SoSe16 Int. Environmental Economics and Int. Political Issues

1. non-rival -> under-provision of Public Goods
2. non-exclusion -> Tragedy of Commons/Allmende: overuse
3. Externalities

• each player gets an equal share but cooperators have to additionally bear the costs of their contributions
• free-ride problem
  -> leads to rational/dominating solution "no investments"
  -> leads to a deadlock in a state of mutual defection

Solution: public goods should not be allocated through the market merchanism, in orde to prevent a misallocation of ressources
 

"When doing what's good for u isn't good for u." - Hardin 1968

• Private optimum:
  • Average Revenue = Marginal Private Cost
  • 2€(48-2A production function) = 8 private costs => A=22
• Social optimum:
  • Marginal Revenue = Marginal Private Cost
  • Profit: Pi= 2€*A*(48-2A)-8A
  • Pi'= 88-8A = 0 => A**=11

1. Regulating the use of the resource
2. Creating and allocating property rights to the resource

• enviroment as public good: 1. non-rivalry and 2. non-excludability
  -> market failure: free-riding -> under-provision
• enviroment as common good: -> overuse

Governmental intervention is required.

• closed environmental system -> we have neg. externalities
• Y= F(K,L) -> Y=F(K,L,E)
• rise of waste, which is discharged into the natural environment

1. Primary energy sources: occur in the nature, mostly not directly useful -> convesion into
2. Secondary energy sources / End-energy: are transported to the "consumers"
3. Useful-energy: heat, hot water, light, sound
4. Energy services: warm rooms, hot water, lighting rooms

flow-resources vs. stock-resources

• difference lies in whether the level of current use affects future availability
• RE-Problems:
  • high costs
    • acceptance prob
    • installation and grid costs
  • volatility
    • storage
    • pump-storage-hydro-powerstation