green ecomomics
DESCRIPTION
Environmental concerns in National IncomeTRANSCRIPT
PROF. M.K.GHADOLIYADIRECTOR (ACADEMIC)
V.M.OPEN UNIVERSITY, KOTA
GREEN ECONOMICS
Structure of the economy Conventional Economics
Necessities: water, food, energy, housing, Index of sustainable waste management economic welfare
Land tax
Distribution, trade, tool manufacture
Administration and Public services
Financial services Central point
Money Gross Domestic Product
IntrodictionIntrodiction
Green economics Includes the eco-logical and environmental impact in addition to the
economical impact of a transaction
Includes externalities ignored by conventional economics Basic Axioms: It is impossible to expand forever into a finite space. It is impossible to take forever from a finite resource. Everything on the surface of the Earth is interconnected. Conventional growth is delusional Money
consumer firm
Consumption Product Production External cost or Benefit External cost
or Benefit3rd PartyInvoluntary costs free Benefits
Green Economics
Resources
Resource action/work Wealth
Finite Resources and Renewable Resources.
Green Economics
Internalizing costs Resource tax: Cost of using finite resources, and cost
towards development of renewable sources of energy The polluter pays principle: a tax built into the cost
of a product or processes having impact on environment and human health
Producer responsibility: Cost of research to find out the effect of a process or a product have and cost of neutralizing these effects
Positive inducements: Tax breaks etc. Tradable credits: A form of rationing. Use your
credits or put it in the market to trade
Green Economics
Work Enlisted amongst top in the list of
activities that bring happiness
Good work can be stimulated in absence of money
Use credit instead of money
Green Economics
In effect Cap-and-trade system – Green house gas (GHG) emission reduction (baseline and credit) If exceed the cap Pay ‘carbon tax’ Purchase carbon credits through emission trading schemes Invest in carbon project – Gets funding because of the resulting reduction in the GHGs. Resulting emissions reductions may become Certified Emissions Reductions (CERs), which can be traded in the future Offset its excess emission by emission reduction through carbon project
Green Economics
Emission trading: Major systems Kyoto Protocol – 1995 international treaty, effective 2005 United States – Clean air act (1990), Regional greenhouse
gas initiative (NY state), Chicago climate exchange European Union – EU ETS Largest of such schemes created along with Kyoto protocol. Caps CO2 productions from large installations Covers half of the EU’s CO2 emissions Australia – Australian carbon trading scheme Green tags (REC) – Positive incentive for renewable energy
provider
Kyoto Protocol
Kyoto Protocol
Kyoto protocol Aimed at reduction of GHGs in view of international climate change Assigns mandatory emission limitations to the signatory nations. Developed (Annex I) countries: Required to reduce their GHG
emission compared to that in 1990 Developing (Annex II) countries: Not required to reduce their
emissions but participate in CDM Reduce collective GHG emissions by 5.2% compared to the year 1990
(which is 29% less compared to the expected emission levels in 2010 in
absence of the protocol)
Kyoto ProtocolClean Development Mechanism (CDM) Allows Annex I countries to invest in projects
reducing emissions in developing countries as an alternative to more expensive emission reductions in their own countries.
Joint implementation (JI) Allows collaboration with other Annex I countries
Green Economics
Carbon emission trading: Tit-bits In 2005, 374 million metric tonnes of carbon
dioxide equivalent (tCO2e) were exchanged through projects in 2005 240% increase relative to 2004
Centre for carbon trading London financial market Emission trading an important market based
solution to address climate change problem Collective initiative by NGO’s, companies and
government – economical growth while preserving environment
India and China Indian companies have earned $500 million from carbon-creditsales, in last two years (Ernst & Young). I CERs : India - 43%, China -17% (of the total issued by CDMexecutive board) Projects : India – 259, China -101 Expected average annual income : India -15%, China - 44%
All is not green Tricky implementation
May be cheaper to corrupt entities distribution licenses than to purchase licenses legally
Issuance of surplus of credits Difficult administration
Actual effect on the environment is dubious Market instability Taxes are predictable
Few notables Walmart’s massive initiative Reduce energy consumption of existing stores by 20% and other’s by 30% in 7 years Simple solutions to reduce energy for heating, refrigeration and lighting
Sets an example for other enterprises
Brazil Every gas station is required to carry ethanol (made fromagricultural products), 85% flexible-fuel cars
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