Africa Beza College

Hawassa Campus
Department of Economics
MSc regular Economics students

Individual Assignment
for Assignment I

Natural and Environmental ResourcesofEconomics

Name: Abraham Jigso

ID: 008/2012
Year 1 Semister 2

Submitted To:DEBELLA (Phd)

Email debelag@gmail.com

In AUGEST-2020
Hawassa Ethiopia
Assignment I

Article I:
[Environmental Economics, the current British political Economy
and its relevance to global applicability]

General Instruction:
 Read the following article thoroughly
 Your answers to this question is based on chapter one of the
course
Source: The Guardian (2019)
The climate emergency has risen to the top of the UK’s election agenda
in a way that would have been “unthinkable” even five years ago,
leading environmentalists have said, predicting that it promise a
permanent change in British political economy.
Recently, Labor took the unprecedented move of putting green issues as
the top section of its manifesto, the first time one of the UK’s two major
parties has done so. Jeremy Corbyn led the appeal to voters with policies
including an £11bn windfall tax on oil and gas companies, a million new
jobs in a “green industrial revolution” and commitments on moving to a
net-zero carbon economy.
Such focus on climate and the environment would have been almost
unthinkable five years ago Tackling climate change runs through this
manifesto in a way that is unprecedented from either of the main parties
ahead of a UK general election.
Now that as younger voters in particular were “energized” over the
environment. Public anxiety had been fuelled by people seeing extreme
weather around the world, and the rise of climate activism in movements
such as Extinction Rebellion and the school climate strikes reflected
that.
Public concern over the climate is “unequivocal”, and people back
decarburization by a massive margin. To have all the major parties
supporting a transition to net zero within a few decades, and competing
with each other on policies to deliver this, is unprecedented. Pushing the
climate emergency back to the political periphery would no longer be an
option for any government.
The Liberal Democrats, while focusing on Brexit, have also made the
climate emergency a key priority, promising to generate 80% of the
UK’s electricity from renewable sources by 2030, to bring forward to
2045 the deadline for net-zero carbon, and to expand electric vehicles
and ban franking. The Green party wants to spend £100bn a year for the
next decade on the climate crisis, replacing high-carbon infrastructure
and creating jobs.

Questions:
1. From the excerpts above, justify the detrimental importance of
natural resource and environmental economics
 2. Distinguish between pessimistic and optimistic views of an
environment
3. Which view (model) is reflected is in the above excerpt:
Pessimistic or Optimistic?
4. How do you evaluate, from environmental economics point of
view, the Ethiopian government project of “Green legacy” where
by in one rainy season of last winter over four billion trees were
planted?

Answers for questions

1. From the excerpts above, justify the detrimental importance natural
resource and environmental economics.

As mentioned in the article, in United Kingdom, the importance of

natural resources to economic development is now well-established. In
the election campaign, the competitors took it as an agenda. This is
because; how a country manages its natural capital stock is critical for
achieving sustainable economic development. To use the natural
resources properly, countries should have a clear and strong policies.
The poor policies and the inefficient mismanagement of natural
resources can be detrimental to growth and development. Moreover, the
article magnifies that, through the use of natural resources, they
politicians of UK has planned to generate 80% from the renewable
resources by 2030. If they will be able to achieve these promises, they
can save the billions of pounds spent for oil utilization. On the other
hand, the green economy they planned also able to generate more job
opportunities in a sustainable manner.

In the article it is mentioned that, government plays the essential role in

putting into place policies that ensure that resources contribute to the
long-term economic development of nations, and not only to short-term
revenue generation. High-quality institutions in the present, that
planning for the future can turn the available fewer sources into an
opportunity.

Natural resources, either renewable or non-renewable, and ecosystem

services are a part of the real wealth of nations. They are the natural
capital out of which other forms of capital are made. Natural resources
contribute towards fiscal revenue, income, and poverty reduction.
Sectors related to natural resources use provide jobs and are often the
basis of livelihoods in poorer communities. Owing to this fundamental
importance of natural resources, they must be managed sustainably.

