Thursday, September 27, 2007

A search for Cleaner Fuels: A Burden for the Rich to Bear

The Bush Administration opened the President's climate meeting this Thursday with hopes of discussing issues surrounding a global consensus on the need for cleaner sources of fuel. This comes closely following on the trail of the UN who has been underway with it's own climate meeting. There seems to be little difference between the two meetings with the big problem being that developing and industrialized nations seem to have little concern for environmental sustainability and global warming. Ultimately, countries that are in the position to be concerning themselves with global warming, don't want to have to bear the burden of the costs to fix it!

Too Little Too Late
The first question that must be asked is can the Bush Administration effectively make any headway in this battle before their time in office runs out? My response would be no. While the UN may continue to make headway on the issue, or will atleast be able to continue to develop answers with some sort of continuity in their process, the Bush party has effectively no time to get a campaign of this magnitude off the ground. This is something that should have been looked at long before now if the current administration wanted to have a significant impact on the policy decisions of the campaign. The beurocracy that already seems to have developed will take much longer to sift through than the one year the Bush Administration effectively has. Given the current dynamic within presidential candidates and their respective parties, the reality is that we will most likely see a much different approach to this issue with the next person in office. My opinion is that someone should have done a better job of uniting with the UN rather that forming some independent meeting and trying to do it on our own. This is especially true given our current global voice. America no longer runs the world! It's as simple as that. We operate as a global economy now so to try and launch a worldwide campaign all on our own would be wishful thinking at best.

The Economic Implications
Initially it seems to make sense that the whole world should share in a desire to find a cleaner source of fuels. After all, we're all going to reap the effects of not having cleaner fuels right? The supposed acid rain is going to burn my skin here just as much as it is in Argentina right? Right. Well then shouldn't we all have to pay to fix this problem? This is just not the case. But luckily, for those that tend to sway to the side of an efficiency based value judgement, it is a great answer.

The definition of efficiency is to maximize net social benefit. This is a highly subjective terminology since the definition of benefit and the places people put value are going to be extremely varied on a global scale. In many countries just having a meal and electricity is the greatest thing one could ever have. In this and other prosperous countries however, food and electricity is a given and quite frankly we've moved on to the more luxurious things in life like Lazy Boy recliners big screen TVs. Oh and most lately, we want enjoy those things without having to get cancer as a result of their production. It's sort of a conceptual heirarchy of the world's needs.

With that said, the definition of efficiency leads us right to the economic realities of whether or not we will actually see a global response to the necesity for cleaner fuels. In order to maximize net social benefit each country will choose to maximize whatever it puts the biggest value in and gets the biggest benefit from. For some this will be eliminating poverty by any means possible. For others this will be ensuring that we don't drown from polar ice caps melting. Whatever the allocation, net social benefit will be maximized provided some world power doesn't evolve and force everyone under on global clean fuel policy and then have a way to enforce it.

It's Ours
In class we used a model of efficiency where whoever had the means of controlling pollution was the one that did the controlling. The solution is very much the same on a global scale. Prosperous nations have both the incentive and the means to find cleaner sources of fuel while developing and industrialized nations have neither. Therefore, the burden is ours to bear. If the UN and President Bush and whoever else wants to see a solution to the dirty fuel problem, they are going to have to be the change they want to see.


1 comment:

Larry Eubanks said...

Your reference in the last paragraph to a model is not described in an accurate way. Our model assumed different sources of pollution had different marginal costs of controlling pollution. It was not a model about who "had the means of controlling." Since cost can always be thought of as opportunity cost, and since you are thinking about developed versus developing countries, you might speculate on where we are likely to find the lower marginal cost of control. Is it possible that developing countries would have lower opportunity costs for controlling carbon emissions?

I think you miss an opportunity to apply one of our models. If one country controls carbon emissions sufficiently to reduce global warming will the benefits enjoyed look like a public good with respect to other countries? If so, then what about the free rider problem and the question of international agreements with respect to reducing carbon emissions?