Showing posts with label externalities. Show all posts
Showing posts with label externalities. Show all posts

07 June 2010

Grokking Green IT - and why Open Source Helps

One of the pardoxes at the heart of computing is that for all its power to improve the world, in one respect it is doing the opposite, thanks to its apparently insatiable appetite for electricity. As we are becoming increasingly aware, most electricity produced today has serious negative consequences for the environment, and so the more we use and depend on computers for our daily lives, the more we damage our planet.

On Open Enterprise blog.

25 June 2008

The Tipping Point (For the Last Time)

Twenty years ago, James Hansen warned us about global warming, but few listened. With incredible patience, he has explained it all again - linking global warming, dependence on cheap oil, the refusal to factor in externalities to prices and the rest, in a dense web of trouble - in the hope that this time we will do something about it. If we don't, it's pretty clear to any rational, non-egoistic, individual that we are in big trouble - and that it will be even worse for our descendants.

16 April 2008

Not Economically Viable

Speaking as a mathematician, I have never understood why economics ignores its environmental effects, since this fundamental error in the model almost guarantees things like climate change, deforestation, overfishing and the rest. It seems I'm not the only one:

the mathematical theories used by mainstream economists are predicated on the following unscientific assumptions:

* The market system is a closed circular flow between production and consumption, with no inlets or outlets.
* Natural resources exist in a domain that is separate and distinct from a closed market system, and the economic value of these resources can be determined only by the dynamics that operate within this system.
* The costs of damage to the external natural environment by economic activities must be treated as costs that lie outside the closed market system or as costs that cannot be included in the pricing mechanisms that operate within the system.
* The external resources of nature are largely inexhaustible, and those that are not can be replaced by other resources or by technologies that minimize the use of the exhaustible resources or that rely on other resources.
* There are no biophysical limits to the growth of market systems.

If the environmental crisis did not exist, the fact that neoclassical economic theory provides a coherent basis for managing economic activities in market systems could be viewed as sufficient justification for its widespread applications. But because the crisis does exist, this theory can no longer be regarded as useful even in pragmatic or utilitarian terms because it fails to meet what must now be viewed as a fundamental requirement of any economic theory—the extent to which this theory allows economic activities to be coordinated in environmentally responsible ways on a worldwide scale. Because neoclassical economics does not even acknowledge the costs of environmental problems and the limits to economic growth, it constitutes one of the greatest barriers to combating climate change and other threats to the planet. It is imperative that economists devise new theories that will take all the realities of our global system into account.

Amen to that.

18 November 2007

Internalising Externalities

One of the problems with most everyday economics is that pollution tends to be regarded as an externality:


An externality occurs when a decision causes costs or benefits to third party stakeholders, often, although not necessarily, from the use of a public good. In other words, the participants in an economic transaction do not necessarily bear all of the costs or reap all of the benefits of the transaction. For example, manufacturing that causes air pollution imposes costs on others when making use of public air.

But externalities have a habit of coming home to roost:

China's rising energy demand isn't just leaving its mark on the country's heritage. Every 30 seconds, an infant with birth defects is born in China, according to Jiang Fan, deputy head of the country's National Population and Family Planning Commission. The rate of birth defects nationwide has soared 40 percent in the past five years, from 105 defects per 10,000 births in 2001 to nearly 146 in 2006. The problem now affects nearly 1 in 10 Chinese families, the Commission stated in a recent report .

Birth defect rates are highest in the northern province of Shanxi, an area that is also home to some of China's richest coal resources. "The incidence of birth defects is related to environmental pollution," An Huanxiao, director of Shanxi's provincial family planning agency, told Xinhua News. "The survey's statistics show that birth defects in Shanxi's eight large coal-mining regions are far above the national average."