Environmental Econ: Crash Course Economics #22

Environmental Econ: Crash Course Economics #22

Adriene: Welcome to Crash Course Economics.
I’m Adriene Hill Jacob: And I’m Jacob Clifford. Economics
is about choices, and how we use our scarce resources. It’s not just about producing
and consuming, it can also be about conserving. Adriene: Maybe counterintuitively, economics
has a lot to add to discussions of how we can balance our desire for prosperity and
growth, with the need to protect our natural resources. Today we’re going to look at environmental
economics and think about how economics can help us keep our planet livable. [Theme Music] Pollution is going to happen, it’s a by-product
of human existence and there is no way that we can get rid of it all. In fact, one of the ways
we know about earliest the societies is by looking at their trash heap, something archaeologists
call middens, because it sounds better than “dumps.” But the fact that humans produce all kinds
of waste doesn’t mean that we have to embrace islands of trash floating in the oceans, a
layer of smog over industrial cities, and toxic chemicals in our rivers. For sake of
simplicity though, we’re going to focus on one type of pollution: carbon dioxide emissions.
They’re one of the primary greenhouse gases. These greenhouse gases basically blanket the
earth and are causing climate change. CO2 levels are the highest they’ve been for
millions years which is why environmentalists consider it a “planetary emergency.” There’s
a lot of effort going into how to remove greenhouse gases from the atmosphere, how
to make cities more resilient to climate change, but in the interest of time we’re going
to focus on efforts to reduce the amount of new pollutants getting spewed into our atmosphere. Jacob: The economic solution is pretty simple.
Step one, identify the sources of the most air pollution. Done. We know exactly what
it is. It’s factories that burn fossil fuels for energy, industries that use oil and coal to produce
things, and vehicles with internal combustion engines. Step two, decrease the supply of these technologies
and products or decrease the demand for them. That’s it, it’s simple. But, the implementation
of these policies gets complicated. Let’s look at decreasing supply. As we mentioned
in the last video, one of the biggest problems with having countries independently enforce
environmental regulations is the Tragedy of the Commons. No one owns the atmosphere, so
there is very little incentive for countries to keep it clean and switch to expensive green
technologies if no one else is going to. It’s not like there is some global environmental
police punishing countries for polluting. While a country like Trinidad and Tobago has
a huge carbon output per capita, its small population means it’s only producing a small
fraction of global CO2. The other option is to decrease the demand
for fossil fuels, possibly by finding alternate green energy sources. But we’re already
very reliant on fossil fuels, and markets have made the production of those fuels very
cheap. So, any new type of energy will have a hard time beating the established system. So we can either wait patiently for new technologies
to develop and get cheaper, or we can speed up the process by manipulating markets with
government subsidies, taxes, and regulations. Adriene: In the case of pollution, there are
long-term side effects, like climate change, that consumers often don’t take into account
when they buy products. Remember negative externalities? When the full cost of a product
doesn’t line up with the costs that manufacturers or consumers pay? Pollution represents a market
failure — a situation where markets fail to produce the amount that society wants. To address this, some economists argue that
government intervention is not only justified, but essential. There are all kinds of different
ways intervention can happen — all of them meant to encourage producers and consumers
to choose to pollute less. One solution is for the government to come
out and set very specific rules about how much specific industries can pollute. Forget
markets. You’re gonna follow our pollution rules. Another way governments encourage people to
pollute less is by providing price incentives. Those incentives can encourage individuals
to make choices that are better for the environment. The government could add taxes to gasoline
purchases, or, on the other hand, provide subsidies for people who drive electric cars. Governments can also create permit markets
— basically setting a limit on how much firms can pollute, and allowing those firms
