Chapter12 - Department of Agricultural and Resource...

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Department of Agricultural and Resource Economics EEP101/ECON 125 University of California, Berkeley David Zilberman ENVIRONMENTAL AND INTERNATIONAL ECONOMICS Environmental considerations expand the range of issues affecting economic relationships between nations. International considerations expand the economics of the environment. (1) a. International exchanges include transfer of species (biodiversity) and technologies. • The discovery of America introduced Europeans to tomatoes, potatoes, corn, etc. • Australia expanded the range of tree species available for forestry. b. There are gains from transfer of biodiversity but also losses. • Exotic species may dominate native species. c. Transfer of species may lead to diseases and destruction if unchecked. • Rabbits in Australia.
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-2- • Syphilis was brought to Europe from America. d. The challenge is to develop policy mechanisms to optimally transfer species and to protect against undesired transfers of bio matters. Some mechanisms include: • Quarantines • Ban on transfers of certain materials. e. Ownership of biological matters and compensation for the use of genetic materials are issues of policy concern. • How much should developing nations be paid for the use of their species in developing medicines, new crop varieties, and other products? • How should the royalties for genetic materials within nations be distributed? (2) a. International trade may lead to the concentration of waste material, lower environmental quality, and lower human health in poorer nations. b. Environmental quality may be viewed as consumption goods that are empirically found to have high-income elasticity. They will be consumed more intensively in richer countries.
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-3- c. Environmental quality characteristics and human health may be viewed as inputs in the production process. Poorer countries have relatively more of these inputs (relative to, say, capital); therefore, they should: • Specialize in pollution-intensive products. • Adopt technologies that are intensive in pollution. • Provide waste disposal services. • Have more unrestricted worker safety and human health regulations. d. "Value of life" is the cost saving of a "statistical" life as implied by safety regulations. "Value of life" in poorer countries is likely to be smaller than richer countries. e. As countries become richer, environmental and safety regulations become stricter. Production activities are less pollution intensive. f. Laws and safety standards in developing countries may cause loss of jobs in developed nations, which will lead to a call for "harmonization" of regulations.
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-4- g. Some waste accumulation activities in poorer nations may be objectionable because of their irreversible outcomes and impacts on future generation. h. Income distribution considerations also affect safety
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Chapter12 - Department of Agricultural and Resource...

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