Sunday, November 23, 2008

Blogging opportunity #1

As we approach the end of the term, among other things I'm considering how everyone is grasping the big picture. You, of course, are considering your grades (among other things).

What follows is the first of a few open questions that will allow us both an opportunity to address these concerns. Mutually beneficial trade via a compatible set of incentives if you will...

Speaking of which, question #1:

Under what circumstances are the individual considerations of self-interest and the resulting social outcomes compatible with true environmental sustainability?

Feel free to provide real, hypothetical or historic examples or a general description.


Dr. Peter Schuhmann said...

A week and not one attempt! :(
I guess there's no reason for more opportunities. This one wasn't that difficult, was it?

steve burke said...

I would like to preface this post by saying I like the blog and being exposed to information I would not come across on my own, but it is hard to find time for it with so much other work that has due dates attached. I'm sure more people would participate if there was a minimum number required to be posted per week or month or something. That said, any time that there is or would be a governmental tax break or subsidy substantial enough that individuals and society gained from the same action while promoting true environmental sustainability then the proposed scenario would become fulfilled. An example of this is that if you would buy solar panels to put on your home and you receive state and federal tax credits so that the price is essentially cut into a quarter of what it would be otherwise and the payback period becomes less than two years I would consider that a compatible situation for both parties. The individual pays less on monthly utilities, frees up space on the grid demand, can potentially make money by selling back energy to the utility company, lowers the price of energy for other uses due to less demand, and benefits the environment from obtaining energy through a renewable source. This is just one example of what could create this mutually compatible situation but I am sure there are many more out there.

Drew Moxon said...

Hypothetically, the the marginal social cost would have to be equal to the marginal private benefit for the outcome to be environmentally sustainable. This makes a few assumptions. First, that the social cost takes sustainability into account (the value put on a resource by society might not make its use sustainable). Second, the statement does not make any mention of efficiency. Although the marginal private benefit is equal to the marginal social cost, the marginal social benefit could be greater. In this case there would be a positive externality which would need to be subsidized for efficiency.

Whitney Knapp said...

First off, is anything in today's society truly environmentally sustainable? Solar panels use minerals that must be extracted to create them. Wind power can kill birds, create noises that have unknown consequences on animals well being. The list goes on. Even the "environmentally friendly" solutions to gasoline, power, etc. have some environmental impact. While this is to a lesser degree, it is still damaging the environment.

With that being said, the answer would be that the marginal benefit to the individual would have to be greater than or equal to the marginal social cost. The marginal social cost would have to take into account all the possible environmental damages to make the practice sustainable.

Drew Moxon said...

The examples you give do not really conflict with sustainability. Sustainability is meeting the current generation's needs while not compromising the ability of future generations to meet their needs. Unless a species is at the x-min that we talked about in class, killing a few birds will not compromise sustainability. In both cases of wind power and solar power, it's a matter of costs versus benefits. It is unlikely that an alternative energy exists that does not have *some* environmental impact. So long as the benefits (marginal social benefits) weigh out, it will be sustainable.

mandy isaac said...

Thanks for giving us an opportunity for make up! I have been slacking since.....September 10th apparently. Woops.

From an economic stand point, in order for people to act in a way that will help to sustain the environment, the marginal cost of that action must equal their marginal benefit. This makes me think of the discussion of trash disposal in class. Less trash would help the environment (less harmful emissions from combining food waste with other types of waste, less space used for land fills, less use of newly extracted resources to save it for future generations, etc) but in order for people to reclycle more and throw away less, their marginal cost has to be greater than zero. Specifically, it has to be equal to the marginal benefit of throwing trash away. If that is how prices were charged, people's self interest would be to recycle more and throw away less and therefore help the increase environmental sustainability.

Hypothetically, if everyone was equally concerned with the same environmental problems there would be true sustainability. For example, if everyone thought that seals were worth way more money sitting on ice and looking cute and cuddly, no one would start poching them. That's because the amount of money they received from killing the animal would not be worth as much to them as saving it would be. The seal population would be far from danger if EVERYONE had the same value for live, happy seals. It would remove the tragedy of the commons because people would stop killing them all together. Obviously this is just a hypothetical scenario as people's self-interests are typically very diverse from person to person.