to buy and sell pollution permits. You’ve probably heard these called “cap and trade”.
Proponents of cap and trade argue that it can successfully limit emissions, without creating
hard and fast rules that might hinder economic growth. And, governments can subsidize the development
of a specific technology or industry—in an effort to make that technology more competitive
with the alternatives. A country might help support the development of solar or wind energy. As of 2014, around 10% of the energy consumed
in the United States came from renewable sources, which is pretty much in line with the global
average. Current predictions are that by 2040 15% of the world energy consumption will come
from renewable sources. But, alternative energy sources, for the most
part, just aren’t cheap enough yet, so the majority of our energy is likely to continue to come
from non-renewable sources, at least for now. Jacob: We don’t have the time to sit back
and wait for new technologies to get cheaper, and there’s no guarantee that the technologies
that the government picks will be cost effective. Perhaps the solution is not to get rid of fossil fuels,
but instead be more efficient with those fuels. But that has drawbacks, too. Some energy economists
argue that the expected gains from energy saving technologies, are offset by something called
the rebound effect. Let’s go to the Thought Bubble. Adriene: Let’s say Hank uses a gallon of
gas to drive to work everyday. Then, partially to help the planet but mostly to help his
wallet, he buys a new fuel efficient car that only takes half a gallon of gas for the same
commute. He saves money and there’s less pollution.
It is a win-win. But the rebound effect says that the benefits of energy efficiency might
be reduced as people change their behavior. With the money he saves, Hank might start
driving more than he normally would or he might go on a vacation in Hawaii. That leads to
more consumption and possibly even more emissions. Also, if greater fuel-efficiency makes driving
less expensive it might encourage more people to buy cars and increase the overall use of
gasoline. And even if people didn’t increase their driving, the new fuel efficiency could
decrease the demand for gas, making fossil fuels cheaper and more readily available for
other uses. The possibility of the rebound effect doesn’t
mean we shouldn’t invest in energy saving technologies. It just means that we have to
keep in mind how consumers will behave. It’s also the reason why it’s important to have economists
involved in the discussion of environmental policy. The tools of economics can help analyze
the incentives and figure out what might work best. Thanks Thought Bubble. Okay, so we’ve identified
another problem. But before you get so angry that you kick over a barrel of oil and light
it on fire, keep in mind that there is hope. Most countries are actively trying to address
the problem of greenhouse gases. The international community has been trying
for decades to work together to protect the environment with varying success. There are
international treaties that commit countries to reducing greenhouse gas emissions. UN negotiations
are underway to create a new climate change agreement — that could be adopted in December
2015. Private companies and governments are
also funding research into green technology. In the U.S. the American Recovery and Reinvestment
Act of 2009 allocated billions to fund renewable energy. China is also vowing to clean things up, and,
in fact, leads the world in renewable energy investment. So, now that most countries recognize
there is a problem, the hope is that they’ll figure out a way, or more likely a lot of
ways, to start addressing it. Environmental economists say that is not just governments
and producers that need to change, it’s also consumers. Conserving and consuming more
thoughtfully likely need to be a part of our daily lives if we want to protect the environment. But just bringing our reusable grocery bags
to the store isn’t going to save the planet, even if it says it on the bag. Bigger and
more costly interventions like improving insulation and changing thermostats might have more impact,
but we need to recognize individual action alone isn’t going to be enough. Industries,
governments, and individuals; we’re in this together. Thanks for watching, we’ll see
you next week. Crash Course Economics is made with the help
of all these fine people. You can support Crash Course at Patreon, a voluntary subscription
service where your support helps keep Crash Course free for everyone forever. And you get
great rewards! Thanks for watching and DFTBA.

