Talk by Phill Loosli – Part 1

The United States Environmental Movement

On the 2nd of October, 2009, the Pesta Tanglung event was on everyone’s mind. Everyone except for Greenpulse members who were treated to a talk on environmental economics and the environmental movement in the United States of America by Mr. Phill Loosli, the US embassy’s Environment, Science, Technology and Health officer.

The talk focused on the economic perspective of the environmental problem, which is to show that without government intervention, it is more logical from an economic perspective to pollute and destroy the environment.

Rival, non-rival, excludable, non-excludable

Rival and non-rival goods

A rival good is a good that deprives others from enjoying it after it has been used, such as catching a fish in a lake and eating it as food, where that fish can no longer be caught by other fishermen.

A non-rival good refers to the air the fishermen breath, whose use does not deprive the other fishermen from using it.

Excludable and non-excludable goods

An excludable good is one where it is possible to stop the consumption of the good by some barrier, whether legally, or financially. For example, the fish in the lake would become excludable if the state government decides to charge the fishermen for fishing in the lake.

Some goods are non-excludable, no matter what, like sunlight which cannot be taxed and whose rays are free for everyone.

Problems arise when an item is non-excludable, such as fish stocks which simultaneously belongs to no one, and everyone.

The Tragedy of the Commons

Using the fish stocks as an example, for a fisherman on the high seas, it is more logical for him to catch as much fish as possible. This increases his or her income although he or she may be overfishing the fish stocks. The problem is, all fishermen think this way as well. What happens is not surprisingly, a severe fall in fish stocks. A real example of this is that of tuna stocks.

The free rider problem

The free rider is a person or an entity that enjoys certain benefits without paying for them. The example pointed out by Loosli was the use of the Cuyahoga river in Ohio by the manufacturing industry as a waste dumping site. When the river literally caught fire and caused widespread and costly damage to the surrounding area, it was taxpayer dollars that helped to put out the fires and to subsequently rehabilitate the river. The manufacturing sector was not obligated to help fund the cleanup bill.

Externalities

There also exists factors outside of the control of the players in the environmental economic game. These are collectively known as externalities.

Externalities may be positive, such as an apiary (equipment for bee hives) which helps pollinate trees and other plants in the surrounding region; or negative, like haze from our neighbours in Indonesia.

Part 2 will discuss the environmental issues and some solutions.

References

http://dieoff.org/page95.htm (4th October 2009)

http://dotearth.blogs.nytimes.com/2008/11/26/the-tuna-tragedy-of-the-commons/ (retrieved 4th October 2009)

http://www.economyprofessor.com/economictheories/free-rider-problem.php (retrieved 4th October 2009)

http://en.wikipedia.org/wiki/Excludability (4th October 2009)

http://www.ohiohistorycentral.org/entry.php?rec=1642 (retrieved 4th October 2009)

http://wilcoxen.maxwell.insightworks.com/pages/130.html (retrieved 4th October 2009)