Comment on the following statement, “It is unnecessary and counterproductive for multilateral institutions to encourage and/or force developing countries to enact policies aimed at protecting the environment.” You should base your answer on the theoretical and empirical evidence on the Kuznets curve. You may also include your own views on this topic, but you should clearly draw a distinction between your opinion and what can be said scientifically.
This statement could mean a few different things. Either that even with proper policies in place, in developing countries the implementation of these policies are weak and usually don’t happen and are not enforced. Or that the Kuznets theory is valid and after a point the economy will take care of itself without setting policies.
The Kuznets curve shows the relationship between income per capita and inequality. This is concave function showing an upside U-shaped slope. There is a trade-off between income per capita and inequality until there is a constant return to scale. With increasing sales to return the inequality increases as the country develops and increases income per capita. When decreasing to scale is in effect the inequality decreases with respect to income per capita. This shows the impact each has on each other in a theoretical approach. The Kuznets curve provides evidence that for developing countries until they reach a constant return to scale between inequality and income per capita. The environment will suffer until that point is reached. These developing countries lack the required money, legislating and policies in order to maintain the environment correctly. Once the country is developed there are able to have increased returns to scale between the income per capita and inequality. This then leads to the maintaining the environment as well as inspiring sustainability for it. Once the increased returns to scale (IRS) is reached. This is the issue since the developing countries are not experiencing IRS.
The Kuznets curve states “the early stages of economic growth degradation and pollution increase, but beyond some level of income per capita the trend reverses, so that at high-income levels economic growth leads to environmental improvement.” (Troy,2003). This statement suggests eventually once a developed country has reached a certain point after growing, the economy by itself will reduce pollution and other factors that harm the environment without the need of policies because of technology and the standard of living correlates with less environmental damage.
My opinion that it is that if we wish to continue to live, as well as our children’s children and so on, we must protect our environment and not let it go to waste. It is unrealistic to rely on underdeveloped countries to become developed before their environment is considered. The amount of time it may take a before country becomes developed may result in completely stripping of their resources without proper policies to protect their environment. In a capitalists eyes when looking at a country that suffers huge amounts of debt, that have large amounts of resources in their environment available, may consider the statement above, but is not the solution. In terms of the human population to continue to live in the long term, protecting the environment is more than necessary. It is very difficult for developing countries to afford the necessary regulations and policy to ensure the environment is maintained. This is why the statement has a bit of ugly truth in it in my opinion since they do lack the funding. I also feel they should maintain the environment as difficult for them as it may be.
http://isecoeco.org/pdf/stern.pdf
Department of Economics, Rensselaer Polytechnic Institute, Troy, NY 12180, USA June 2003
Question 3 [15]:
In order to answer the questions below you will need to look at “Flushing the Future? Examining Urban Water Use in Canada” by Oliver M. Brandes with Keith Ferguson. POLIS Project on Ecological Economics. University of Victoria, Victoria, BC. http://www.polisproject.org/PDFs/report1_full.pdf (We have cited the images directly from this article) *(Brandes & Ferguson, 1972, p. 1-66)
What are the different ways of pricing water for residential consumers?
Two different ways of pricing water: flat vs. volume-based rates
“Flat Rates:
Consumers are charged a fixed amount in each billing period, regardless of the volume of water used. Many municipalities choose this option because it is perceived to be simpler for both customers and administration. Municipalities determine flat rate charges through estimates of expected consumption and the cost of providing the service. A flat rate can also be charged on an ‘assessed’ basis using property values or property taxes as a proxy. Flat rate pricing structures provide little incentive to reduce water use by individual customers. Instead, municipalities may try to control water demands through legal and administrative measures such as lawn watering restrictions, often with limited success (Environment Canada 2001).” (Brandes & Ferguson, 1972, p. 25)
Simply put this a set rate that does not vary regardless of water usage.
“Volume-Based Rates
As its name implies, the consumer’s water bill varies with the amount of water used. Various rate structures exist, ranging from a
constant charge (individual unit prices remain constant regardless of the amount used), declining block rates (individual unit prices decrease in cost as more units
are consumed) and increasing block rates (individual unit prices increase as more units are consumed). All these options require water meters be installed to measure consumption and all have different impacts on patterns of consumption.” (Brandes & Ferguson, 1972, p. 25)
This is a rate that varies upon the customers usage of water for each month.
Compare residential water consumption by pricing method for Saskatchewan, Nova Scotia, Ontario, and Canada as a whole. Which pricing method results in the lowest consumption levels? Explain your findings.
It can be seen that places in Canada that use a Volume based rate cost method for water, correlates with lower residential use of water (L) per day. Places with metering use the volume based rate cost method for water, and as you can see below on the graph displays a lower usage of water compared to places that don't use metering. Metering inspires lower usage of water by creating a cost related to each individual household’s usage. This is much more effective and efficient for preserving quantity of water. With a flat fee water would be misused more often and wasted as a result. Metering is very effective for helping sustain water, which is a very valuable and essential element in every human’s life. Water must be drank each day. Allowing water to be over used is not a very positive option for human kind. As the graph below provides clear evidence that metering lowers water usage.
100%.
(Brandes & Ferguson, 1972, p. 35)
Are there factors other than the price of water that might affect
residential water consumption?