100 thoughts on “Environmental Econ: Crash Course Economics #22

  1. There has been a machine invented to take some carbon out of the atmosphere. If this got mass produced quickly, we could take a lot of CO2 out of the atmosphere,

  2. The primary cause of high greenhouse gases isn't factories or oil usage, it's the byproducts of animal agriculture. Not only is it responsible for air pollution, but it's also the cause of desertification, deforestation, and water pollution.

  3. Also with hybrid cars, that's the problem with the waste in both the old and new car. Electric cars result in batteries that are hard to recycle (after they permanently die).

  4. Firstly – human CO^2 emissions are higher than ever, yet there has been no net warming trend over the past 18 years. Secondly, enough with the "over millions of years" stuff. There are plenty of limiting factors that limit the Earth's age to only about 6,000 to 10,000 years. Those methods that scientists use to say the Earth is about 4.54 billion years old often rely on several assumptions that are easily refuted.

  5. if they actually did everything she said they could do, we could help save the world. then other countries would follow suite… isn't that something the UN should be imposing since it's a global threat?

  6. Adriene talks too much and adds a liberal spin to everything. Not to mention her over use of her hands is annoying. This course would be so much better without her!

  7. This isn't environmental economics, it is environmentalism with an economic view. Environmental economics has to also consider the fact that people don't value nature evenly, which greatly changes what is meant by saving the environment. The video only goes into values based on bequests for future generations but how can we value such things. To only focus on that issue, diminishes the value of what the video teaches due to its subjective nature.

  8. To all the people who dot want to quit meat altogether, start by eating less red meat. That's not that hard to do, is it? And it could really make an impact if everyone did the same.

  9. This has more problems than solutions (like the video says). You also have to factor in poverty, income inequality, N.I.M.B.Y., and the fact that global warming is not exactly effecting every individual person..leading to not caring as much. Also, politicians still see it as a far-off issue, and not immediate! Do you guys know any environmental economists that I could talk to?

  10. What's wrong with nuclear energy??? I think the best case scenario is to switch to nuclear short term, and have a long term plan to switch to renewable energy(solar, wind, hydro, wave, etc.)

  11. resources aren't scarce though… 1 example: we grow enough food to easily feed more than the people on the earth currently, yet we just don't

  12. @crashcourse How did this video manage to spend over one minute talking about "The Rebound Effect" but not once mention the concept of a Carbon Tax?

  13. Great video! Check out my Environmental and Natural Resource Economics video series on my channel for more advanced content

  14. Navie video. You think that the sharks of the market, the leaders of the kartells, the wall street pimps will actually CONSIDER this???? ARE YOU KIDDING?

  15. Step 1 . Pull carbon out the ocean.
    Step 2. Ocean Pulls carbon out of Atmosphere

    So simple? XD
    Stop the arms race, start Breaking down first mover cost for Thorium Molten Salt reactors.
    Some one has to do it. Or we all die 🙂

  16. Great lecture! Check out my Environmental and Natural Resource Economics video series for similar work

  17. what about the emissions from factory farming?!!? thats the no.1 cause of greenhouse gases! Sad that you guys didnt mention it 🙁

  18. Im watching this now in 2017 and in Australia our current government which funnily enough is known as the Liberal party but are NOT liberal at all, in fact very conservative & somewhat anti climate change. Prove this the previous government (known as the Labor party) had a carbon tax which the liberal party removed when they got in to government and the mining tax. Now they are pushing for a large coal mine to be open in QLD. The businessman from India who wants to open this mine needs more backing (i.e capital) but the public are pushing against this and in fact banks are too. Most of the banks are saying no to supporting the mine (giving him money) which makes them look great to consumers , as most Australian dont want this mine. (as meant to be one of the largest coal mines in the world and the produce of green gases will be very high -also the risk of damage to under water rivers and great barrier reef to shop the coal) but reality is banks know its a bad investment and in fact are investing in green energy. So with lack of capital the government wants to use tax payers money to fund this mine hoping to create a bundle of jobs (which has been question as well). Watching this video seems nothing change in fact the Liberal party are so in bed with the coal industry they subsidised the industry – (also so does the Labor party) – and most of these large company of these mines pay lucky 1% tax. And they did a bunch of ads telling us coal is the future and even brought one into the parliament to prove its the only way. We got a long way to go especially in Australia where coal is plentiful and one of our large exports.

  19. People aren't going green because it's expensive. There needs to be a monetary incentive to lower emissions. What we need is a revenue-neutral carbon tax. This means you put a tax on fossil fuels, but all the revenue that the government gets from the tax is given back to people and corporations through broad-based tax cuts or direct government cheques. This means if an individual/corporation emits less CO2, they'll actually SAVE money.

