Interdisciplinary Seminar On Environmental Issues

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Interdisciplinary Seminar On Environmental Issues

• Profs. Urs Luterbacher and
• Dr. Ellen Wiegandt

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What Are Environmental Problems

• Man Made Environmental Problems Originate from
  the Overuse of Natural Resources
• Why are environmental problems complex? They
  create distorsions and inequalities
• Left to themselves environmental problems distort
  economic and political processes

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Scope of the problems

• At the International level they appear in 3 ways
  Transboundary Bilateral, Transboundary Regional,
  and Global
• These Problems are not specially new

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Reasons to Study Environmental Problems at The
International Level

• Transboundary and Global Nature of Environmental
  Problems
• Environmentally Related Conflicts
• Existence of a Global Environmental Governance
  International Environmental Accords

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Introduction and Historical Context of Man-Nature
Relations
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Context and Approach

• Why a course on environmental issues now?
• Is the problem a recent one?
• What are key substantive issues?

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Evidence of current interest in environmental
questions

• Attitudinal
• Scientific, intellectual
• Policy Brief overview of climate policy

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Reasons underlying environmental concerns

• Man-made environmental problems originate from
  the overuse of natural resources
• oil shock 1973
• Scientific evidence of ozone hole
• Scientific evidence of climate change
• IPCC report 3
• Part of general process of globalization
• recognition that some environmental questions are
  global and can only be addressed at international
  level a new issue for international cooperation.

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Mans Influence on Nature a New Phenomenon?

• Origin of human species
• Origin of agriculture
• Little Ice Age 1650-1850

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Focus on Society-Environment Interactions

• What behavioral and institutional factors mediate
  relations with natural system?
• What features create vulnerability or resistance
  to certain natural events or processes?
• What mechanisms are available to different types
  of society to adapt or mitigate change.

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Environment-Climate Issues

• What are climate ranges we can expect from future
  climate change?
• What will their impacts be on sea-level,
  precipitation, variability, extreme events, etc.
• Do these impose new limits on human activity?
• How to organize behavior to stay within these
  limits.

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Environment-Society Issues

• Level of resource use
• Population size
• Even with constant level of use, attain limits as
  population increases

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Malthus

• Population will grow to the limits of available
  food supply and will then be checked
• Technological progress may raise the level of
  population but ultimately does not raise the
  overall standard of living because of propensity
  of population to attain limits of available
  resources

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Malthusian Mechanisms

• Positive check on population
• Mortality
• Preventive checks
• Societal mechanisms to reduce fertility

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Alternatives to Malthus

• Technological progress induces or allows
  population growth.
• Variant autonomous population growth induces
  technnological progress to meet new needs.
• Modern exponent of these views Julian Simon

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Easter Island

• Stone Age culture created monumental statues.
• Upon its discovery by Westerners in 1722, was
  poor and had smaller population than vestiges
  indicated
• Why system collapse?
• Lack of knowledge
• Lack of institutional controls

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Environment and Society. A Critical Issue for our
Future?

• At issue is relation between natural processes
  and human populations
• To what extent does human agency matter?
• If human choices affect natural processes, can we
  identify some problems crucial enough to address
  now?

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General Issue Environmental Determinism

• Immediate environmental influences high in past
• Less important with technological progress
• Some troubling aspects remain

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The Assessment of Environmental Risks

• The Brander and Taylor study of Easter Island
  shows the importance of knowing the environment
  in order to assess the risks it presents
  knowledge of two aspects are important 1) The
  evolutionary dynamics of the crucial resource 2)
  The initial resource stock (ex. climate change)
• It also shows the importance of social responses
  to the problems involved in terms of a) control
  of access b) charging for use in proportion
• 3 Types of risk management have therefore to be
  considered

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Risk management types

• 1. Risks due to nature
• 2. Risks due to the consequences of uncoordinated
  and non-cooperative human activities, present and
  future
• 3. Risks due to problems of coordination and
  cooperation of social institutions present and
  future

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Risks due to nature can be assessed in terms of
expected utility

• 2 elements uncertainty measure p (probability)
  of an outcome and its subjective value or utility
  U
• P(o)U(o)
• This formulation suggests a cost benefit
  analysis. Suppose there are only 2 outcomes, o1
  and o2 Total value is
• P(o1) U(o1) (1 p) U(o2)
• Present value P(o1) U(o1) (1 p) U(o2)/i,
  where i is a discount rate (interest rate)
• Ex. Climate change and controversies

