon sequestration through permaculture style grazing and no till farming as a means to lower CO2. (Adds valuable externalities like nutritious food and fertile soil and less disease)
2. Small local waste treatment for biological residues and add value through compost and/or insect farm (adds value through organic fertilizers and insects for animal feeds) mainly to prevent water pollution
3. If polluting company serves a social goal (i.e: fossil fuels for energy), maybe taxing only the company for all the externalities isnt the best choice. We could debate cases in which the expense is passed to the consumer in the form of taxes so the company doesnt need to raise prices for their goods, yet the externalities were accounted for.
4. Government organized transition plan with support and subsidies for farmers transitioning away from chemical conventional farming.

I really enjoy your course and am aching of doing thought bubbles too 🙂

[umzz]

This lines up perfectly as i'm starting my globalisation and sustainability class, cheering.

Thankyou.

[marvij]

CrashCourse is the best channel on youtube. How I learn a lot in less than 10 minutes amazes me. Vielen Dank

[SparshAgrawalK]

What's wrong with nuclear energy??? I think the best case scenario is to switch to nuclear short term, and have a long term plan to switch to renewable energy(solar, wind, hydro, wave, etc.)

[ChristianNeihart]

I would look into alternative ways of producing meat, since agriculture is one of the biggest culprits in regards to climate change. The fossil fuel industry needs to go to.

[nolanthiessen]

Renewables not cheap enough is a half truth. In countries such as Chile and India, solar out competes coal/natgas. Areas such as Texas see wind power far cheaper than fossil fuels. Even the German government just said a few days ago that renewables are now cheaper than fossil fuels. It's just a matter of internalizing the externalities to such a point where the *real* cost of fossil fuels is fully realized in the price.
As the price of renewables continues to drop and the price of fossil fuel regulations increase, more and more places around the world will see renewables become cheaper than fossil fuels. 2014/15 was the time when renewables started being cost effective in select markets. Soon, it will be all markets.

[jeronimonunes]

The best part of this videos was Hank dancing! LOL

[Chico]

Yay! Glad they partially covered environmental economics. Next step, Ecological Economics! Hopefully..

[natalienat]

Nice topic. On the side note, the animation of John, Craig, Stan and Hank on a vacation is pretty funny :)

[TheDarkwing]

Great contribution to Crash Course you guys! But on the subject of environmental economics and externalities, I was sort of hoping to hear a little about value engineering and planned obsolescence.

Also, I imagine it may be a little controversial to mention much about human rights violations as a tactic used by some large companies to exploit resources in developing nations and to discourage protesting by indigenous people. But those instances are very real and a major part of globalization and the growing economic inequalities you mention in some of the earlier episodes, which sadly do not often get enough media attention for most people to ever hear or even believe they are happening.

Crash Course isn't exactly the news though, and even though it is part of the modern world's economic challenge, it would be pretty hard for you guys to cover something like that without getting sucked into some pretty heavy ideological debate.

Either way, you're both doing a great job, and btw I dig the AC/DC belt buckles.

[jesyca]

Thank you, and looking forward for more economics classes...

[acey]

if Hank and John would sell their homes, I guess there would be less green' houses (gases)

[LittleDreamer]

We started exactly with this topic in school today, very helpful video!

[brycealley]

Top notch animations for this one. I particularly enjoy all the hula dancing and cartoony cameos from other CC personalities. Hula on, Hank Green.

[wheezetube]

omg Hank at 6:10 had me dead ! Amazing work 😂😂