  20. We should really just go nuclear at this point. More people have died in Ted Kennedy's car than US-owned nuclear plants.

  21. I know that you have the best intentions, but what about agriculture? It's known that agriculture has one of the biggest effects on greenhouse gases emissions. Thanks Crash Course.

  22. Focus on the one kind of pollution whose negative effects don't actually have sufficient empirical support, why don't you? 😀

  23. Nice course. I would have a remark though, I dont think its proper used the phrase "save the planet" since the planet was just fine before humans were here and will probably be as fine after we get extinct (there is quite a difference in the life spawn of a planet and of a single specie). But going back I would better use "save humankind" because we are the ones who suffer if the climate on this planet will change, not the planet itself.

  24. I was just listening to green funds topic, it is a good program once implemented , but I think we have to be quick to give out resources to rural communities because they are among the people who are most affected by climate change. It is too much of negotiations without action.

  25. This video set me on course to starting my own youtube channel about this topic. Thank you so much, I'd love it if anybody checked out my channel. I'd love to help other people out too!!

  26. The market has not been alone in making fossil fuels cheap. So have government subsidies through tax breaks for money spent on exploration, for example

  27. It's really less of "saving the planet" than it is just "preventing our inevitable extinction". The earth will be fine even if we all died at once. It was here long before we showed up, and it will be here long after we're gone. We just have to keep fighting our uphill battle against nature to keep ourselves alive.

  28. The environmental police that punishes countries who pollute more might come from developed countries like US, Canada & UK. They might impose trade barriers or other obstructions to countries that don't take measures to reduce their pollution.

  29. Can't wait to get a wicked tan when the atmosphere is 96.5% CO2 and the average temperature is 860F. Might even run for president.

  30. Everybody stop. This video is somewhat misleading. I like the content but you keep stating that factories emit C02 for manufacturing. Where do you think solar modules are made (in a factory) then shipped (using fossil fuels) across the ocean (90+%) to North America where they are delivered by truck across the states with the highest utility rates. All while emitting C02. I like what you are saying but you have not solved a problem. Please read Paul Hawking the Ecology of Commerce. FYI scientist only know what they look at (samples vs industries with micro industries). How many sales meetings were attended to (by car)!to sell a solar job. Where do you recycle modules after their 25 year use. (Look we just created more trash). This planet would be much better off if we got off of plastic and went back to glass. SAND AND HEAT.

  31. 1:07 isn't that steam?? it's like a common misconception that people think those massive clouds are pollution but it's just water evaporating from cooling down something …. yea??

  32. Let's talk about lessening demand. What are the biggest polluters. Industry, oil production. What are the biggest demands, cars. What schooling do people receive while in school, STEM. So people go into these fields. Why do people need cars. The nonavailability of the things they need where they are. Local economy. Drive to work, then drive to grocery store, drive to clothing retailer, and then home. Drive to the bank to pay mortgage, and taxes. In all of that gasoline is used. Huge demand. In all of that no one could work on their own land growing a portion of the food they use. Or start sustainable agriculture to produce clothing where they are. Much of the clothing that is sold is made out of country, and is synthetic (made from oil), and out of country(no accountability on what is produced). Need to get people back to farming, producing what is needed where it's needed. Start new businesses that produce sustainable products. Get away from cheap fashion.

  33. Scotland just recently hit 98% of its electricity consumption is renewable energy from wind farms, demand is 1.85 TWh and wind farms generate 1.82TWh. It’s aim is 100% by 2020 smashing its target in comparison to its British counterparts

  34. Why is this channel taking a democrat approach on an undecided topic as global warming? Well knowing that supporting democrats will cause other problems beyond the scope of the climate such as socialism, increased crime rate, and the collapse of economy? These things must be thought of together and not separated.

  35. Least favorite episode, it doesn’t get into the pollution produced from creating these “green” solutions. Solar panels, batteries, waste from these product and every other solution has research that’s been more focused on the pollution over its useful life not it full life span starting from manufacturing. It’s shortsighted to make knee jerk reactions, and as this channel has done so well up until this episode it has shown what happens when we do this.

