Environmental Econ: Crash Course Economics #22

CrashCourse
27 Jan 201608:23
EducationalLearning
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TLDRThis economics video examines environmental economics and how to balance prosperity and growth with protecting natural resources. It focuses on carbon emissions as a key pollutant driving climate change. Proposed solutions include global cooperation to enforce environmental regulations, decreasing demand for fossil fuels by increasing costs or finding cheaper alternatives like solar and wind, and addressing the rebound effect where efficiency gains are offset by increased consumption. It notes that government intervention through taxes, subsidies, and caps can help address market failures, and that countries and companies are investing more in renewables, but real progress requires commitment from industries, governments, and individuals.

Takeaways
  • 😀 Pollution is an inevitable byproduct of human existence, but we should still aim to reduce it
  • 🌿 Greenhouse gases like CO2 are causing climate change by blanketing the Earth
  • 🚗 Transportation and energy production are major sources of air pollution
  • 💡 Simple economic solutions: decrease supply of dirty tech/fuels or decrease demand
  • 🤝 Implementation requires global cooperation, which has had mixed results historically
  • 💰 Governments can manipulate markets to incentivize pollution reduction
  • 🔋 Renewable energy is growing, but still a small fraction of total consumption
  • 🚗 Fuel efficiency gains could be offset by increased driving (rebound effect)
  • 🌎 Most countries now recognize the climate change problem
  • 👩‍👩‍👧‍👧 Cooperation between governments, industries and individuals is needed
Q & A

  • What are some ways that governments can encourage people to pollute less?

    -Governments can encourage less pollution by adding taxes to purchases that cause pollution, like gasoline, or providing subsidies for cleaner options, like electric cars. They can also create permit markets to limit emissions from companies.

  • What is the rebound effect in economics?

    -The rebound effect refers to how the benefits of increased energy efficiency can be offset by changes in consumer behavior. For example, buying a more fuel efficient car may lead to driving more. This can reduce the expected gains from energy saving technology.

  • What are some international efforts to address climate change?

    -There are international treaties like the Kyoto Protocol that commit countries to reducing emissions. The UN is working on a new climate agreement for 2015. Countries like China are also investing in renewable energy.

  • How can economics help address environmental problems?

    -Economics provides tools to analyze incentives and figure out the most effective policies. It considers how consumers and producers will respond to different regulations and market changes.

  • What causes carbon dioxide emissions?

    -The main sources of carbon dioxide emissions are burning fossil fuels like coal, oil, and natural gas. This happens in electricity production, industrial processes, and vehicles with combustion engines.

  • What share of energy currently comes from renewable sources?

    -As of 2014, around 10% of energy consumed globally came from renewable sources. This includes solar, wind, hydroelectric, geothermal, and other renewable sources.

  • What are some ways to decrease the supply and demand for fossil fuels?

    -Supply could be decreased by limiting extraction and production. Demand could be decreased by using taxes or permit markets to make fossil fuels more expensive, or subsidizing the development of cheaper alternative energy sources.

  • What market failure contributes to pollution?

    -Pollution represents a negative externality, which is a market failure. The full costs of pollution are not incorporated into market prices, leading to overproduction of goods that cause pollution.

  • What is the Tragedy of the Commons?

    -The Tragedy of the Commons refers to how commonly owned resources tend to be overused. With the global atmosphere, countries have little incentive to limit pollution since no one owns the air.

  • What are some critiques of solutions to reduce fossil fuel use?

    -Some argue the rebound effect can offset efficiency gains. Also, governments picking which new energy tech to invest in may not choose the most cost effective options. Simply waiting for technologies to develop can be slow.

Outlines
00:00
🌍 Introduction to Environmental Economics

Adriene Hill and Jacob Clifford introduce the concept of environmental economics in this episode of Crash Course Economics, emphasizing the importance of balancing prosperity and growth with the need to protect natural resources. They discuss how economics can contribute to understanding and solving environmental issues, focusing specifically on carbon dioxide emissions and their role in climate change. The segment outlines the basic economic approach to addressing pollution, including identifying sources and reducing supply or demand, while also highlighting the complexities involved in implementing such policies. The discussion then moves to government intervention and various strategies to encourage less pollution, such as setting pollution limits, providing price incentives, and supporting the development of alternative energy sources. Despite the current reliance on fossil fuels, there's a push towards renewable energy, with predictions for increased consumption from renewable sources by 2040.

05:03
💡 Energy Efficiency and Consumer Behavior

This section delves into the concept of energy efficiency and the potential counterproductive consequences known as the rebound effect. Using the example of Hank, who buys a fuel-efficient car to save on gas and reduce pollution, the narrative explains how energy savings can lead to increased consumption and emissions due to changed behavior and market responses. Despite these challenges, the segment emphasizes the importance of continuing to invest in energy-saving technologies while considering consumer behavior. It concludes on an optimistic note, mentioning global efforts to address greenhouse gas emissions through international treaties, investments in green technology, and the collective responsibility of industries, governments, and individuals to enact change. The role of environmental economists in shaping policies that account for human behavior and market dynamics is also highlighted.

Mindmap
Keywords
💡Pollution
Pollution refers to harmful substances released into the environment as a byproduct of human activity. The video focuses specifically on carbon dioxide emissions as a major contributor to pollution and climate change. Pollution represents a negative externality or market failure, where the full costs are not accounted for.
💡Externalities
Externalities refer to costs or benefits that affect third parties outside of the original transaction. Pollution is a negative externality that imposes costs on society that producers and consumers do not pay. This leads to overproduction and overconsumption relative to the social optimum.
💡Climate change
Climate change in the video refers to rising average global temperatures caused by increased greenhouse gas emissions like carbon dioxide. This is identified as a major environmental threat that requires policy changes to address.
💡Market failure
A market failure is a situation where markets fail to efficiently allocate resources or produce desired outcomes for society. Pollution and climate change are examples of market failures requiring government intervention.
💡Government intervention
Government intervention refers to policies like taxes, subsidies, regulations etc. that aim to alter market outcomes. The video argues intervention is justified and essential to address the market failure of pollution.
💡Carbon emissions
Carbon emissions, specifically carbon dioxide emissions, are a major focus of the video as a source of pollution and driver of climate change that needs to be reduced.
💡Renewable energy
Renewable energy sources like solar, wind and hydro energy are identified as alternatives to polluting fossil fuels. But adoption has been slow due to high costs.
💡Rebound effect
The rebound effect refers to how expected gains from energy efficiency can be offset by changes in consumer behavior, like increased driving or consumption. This illustrates the complexity of environmental policy.
💡Tragedy of the Commons
The tragedy of the commons refers to the problem of overusing a common resource when property rights are unclear. This applies to the atmosphere and countries' lack of incentive to unilaterally cut emissions.
💡Negative externalities
Negative externalities are costs imposed on third parties outside of a transaction, such as pollution. They represent a market failure requiring government intervention to account for these external costs.
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Transcripts

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