Tag: global warming

Economic growth is normally seen as the most important long-term macroeconomic objective. Without economic growth, so it is argued, people will be unable to achieve rising living standards. But, according to Nicholas Stern, Professor of Economics and Government at the London School of Economics, former head of the Government Economic Service, former World Bank chief economist and author of the 2006 Stern Review on the Economics of Climate Change, countries will need to reconsider making growth the goal of their societies.

Speaking to students at the People’s University of Beijing, Lord Stern warned that unless substantial cuts were made in carbon emissions, the effects of global warming would have devastating effects on people’s lives. As the Stern report stated, “Climate change will affect the basic elements of life for people around the world – access to water, food production, health, and the environment. Hundreds of millions of people could suffer hunger, water shortages and coastal flooding as the world warms.” The implications are that countries must making cutting carbon emissions a priority and must reconsider their growth strategies. In his speech he said that “Beijing should shift the economy away from heavy industry, manufacturing for exports and other high-emission activities. Instead, it should focus more on domestic consumption, service industries and low-carbon technology.”

So should countries rethink their economic objectives? Is economic growth either a necessary or sufficient condition for an increase in human welfare? Read the articles and then consider the questions below.

World must help China shift to clean growth-Stern Reuters (11/9/09)
Stern Truths: Some Parts of China Have Western-Style Emissions Wall Street Journal (11/9/09)
Stern: Rich nations will have to forget about growth to stop climate change Guardian (11/9/09)
Stern words in Beijing Hot Topic (New Zealand) (13/9/09)

Questions

  1. Are the objectives of economic growth and tackling gobal warming necessarily incompatible?
  2. What would a low carbon growth strategy look like?
  3. What would you include in the opportunity costs of maintaining a high growth strategy compared with switching to a lower carbon, lower growth one?
  4. Consider whether economic growth is (a) a necessary condition; (b) a sufficient condition for a growth in the wellbeing of the human race.

The economic crisis is petty by comparison to the nature crunch. But they have the same cause.” This is how George Monbiot starts his article below. The comparison between the financial crisis may seem an unlikely one, but global warming and the resultant economic costs could also have a significant effect on the world economy.

This is what denial does Monbiot.com (14/10/08)
Green shoots of recovery Guardian (8/10/08)
Independence from the street up Guardian (23/9/08)

Questions

1. Define the terms (i) external cost (ii) private cost (iii) social costs.
2. Using diagrams as appropriate show the reasons why the market economy may fail to allocate scarce resources appropriately.
3. “If the global economy keeps growing at 3% a year (or 1700% a century) it too will hit the wall.”. Discuss possible policies that may help prevent this situation arising.

In its first report on the impact of bio-fuels, the United Nations (UN) has warned that such fuels may increase poverty in developing countries and have a wider environmental impact than has in the past been suggested. With oil prices at a record high and with climate change pressures, much of the developed world has adopted targets for bio-fuels, but environmentalists have warned that the rush to grow the raw materials for bio-fuels may be more damaging to the environment than the fossil fuels they will replace.

Global rush to energy crops threatens to bring food shortages and increase poverty, says UN Guardian (9/5/07)
UN warns on impacts of biofuels BBC News Online (9/5/07)
UN raises doubts on biofuels Guardian (9/5/07)


Questions
1. What are the external costs and external benefits resulting from the use of bio-fuels as opposed to fossil fuels?
2. Using diagrams as appropriate, show the impact of increased use of bio-fuels on the social equilibrium in the market for fuel.
3. Assess policies that European governments could put in place to ensure that the move towards increased use of bio-fuels has a positive environmental impact.