1. Ch 15 Energy and Sustainability Homework

2. 1. Explain why sustainability is a public good
1. Explain why sustainability is a public good. How does this characterization make it more difficult to achieve sustainability?
All who value sustainability benefit from its provision, and one person’s appreciation of its achievement does not reduce the value of the benefit to others.
It is also non-excludable, insofar as if we achieve sustainability, the benefits go to everyone.
Public goods invite free riders, who benefit without paying the cost. We may all favor preserving the Amazon Rainforest for sustainability reasons. If it is preserved, we all benefit whether or not we pay.
So where non-payers cannot be excluded, we are likely to understate willingness-to-pay.

3. 2. Why do economists have difficulty using the Bruntland definition of sustainability?
The Bruntland definition refers to needs: Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
Need is not a measurable concept.
It is also part of Karl Marx’s definition of Communism
From each according to his abilities, to each according to his needs. Read more at:

4. 3. Provide arguments that the value of ecosystems will increase over time.
Environment is a normal good, so as incomes increase, demand for environmental and ecosystem services will increase.
Also, as population increased, aggregate marginal benefit increases.
Ecosystems have public goods characteristics, so the sum of marginal benefits increases when we sum over more individuals.

5. 4. Provide an example of absurdly strong sustainability.
Absurdly strong interpretation:
We can never use any finite resources, because we would always leave less for future generations.
We cannot use any oil.
We also may be forbidden to construct any pipelines, as we reduce the amount of land available for other uses.
•And should we seek the preservation of the mosquito that spreads the Zika virus?

6. 5. Explain the IPAT equation, and why economists question its use.
where I is environmental impact, P is population, A is affluence, and T is technology
Note the absence of prices.
Also, the equation implies that technology increases economic impact.
Technology can increase energy efficiency, reducing impact.

7. 6. What is the Schelling Paradox, as it relates to sustainability?
Schelling finds it paradoxical that we are taking money from today’s citizens to help future citizens.
The trend for the last 200 years has been growing wealth.
So the future is likely to be wealthier.
As Schelling puts it, we may be taking away money from today’s poorest occupants to help tomorrow’s wealthier generation.

8. 7. Does Hotelling’s rule guarantee that we will use oil sustainably?
Hotelling’s rule addresses dynamically efficient use of finite resources.
It does not guarantee that we will leave the future at least as much oil as we have today.
In fact, present value considerations will lead to producing more today than in future periods.

9. 8. Explain Hartwick’s rule as it applies to sustainability.
Hartwick’s rule requires investing the proceeds from the use of finite resources.
He allows an increase in physical resources to offset a loss of natural resources.
Solow presents a very similar concept, that we invest revenues from the sale of resources so that future generations have the capacity to be as well off as we are today.
Hartwick’s rule underpins the concept of weak sustainability.

10. 9. When is the use of biomass energy sustainable? When is it not?
Biomass is renewable, but depletable.
In order for its use to be sustainable, it has to be replenished to replace what has been used.
“Fossil resources” such as groundwater aquifers or old-growth forests may have a slow rate of growth.
Their use is unlikely to be sustainable.
In addition, cutting down biomass will release stored carbon, adding to climate change concerns.

11. They would be more amenable to subsidies.
10. How can dynamic electricity prices foster sustainability? What are the prospects for dynamic electricity prices? What about rates that reward consumers for reducing electricity use?
Dynamic prices reduce electricity use during peak periods, and consequently reduce the need for electric utilities to build new generating plants.
Consumers have been resistant to prices that are higher during peak periods.
They would be more amenable to subsidies.
But it is difficult to determine how much they have reduced usage in order to determine the proper subsidy.
We do not know how much they would have used in the absence of peak-load reduction rates
Furthermore, consumers have an incentive to inflate the baseline used to measure the demand reduction.