  36. I have a degree in Engineering focusing on atmospheric sciences. Often people who don't know anything about the atmosphere automatically assume that humans cause climate change. This is not true. The normally cited proof that the world is warming is the correlation between the increase in human caused Carbon Dioxide emissions and warming temperatures. That is an incorrect conclusion. Most of the Carbon Dioxide on earth is dissolved in the oceans' waters. The sun's output over the last century has been steadily increasing. Even a small increase in ocean temperature caused by the sun can release a great deal of Carbon Dioxide that is dissolved in the oceans. This amount of CO2 released by mother nature greatly exceeds what humans produce by industry and cars. Even though humans don't cause the majority of CO2 emissions we can still reduce emissions by switching to electric vehicles. Switching to solar or wind isn't the answer since they increase the cost of energy. A 1% increase in the world wide cost of energy causes an additional 2 million people in the world to starve to death due to the increase cost of food production. The real answer is to increase the use of nuclear generators. Nuclear produces no greenhouse gases at all and the waste products can be put back in the ground because we got the fuel from the ground in the first place. In the energy production industry on average there is one death per every 2000 man-years worked. The nuclear industry has a safety record a lot better than that.

  37. Hello Adriene and Jacob! I’ve been watching the entire course. Everything totally awesome! I own a permaculture farming business. I would love to hear your thoughts on this concept and the multiplier effect it could have:

    In climate change there are two sides: pollution, and the degeneration of the biological systems that act as buffers, filters, and fertility regenerators.

    Focus could be drawn to:
    1. The potential of carbon sequestration through permaculture style grazing and no till farming as a means to lower CO2. (Adds valuable externalities like nutritious food and fertile soil and less disease)
    2. Small local waste treatment for biological residues and add value through compost and/or insect farm (adds value through organic fertilizers and insects for animal feeds) mainly to prevent water pollution
    3. If polluting company serves a social goal (i.e: fossil fuels for energy), maybe taxing only the company for all the externalities isnt the best choice. We could debate cases in which the expense is passed to the consumer in the form of taxes so the company doesnt need to raise prices for their goods, yet the externalities were accounted for.
    4. Government organized transition plan with support and subsidies for farmers transitioning away from chemical conventional farming.

    I really enjoy your course and am aching of doing thought bubbles too 🙂

  38. nice job tackling such a sensitive topic and educate people. We can not develop policies to combat environmental challenges without considering economics.

  39. This discussion is very limited. It does not address built in dynamics of capitalism such as the requirement for growth. Growth requires that we consume more and more every year, including finite resources. To this end we are emptying our oceans and pumping toxic liguids into the ground (with the risk of polluting our water supply) to get energy. Second, capitalism pushes costs onto the public which we pay for in health costs and on ogin damage to our environment. We have made some laws about air and water pollution but what if the oil industry had to pay for remediating climate change? What is Monsanto had to pay to remediate the damage to butterflies and other insects due to their pesticides (Roundup). Europe has seem a 75% decrease in insect life which is a fracturing of the ecosystem that we rely on. What if the oil companies had to really remediate after the massive oil spill in the gulf, not merely disperse the oil. What is the companies were completely responsible for the plastic they use in packaging on both human health and waste. If companies were completely responsible they would go bankrupt or they would scream and demand that they not be held responsible because it would collapse the economy. Capitalism worked when the population was much lower but now the impact is to great to sustain.

  40. 15% by 2040 is very conservative. I think it'll be much higher. Maybe upwards of 30%. There's simply so much investment into green tech going around and we're drastically accelerating all the time. It has simply gained a massive momentum.

  41. For anyone actually interested in this topic I recommend reading an article in ecological economics (2015) “In Markets We Trust? Setting the Boundaries of Market-Based Instruments in Ecosystem Services Governance” by Erik Gómez-Baggethum and Roldan Muradian

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