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Welfare preserving collective goods

• In welfare preserving (rival) collective goods,
  users represent a negative externality with
  respect to each other. The risk comes from
  others! The purpose of institutions is to limit
  use. This is difficult to achieve because there
  is a first mover advantage of non cooperation
  with the institution which then often leads to
  conflict and coercion
• This model cannot be followed at the
  inter-institutional level

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Problem 2 strategies

• Adhere or not to a strategy depending on what
  others are doing.
• This problem can have a stable (Nash )
  equilibrium
• The equilibrium is only efficient if a sufficient
  numbre participate.
• Non- Efficient Accord Efficient Accord

Coop. Strat a(t)
U(t)
Non Coop. Strat b(t)
U(t)
Stable Nash Equ.
Non Coop. Strat b(t)
Coop. Strat a(t)
Stable Nash Equ.
Min fraction of total to sustain accord
Min fraction of total to sustain accord
0 t
1
0 t
1
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Risks due to social interactions are more
difficult to present

• As seen from the Stephens text in Cashdan, risk
  analysis can help us understand animal behavior
  and thus raise our knowledge about nature
• Human behavior is more complex. One can usefully
  however analyze it with the help of general
  concept such as the one of collective good. A
  collective good situation is characterized by two
  aspects Non excludability and some times
  non-rivalry. There are however collective goods
  that are rival, so called commons, thus 2 types
  of collective goods welfare generating and
  welfare preserving

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Welfare Preserving Collective Goods The Tragedy
of the Commons Debate

• Hardin (1968) introduced the question of welfare
  preserving collective goods with his article on
  the tragedy of the commons
• Coases articles (1960)
• Dasgupta and Heal Economic Theory and Exhaustible
  Resources (1979)
• Graciela Chichilniskys Trade Theory between
  Regions with Different Property rights Regimes
  (1994)
• The choice is not really only between different
  types of property rights but between different
  types of hierarchies of collective goods Even
  private property rights have to be protected!

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Theory of Collective Goods and Theory of the
Commons

• The importance of jointness Behavior driven by
  average product F(Nx)/N(x)
• Common as opposed to private marginal product
• As emphasized by Dasgupta and Heal Commons
  problems are not PD problems

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The production function depends on a fixed
factor with constant returns, a variable factor
or input x with diminishing returns F(x) where
usually F(x)gt0 eventually F(x)lt0 as x
increases, and among N producers each producer
will introduce an input x, producer i
maximizes  Maximizing with respect to
xi while assuming that here x xi x, yields
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Open access marginal product
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Private Marginal Product
F(Nx) p and
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Graphical Illustration
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Conclusion

• There are several ways of solving the commons
  question
• Markets for externalities, the most efficient
  solution might not always be possible
• The structuring of authority associated with the
  commons problem is quite important

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Role of Property Rights

• Mechanisms developed by society
• to set limits on resource use before diminishing
  returns set in
• to meet needs across space and through time with
  greatest efficiency

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Property Rights solutions
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Standard economic view of property rights

• Well-defined property rights
• Market mechanisms and a pricing system
• No transaction costs
• No income effects
• Assumes collective action problems solved

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Private property solves production (and
environmental) problems

• Can anticipate diminishing returns incorporate
  foregone benefits into present production
  decisions (Hotelling)
• Private property rules provide means to maintain
  efficiency even when environmental externalities
  exist (Coase)

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Possible problems

• Definition of the property itself
• Enforceability of exclusionary rights

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Common Property Tragedy of the Commons

• Resource that is
• Depletable
• Non-exclusive
• Rival

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Common Property

• Resource unit defined
• Well-delineated user group
• Multiple users
• Explicit rules of extraction

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Why Common Property?