Maximizing the value of natural resources for sustained growth and

development, and avoiding the resource curse, requires policies that
formalize and codify revenue management procedures. The wealth
embodied in natural resources makes up a significant proportion of the
wealth of most nations, often more than the wealth embodied in
produced capital, therefore making natural resources management a key
aspect of economic development.
 2. Distinguish between pessimistic and optimistic views of an
environment

Pessimistic views of an environment

- The model is in essence, the `limit to growth `model.

The dominant characteristic of the pessimist model is that the use The
pessimist view or the limits to growth model
• This model is reflected by the famous publication entitled in
“Limits to Growth” which was published initially in 1972 and later
revised in 1992 by “Beyond the Limit”.
• Based on a technique known as systems dynamics, Professor Jay
Forrester predicted about the future outcomes of the world
economy.
• To do so, a large scale computer model was constructed to
simulate the likely future outcome of the world economy.
System approach sees the world as a set of unfolding dynamic behavior
patterns (such as growth, decline oscillation, overshot
It focuses on interconnection and sees the economy and the environment
as one system.

It focuses on interconnection and sees the economy and the environment

as one system.
This pessimist model arrived at three main conclusions.
1. Within a time span of less than 100 years society will run out of
the non-renewable resources on which the industrial base
depends. Then the result will be the world economy will
 collapse and it shall be manifested by massive unemployment,
decreased food production, and a decline in population as the
death rate goes up.
2 Even if the resource base will be doubled, the economy will still
collapse due to excessive pollution generated by the increased pace of
industrialization permitted by the greater availability of resources.
3. Economic collapse may be avoided by an immediate limit on
population and pollution using self-restraint and conscious policy but it
will finally end up with societal collapse.
• Thus, one way or the other, economic growth will cease. That is
why this view is called as the pessimist model (view).
• The dominant characteristic of the pessimist model is that the use
of resources (consumption) grows exponentially while most
resources are relatively fixed in quantity Thus, one way or the
other, economic growth will cease. That is why this view is called
as the pessimist model (view).
• of resources (consumption) grows exponentially while most
resources are relatively fixed in quantity.
The model is in some way reinforced, while in other way tempered.

The positive feedback loop – states that secondary effects tend to

reinforce the basic trend.

Some actions have problem reinforcing influence. E.g. capital

accumulation: investments generates greater output that generates
greater profits.

The profits can be rein vested that further depletes resources base.
Emission of methane and global warming: increase in methane emission
contribute to global warming/c as temperature rises release larger
quantities of methane.

Shortages of commodity: shortage of food, for instance, endure people

to eat the seed w/c is painful to the future. The situation will be down
war spiral causing troublesome.

Note: feedback loop:-is apatch that connects an action to its effect on the
surrounding conditions that in turn can influence further actions.

A negative feedback loop- the structure of the model is self-limiting, for

instance, death rate has aerate of limiting population growth. As growth
occurs, the larger increases in industrial output are associated with
increasing pollution/c intern triggers a rise in death rates retarding
population growth. thus, negative feedback loop can provide tempering
influence on the growth process.

Optimistic views of an environment

The optimist model (view)

• Herman Kahn and his associates believed that technological

progress would be the solution for every problem of sc.The
optimist model (view)
• The final conclusion reached by this view is that a continuing
evolution of a form of technological progress that serves to
push back the natural limits until they are no longer limiting.

• That means the sources of optimism are related to

technological progress.

• The availability of physical resources can be expanded through

the use of better technology.

• For example, food production can be increased by the spread

of better farming techniques, if soils become depleted, then
food can be raised with hydroponics, a process using no soil,
waste products can also be converted into usable output using
technological advancement.

• The message of this model is that currently recognized

technologies can overcome the limitations envisioned by the
limits to growth view.

• These technologies effectively either remove the limit or buy

time until a subsequent technology can remove the limit.

• The saying “necessity is the mother of invention” is the base

for this optimist model.

• An alternative version dominated by Julian Simon which was

published under the title “The Ultimate Resource” rejects the
 overshot and collapse scenario indicated by the pessimistic
version.

• The following conclusions have been reached by the

proponents of this model.

• 1. The standard of living has been improved along with the

size of the world population since the beginning of record time

• An alternative version dominated by Julian Simon which was

published under the title “The Ultimate Resource” rejects the
overshot and collapse scenario indicated by the pessimistic
version.

• The following conclusions have been reached by the

proponents of this model.