Location plays the biggest role in water consumption, example: Watering your lawn in Las Vegas compared to Peterborough. The standard of living; toilets, showers, sinks in developed countries consume a vast amount of the water usage, unlike in underdeveloped countries wouldn't have water in their toilets and may just use a bucket of water to bath and clean themselves. Based on speculation, If the price of booze went up significantly so much that it wasn't affordable to the poor, I’m sure a huge increase in residential water consumption would be seen.
Arid environment’s would place a higher important on water usage. Since in these areas rain fall and water quantity is lower than average. “Many other factors likely contribute to the differences in use, such as local climate, availability of supply, specific prices and pricing structures, governance and decision-making structures, social attitudes, and regional conservation initiatives.” (Brandes & Ferguson, 1972, p. 46). These are also valid factors that help influence water usage.
Describe demand-side management for water.
“Demand-side management (DSM) is an alternative approach to increasing supply infrastructure. It involves decreasing the demand for water through a mix of education, technology, pricing reform, regulation and recycling. In those North American cities where significant DSM measures have been implemented, it has often shown considerable success in reducing urban water use” (Brandes & Ferguson, 1972, p. 2). A different approach that helps reduce water usage.
“By reducing the amount of water withdrawn from the environment, DSM holds the potential to reduce pressures on freshwater ecosystems, to avoid scarcities from becoming more widespread, and to generate cost savings by delaying or eliminating the need for costly construction associated with increasing supply. DSM also addresses non-monetary social concerns for water conservation, such as uncertainties about future needs, preserving options for future development, and sustainable development of water resources” (Brandes & Ferguson, 1972, p. 2). DSM helps lower the overall extraction of water. In turn helping this resource become more sustainable, the less we use today the more the future has access too.
“In many regions, DSM can address existing water stresses and an appropriate DSM regime may also help to ensure a sustainable water management regime. In looking to the future, as part of a broader “soft path” approach to water management, it is timely to assess just what might be the full potential for DSM and what are the barriers to implementing it more widely” (Brandes & Ferguson, 1972, p. 2).
“Demand-Side Management (DSM) is a key tool for reducing current levels of water use. Some DSM measures are being used in Canada but, along with the need for a broader debate about the merits of a “soft path” approach, DSM still awaits more general recognition as a viable alternative to traditional efforts to increase/expand supply. An appropriate DSM regime can, at the very least, mitigate the need for spending on additional expensive supply infrastructures such as reservoirs, treatment plants, and groundwater pumping stations. Within the DSM framework, such capital-intensive structures to increase supply should only be developed after less costly attempts to lower demand have been exhausted. More broadly, DSM can reduce current high levels of water use, reduce ecological damage, and help create an ethic of conservation rather than limitless consumption” (Brandes & Ferguson, 1972, p. 49).
Describe how changing the pricing structure of water to a water conserving price structure is an effective means of reducing water demand.
As stated in d) *(refer to d) for support) DSM can help reduce water usage. This is very key tool to preserving the most important resource in the world.
“Water conserving price structures, such as increasing rates with higher use, marginal cost pricing, full-cost recovery polices, higher peak hour rates, summer use surcharges, and sewer charges, can also act as motivators for rationing use and reducing waste” (Brandes & Ferguson, 1972, p. 41). Increasing costs for higher usage is a good way to eliminate customers abusing usage. Setting hours that determine rates helps influences when consumers choose to use the resource.
“Such pricing structures are effective because they more accurately convey to water users the true value or cost of the resource that they are using. Canadians currently pay less for water than citizens of most industrialized nations and an inverse correlation exists between the price of water and water use (see Figure 5.8). Many believe that reforming pricing structures is an especially effective option to help realign water use in Canada” (Brandes & Ferguson, 1972, p. 41).
“In general, water conservation programs focus aggressively on each customer sector can expect to see the largest savings, with overall demand reductions averaging about 20 percent after the first five years of the program. Such savings reflect the amount of waste in a system, the resources committed to water efficiency, and the effectiveness of the program’s design and management” (Brandes & Ferguson, 1972, p. 36).
By changing the previous cost method for water usage, creates public awareness that water usage is being measured. Using a flat fee would create misuse of water that individual’s will now have to pay for. This would help change some people’s bad habits like leaving the tap on, etc.
Vickers, A. 1993. “Municipal Water Conservation: Designing a Program to Meet Your System’s Needs”. In D Shrubsole and D Tate (Eds.). Every Drop Counts Cambridge: Canadian Water Resources Association, p.93.
What other supplementary structural and operational strategies would assist in managing water demand?
-Improving water transportation efficiency, lots of water is lost in leakage.
-Improving consumer water conservation by having more effective showerheads, toilets, faucets, dishwashers.
-Improving communities by avoiding building water wasting facilities.
-Companies like Breweries whom consume a lot of water, figure more efficient ways of using or recycling the water they use.
- Leak detection
- water recycling
“Many other factors likely contribute to the differences in use, such as local climate, availability of supply, specific prices and pricing structures, governance and decision-making structures, social attitudes, and regional conservation initiatives.” (Brandes & Ferguson, 1972, p. 46).
You could create incentive for lower water usage by applying some of the factors above that help influence consumers to use less.