• Nature of resource
• Economies of scale
• Maintenance or capital demands
• Enforcement

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Relevance of different property regimes to
current environmental issues

• Confrontation of regimes is occuring
• South/North
• Common property characteristics of environmental
  resources
• Institutional solutions are adopting common
  property arrangements

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Problems of environmental regulation solution
through definition of property rights

• Atmosphere rival at global level
• Consumption interdependent
• Command and control difficult to achieve because
  deal with countries
• Introduce market solution to create incentives
• Raises problems of initial allocation

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Sustainability and exhaustible resources

• In some basic sense nothing is truly sustainable
  since finite resources are continuously exhausted
  by man but also by nature
• Sustainability has thus evolved to mean a
  correct relationship between generations
• Sustainability means that resources should be as
  much as possible preserved for future
  generations use
• Clearly this means that slowly renewable and
  exhaustible resources should be depleted at an
  optimal rate.

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Theory of slowly renewable resources

• Slowly renewable resources have to be evaluated
  as an evolving stock such as a population minus
  withdrawals

Evolution of z Natural Dynamics of z minus
catches
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Slowly renewable resources Production

• Producers will be drawn into using the stock by
  profits

Evolution of inputs x, if average profits are
positive, if F is production, q unit price, p
unit costs
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Equilibrium conditions

• In equilibrium there should be an optimal level
  of the resource z if

Is maximized subject to the relation before and
where r is a discount rate The discounted sum of
all future profits is maximized with a discount
rate r, the spot price of the resource is thus
dependent on availability of z in nature and the
discount rate
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Exhaustible Resources

• Hotelling Principle
• An exhaustible resource is an asset and its net
  price (market price - extraction costs) should
  increase exponentially with the interest (or
  discount rate, to some extent a socio-political
  construct), i.e.
• P(t) P(0)eit
• or
• (dP/dt)/P i

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Hotellings Principle

• Competitive resource owners will deplete at a
  socially optimal rate
• Take r the rate if return to the owner of natural
  resources. In equilibrium r i
• Whenever, r i, we have a conservationists
  dilemma.

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Conditions for Hotelling principle

• 1. No externalities
• 2. No uncertainty about future sales, exploration
  prospects, etc.
• 3. No extraction with environmental externalities
  (ex. Gold Rush).
• 4. Not too big differences between private and
  market (social) discount rate (for instance due
  to dangers of transfer within society)

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ExampleDeforestation processes

• According to Hotelling principles a forested area
  is a particular type of asset whose capitalized
  value should grow with the interest rate. If this
  growth is not achieved other assets including
  agricultural ones will be closer and the forested
  land will either sold for development or
  transformed into another agricultural asset.
• In particularIf the income flow stemming from
  the forest is lower than the income flow from
  other activities then deforestation will occur!

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This can be due to

• subsidies for agricultural production
• income subsidies or welfare
• cost of property rights enforcement
• prohibition of trade
• unclearly defined property rights

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Graphical analysis
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Population Dynamics

• Fundamental problem of global environmental
  change
• Balance supply of resources from physical system
  with demand for these resources from human
  populations over time

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Measuring Population

• Static characteristics
• total
• age distribution
• genders
• urban/rural
• geographic distributions
• Dynamic use various extrapolation techniques to
  predict future trends

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Measuring Population

• Challenges in achieving accurate assessment
• completeness and accuracy
• census comparability
• different interpretations of categories
• different areas/levels of aggregation
• different time periods
• size of area
• units

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Projections

• Dependent on accuracy of initial conditions (i.e.
  count)
• Need techniques of projection
• postulate relationships among the different
  aspects of population so you can have internally
  driven system.
• But projections assume smooth path. Also need to
  introduce mechanisms to account for changes in
  rates

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Malthusian theories of population

• Assumptions
• constant "passion between the sexes"
• finite earth
• Argument
• left unchecked, population grows and, by
  definition, grows exponentially (passion)
• after an initial period of strong growth, output
  as a function of population (labor) exhibits
  diminishing returns

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Preventive checks

• Late marriage
• Low marital fertility (spacing)
• Contraception
• Migration

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Alternatives to Malthus Boserup/Simon

• Relate technological progress to population
  growth
• Population concentration leads to higher
  likelihood of technological advance.
• Population growth º longer hours,
• More labor-intensive techniques º eventually
  leads to more sophisticated technology.

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Pre-industrial Western European Demographic Regime

• High mortality
• High Fertility
• Fertility Controls
• Celibacy
• Age at marriage
• Spacing behavior

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Limits to Malthusian Approach

• Explaining emergence of new demographic regimes
• How technology might explain shifts
• These considerations important, because new
  regimes have emerged.
• Synthesis argument Lee, Ronald, Malthus and
  Boserup A Dynamic Synthesis, In David Coleman
  and Roger Schofield, The State of Population
  Theory, Oxford Basil Blackwell, 1986.