• An alternative version dominated by Julian Simon which was

published under the title “The Ultimate Resource” rejects the
overshot and collapse scenario indicated by the pessimistic
version.

• The following conclusions have been reached by the

proponents of this model.

• 2 Increase in income & population has come up with less

severe shortage & lower costs of resources.
 • 3. There are no convincing reasons why this trend towards
better life and lower prices of raw material should not continue
indefinitely.

The model assumes that the `limit to growth` is not accurate.(Herman

kahn,et al discussed in a book titled ``the next 200 years). The
neoclassical suggest that economic growth is not necessarily constrained
by availability of resources. The model is based on the continues
evolution of technological progress that serves to push back the natural
limits until they are no longer limiting advancement in technology
pushes outward the production possibility frontier. Moreover ,the
market system mitigated the scarcity of resource.

i). over time: as resources get more and more scarce, prices of the
resources also rises. The rise in prices induces exploration for other
factors, recycling and efficient use of the available resource using new
technical innovations. Therefore, rise in price of resources has resource-
augmenting mechanisms.

The model concludes that long 200 yrs ago, almost every human being
were relatively poor, and few at the mercy of the forces of nature. And
in the coming 200 yearsevery where they will be numerous rich and in
control of the forces of nature.

The nature of the model

The H.Kahn model is more qualitative than the limits to growth model,
and therefore, its structure is less specific. It has plausible scenarios
consistent with each other that frequently include lists of new
technologies.

Examples: take food and energy:- one of sources of collapse in the- limit
–to –growth model was the inability of food supply to keep up with
consumption. In contract,kahn sees that food production rising to rapidly
to create abundant of food. The depends on some specific source of
optimism.

i). physical resource will not effectively limit production in the next 200
yrs.

ii). Substantial increases in food production can be achieved by both

conventional and unconventional means for example better farming
techniques and by the dep’t of new improved seeds.

Optimum are related to technological progress that are assumed to

overcome the limitation envisioned by the ``limits to growth ‘view.

The neo-classical thought- suggests that economic growth is not

necessarily constrained by availability of resources. The market system
mitigates the scarcity of resources.

3. Which view (model) is reflected is in the above excerpt:

Pessimistic or Optimistic?
 Optimistic
4. How do you evaluate, from environmental economics point of
view, the Ethiopian government project of “Green legacy”
 whereby in one rainy season of last winter over four billion
trees were planted?

With the initiation of Ethiopian Prime Minister, Dr. Abiy Ahmed, our
country has able to plan 4 billion trees. The plantation has carried
throughout the country. During the period, all age and gender has
participated. The government did this with the objective of increasing
the forest cover, decreasing the deforestation and relying on the
renewable natural energy sources. From the environmental economics
view point, the campaign has a many implications. Last year the green
initiative has set a world record by planting the largest number of
saplings in one day. Citizens across the nation have volunteered to plant
a world record 353 million trees in a single day on July 30, 2019, and a
total of over 4 billion tree saplings between May and October 2019. It is
worth remembering here foreign nationals of the diplomatic community
have also participated in the “green” campaign last year.

Firstly, it will improve the productivity of agricultural production. On

the other hand, the trees planted are multipurpose and can be used for
consumptions. The forest that will create can maintain the ecosystem
and create the balanced biodiversity. The employment and job creation
can be achieved through organizing youths in forest management. The
income can also be generated through the carbon trading. Moreover, if
we are able to create the dense forest, the rainfall can be available
throughout the year, and our dams are able to get required amount of
water for electrifications.
Experts estimate that the forest coverage of the country is showing
improvement, and it stands now around 15.5%. They attributed the rise
in forest coverage partly to the consecutive tree planting campaigns done
so far across the nation. The indispensability of a forestation to such
agrarian economies of rain-fed agriculture like Ethiopia is
unquestionable. More forest would simply mean more streams and more
rain, and this implies our rivers would flow for the year around
brimming to the full.

References
Barbier, Edward B., "The Concept of Sustainable Economic
Development", Environmental Conservation, vol. 14(2), Summer
1987, p. 101-110.
Edward B. Barbier. 2002. The role of natural resources in economic
development
Easterbrook, Gregg. 1995. A Moment on the Earth: The Coming Age of
Environmental Optimism. New York: Viking Penguin