Economic Implications

Part Six: “Property Rights and the Environment.”

Chapter 25 – Economic implications of global warming

Chapter 27 – Ethanol in gasoline

This section of the text is oriented towards the interplay of economics and the environment — and which policies, if any, should be implemented in order to insure the survival of the planet.The two chapters we focus on are very controversial and have wide-ranging implications.Something like 25-40% of US corn acreage is dedicated to ethanol, and something like $4-5 billion is spent on policies, production, and programs related to global warming.Once again we will eyewitness the tangible application of economics and the way that politics frequently intermixes, and often dominates, “simple” economics.You can spend an entire semester studying all the ins and outs of just these two closely related subjects.

PART I – background

(1) Read and summarize the important points in Chapters 25 and 27, and also submit to your semester journal.

(2) What is “rational ignorance?”Since this is an important reason so many controversial laws get put into place, can you think of any other examples in which it played a factor in creating a law or policy that everyone else (i.e. those that had nothing to do with its passage) then had to live with, but then questioned how or why it ever was enacted?It doesn’t necessarily have to be a national policy, it could be something “micro” like a dorm or college regulation, or a city ordinance, a store policy, etc.What you are looking for is some policy prescription at whatever level, in which you wonder how did it ever come into existence?

(3) As background it is important to understand the Energy Independence and Security Act of 2007.Do a search on google and determine what the goals and justification of the EISA were, and what the direct consequences were, both then and into the future.

(4) Look up the IPCC, which will frequently be referred to under both issues.What is the organization?Who sponsors it?Who are its members? What does it do?

PART II – Anthropogenic Global Warming (human-caused)

We are not going to directly investigate the economics of CO2 reduction.There are any number of web videos, books, and articles that go against the idea that human beings have caused GW, but the problem is that the belief at some point became “politically correct.”We are not going to try to amass the many facts that question its existence, but there’s also no sense in studying CO2-reduction policies if the underlying science doesn’t justify it.For this component we are going to stretch the boundaries a little bit and dig into some of the science, statistics, and politics surrounding the issue (If you are interested in some convincing anti-GW literature, stop by and see me).

(1)Briefly summarize the following article from The Economist: “Who Pressed the Pause Button,” March 6, 2014 (<100 words)

 

(2) Briefly summarize what Wikipedia has to say about “The Pause.” (<100 words)

 

(3) What is your reaction to the following, in which the head of the Sierra Club (a major environmental organization) is confronted with contrary evidence? (<100 words)

 

(4) The following article from Forbes is a critique of the original John Cook article that started the whole idea about the existence of a so-called “consensus” among scientists.What are the author’s reasons for doubting the “97%” statistic?

 

(5) Michael Crichton interview (debate) with PBS’s Charlie Rose – watch all 3 parts

 

To start you might want to look up the bio of Mr. Crichton; he’s a very accomplished individual as an author and director who spent a few years studying deeply the issue of GW, and came to the politically incorrect conclusion.Do you think he was convincing in defending his position against Mr. Rose?What were his strongest points?Were there any questions you spotted from Mr. Rose in which he dodged or didn’t make his case?

PART III – ethanol cost and benefit in gasoline

(1) Ethanol effects on engines and carburetors – From the following article find (and state) the direct quotes that reflect the point of view of mechanics that actually work with engines on the effects of ethanol on engine performance.

(2) On google type in “environmental costs of ethanol” and make a list of what you find with just a brief 1-2 sentence explanation of each.

(3) The following is a brief summary of the economic costs and benefits of ethanol from a non-ecological perspective.(a) What are the 3-4 strongest benefits, (b) What are the 3-4 greatest costs, (c) What are the biggest uncertainties associated with the whole issue of forcing ethanol usage in gasoline?For each question make a list and a 1-2 sentence explanation of each will suffice.

PART IV – extra credit (up to +2

(1) GW is a fascinating issue because there is so much involved – economics and politics, history (i.e. billions of years, ice ages, etc.), and science.For this question you don’t even need to write an essay, merely list the main points the presenter, a professor named Willie Soon makes, with maybe one sentence explanation of each.The more you list the greater the credit.It is extra because it goes beyond the realm of just economics.