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Demographic Transition

• Characterized by a drop in marital fertility
  achieved through "stopping" behavior, i.e.
  controlling births after having the desired
  number of children
• Puzzle
• Not linked to decreased mortality
• No obvious link to Industrialization
• No Maltusian population response to income growth

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Fertility Declines, Real and Projected
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Stabilization Remains a Challenge
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Sub-Saharan African Fertility Regime

• Low age at marriage
• Polygyny men have many wives, leaving few women
  celibate
• Acceptance of pre-marital and extra-marital
  sexual relations
• Remarriage after widowhood or divorce is the norm
• These are all factors that make women susceptible
  to childbearing throughout their reproductive
  period of 15-49.

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Differences Pre-industrial European and African
Regimes

• Europe reduce "exposure"
• Africa spacing behavior

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Characteristics of Sub-Saharan African Social
System

• Poorly defined or poorly enforced common property
  systems
• Children reared communally (polygyny)
• share costs in time or responsibility
• Weak conjugal bonds
• Lineage holds land
• large families have access to larger share
• References Dasgupta Partha, The Population
  Problem Theory and Evidence Journal of Economic
  Literature, 33, 4, 1995 1879-1902 Chichilnisky,
  Graciela, North-South Trade and the Global
  Environment, The American Economic Review 84 (4)
  851-874.

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Changes in life expectancy in selected African
countries with high and low HIV prevalence 1950
- 2005
with high HIV prevalence
Zimbabwe
South Africa
Botswana
with low HIV prevalence
Madagascar
Mali
1950 1955
1955- 1960
1960- 1965
1965- 1970
1970- 1975
1975- 1980
1980- 1985
1985- 1990
1990- 1995
1995- 2000
2000- 2005
Source UN Department of Economic and Social
Affairs (2001) World Population Prospects, the
2000 Revision.
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Predicted loss in life expectancy due to HIV/AIDS
in children born in 2000
Predicted life expectancy
Loss in life expectancy due to HIV/AIDS
Botswana
Zimbabwe
South Africa
Kenya
Zambia
Côte d'Ivoire
Rwanda
Mozambique
Haiti
Cambodia
0
10
20
30
40
50
60
70
Life expectancy at birth (years)
Source U.S. Census Bureau, 2000
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Environment and Migration

• Migration constitutes, as mentioned before, a
  significant factor in population dynamics
• Migration and the environment are linked in 2
  important ways
• Some migrations are environmentally induced ex.
  The dust bowls in the US, the Sahel
• Migrations create environmental problems
  crowding effects

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Before we look at these links lets consider
theoretical approaches to migration

• There are two basic theoretical considerations
  about migration which emphasize either push or
  pull factors
• Voluntary migration migrants decide to move from
  one place to the other on the basis of some
  incentives, wages, quality of life
• Involuntary migrations migrants are excluded
  from a given society and are forced to leave
• This 2 causes can combine themselves

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Involuntary migration

• A description of the multiple aspects of
  involuntary migration is included in the Zollberg
  article political, racial or religious reasons
• The collective good literature helps to
  understand exclusion processes
• Other countries often are reluctant to accept
  these populations which are then concentrated in
  relatively small areas and cause environmental
  problems

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Voluntary Migrations

• Since voluntary migrations are based on
  incentives to move, these incentives have to be
  made explicit in the form of wage differentials
  for instance
• Migration due to wage differential constitutes
  the main explanation for migrations in economics
• A standing puzzle lies in the explanation of
  overcrowding of big developing country cities

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Harris Todaro Model

• These 2 authors postulate a 2 sector rural
  (agricultural) and industrial economy
• Wages in agriculture are WAP.q
• Wages in industry are dependent upon a minimal
  wage Wmin They are

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Equilibrium conditions

• As long as the following is gt0, migration will
  occur

Is a time evolution (derivative)
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Other incentive models The Owen land use model

• The land use model developed by Owen assumes only
  two types of land use, agriculture and dwelling
  and examines the special case of areas around
  urban centers
• Whether land will be transformed into dwelling
  will depend on income streams generated by both
• Arrival of newcomers increases income streams
  from dwellings especially if migrants get
  subsidies

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Conclusions of Owen model and further development

• Even under normal conditions, as long as there is
  an attraction to moving into an urban area such
  as a subsidy or the hope of a job, farm land will
  be urbanized down to a critical value which can
  be very close to zero.
• Higher interest rate for agricultural investments
  as opposed to investments for urban dwellings
  will accelerate the process.

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Further conclusions

• Mass migration which can result from climate
  change will accelerate this process.
• Foreign aid and relief can accelerate the process
• An Ill-defined property right regime will
  initially slow but then accelerate the process.
• Climate change might reduce net profits made from
  agricultural production and accelerate the
  process.

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Analysis of Countries with Ill-Defined Property
Rights

• These countries are sensitive to price
  fluctuations due to substitution effects or
  taxation policies
• Lower prices lead to more extraction of natural
  resources due to alowering of the opportunity
  cost of labor
• This lowers their bargaining power at the
  international level
• Their bargaining power is lowered further by the
  cost of the artificial "comparative advantage" in
  terms of natural resources on the society as a
  whole which might lead to social upheavals.

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Conflict, cooperation, and the environment

• The relations between conflict, cooperation and
  the environment are numerous but cannot always be
  clearly established
• Quite clearly early cooperative structures such
  as early agricultural states were driven by the
  necessity to better control the human environment
• Resource driven conflicts are probable in this
  context

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Relationships between the environment and human
production

• As technology evolves, the relations between the
  environment and human activities become more
  distant
• 2 types of relations can be emphasized 1.
  Cataclysmic Events such as volcano eruptions
• Long term changes such as deforestation trends
  and climate changes the 2 may be linked

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Conflicts over environmental resources may exist
but they are difficult to show

• Difficulty to disentangle environmental form
  other conflicts, ex. Rwanda
• Similar for conflict over resources Central Asia
  and Water in the Jordan river water basin,
  conflict between Turkey, Syria and Iraq over the
  Euphrates and Tigris waters

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The Central Asian Water Question
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Symmetric and Asymmetric Access to Resources
The Example of the Middle East
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2 Middle Eastern Conflicts The Jordan and
Euphrates River Basins

• Jordan River Israel plus Palestinians use about
  2300 million cubic meters per annum, only 1950 is
  considered sustainable
• Jordan uses 740 to 750 million cubic meters per
  annum. Only 730 is considered sustainable
• Euphrates Turkey reduces Euphrates flow to 500
  to 300 cubic meters per second, 700 are demanded
  by Syria

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Some Theoretical Notions

• Goal tackle problems analytically and suggest
  responses that tend to promote strategies to
  minimize conflicts and promote cooperation
• All social interactions and conflicts are not the
  same. They have to be analyzed according to their
  incentive structures
• Water problems are also common problems
• Commons lead to asymmetries Lack of dominant
  strategies lead to first mover advantage
• First, (or second) move advantage can be enhanced
  by geographic or technological circumstances

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Fundamental Questions to Address

• What are the nature of the conflicts
• How can one find optimal solutions to solve them?

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Water competition has technological and economic
limits

• Price of Water from Sea fundamental
• Given by the cost of a m3of water from sea water
  or possibly from pipe lines
• Around 65 per m3
• 70 of all consumed water is for agriculture
  (irrigation)
• In the Middle East this proportion can reach 80
  to 90
• Is it worth it?

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Symbolic aspects

• The sharper the conflict and the demands around
  it, the more is at stake
• Giving in on little things is perceived as signal
  to give in on big ones

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How to get out of the conflict spiral?

• Emphasize limited worth of conflict
• Franklin Fisher approach using pricing
• Problem Symbolic aspect
• Policy of mutual voluntary restraint in use
• Reduce conflict extensions to other areas through
  compensations

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Difficulty The Mid-east population explosion
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The Mid-East Demographic Boom
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Per capita GDP diminish in the Mid-East
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Environmental Negotiations

• The Common problem makes it difficult to carry
  out international environmental negotiations
• Often countries try to free ride on each other
• It is difficult to exclude from environmental
  benefits

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Unit veto problem

• Unit Veto makes agreements even more difficult
• Particular importance of players
• One has to find ways to exclude
• Side payments have to be provided