Transcript Environmental Institutionsx - U

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Environmental Institutions
Econ 373
Feb 22, 2012
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Various environmental organizations
• Intergovernmental organizations
• Government organization
• Nongovernment organization
▫ International
▫ Country specific
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Intergovernmental organizations
• United Nations Environment Programme
(UNEP)
• IPCC (Intergovernmental Panel on Climate
Change) [1988]
• World Bank- Environment and natural
resources management
• International Energy Agency (IEA)
• Earth System Governance Project [2009]
• Global Environment Facility [1991]
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Intergovernmental organizations
• International Maritime Organization
▫ A special program under UN founded in 1948
▫ Bring the regulation of the safety of shipping into an
international framework
• Regional fishery management organizations
(RFMOs)
▫ International organization dedicated to the sustainable
management of fishery resources in a particular region of
international waters, or of highly migratory species.
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International Treaties
• United Nations Framework Convention on Climate
Change (UNFCCC): 1992. To stabilize greenhouse gas
concentrations in the atmosphere at a level that would
prevent dangerous anthropogenic interference with the
climate system
• Legally no-binding
• Updates are the protocols
▫ Annex I countries: industrialized countries and economies in
transition
▫ Annex II countries: developed countries which pay for costs of
developing countries
▫ Non Annex I countries: Developing countries.
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Kyoto Protocol (1997)
Brown = Countries that have signed and ratified the treaty
(Annex I & II countries in dark brown)
Blue = No intention to ratify at this stage.
Dark blue = Canada, which withdrew from the Protocol in December 2011.
Grey = no position taken or position unknown
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International Treaties
• Stockholm Conference in 1972: UN's first major
conference on international environmental issues
• Montreal Protocol 1987: Designed to protect the ozone
layer by phasing out ozone depleting
chemicals.
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Montreal Protocol 1987
• The main provisions
▫ Requirement for individual countries to phase out
the production and consumption of designated
substances
▫ A multilateral fund into which industrialized
countries could contribute funds that would be
used to help developing countries achieve the
control measures specified in the agreement
▫ A provision for trade restrictions in designated
ozone-depleting chemicals. Also bans trade in
products containing these substances.
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Excess profits associating with
production ceiling
Demand for CFCs
$
P2
Marginal production
costs
a
P1
Q2
Q1
Quantity
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Designing International Environmental
Agreements
• Transboundary pollutant: CFCs, CO2
• Issues:
▫ Has to be self-enforcing
▫ Sufficiently appealing for the initial agreement
• Similar to cartel
▫ Self-enforcing
▫ Voluntary participation
▫ Effective restriction on output
• Basic characteristics
▫ Cheating and nonparticipation deterred
▫ Individually rational
▫ Environmentally improving
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The Size of International
Environmental Agreements
• N identical countries
• Each country i emits 𝑒𝑖
• Each country chooses either to pollute 𝑒𝑖 = 1 or
to abate 𝑒𝑖 = 0
• Payoff to the country Π𝑖 = 𝑒𝑖 − 𝛾 𝑁
𝑘=1 𝑒𝑘
▫ 𝛾 is the average damage of 1 unit of emissions,
𝛾<1
1
𝑁
<
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The Size of International
Environmental Agreements
• The cooperative solution
▫ If all pollute Π𝑖 = 𝑒𝑖 − 𝛾 𝑁
𝑘=1 𝑒𝑘 = 1 − 𝛾𝑁 < 0
▫ All abate Π𝑖 = 0 => choose abate
• The noncooperative solution
▫ Π𝑖 = 𝑒𝑖 − 𝛾𝑒𝑖 − 𝛾
▫ => choose pollute
𝑘≠𝑖 𝑒𝑘
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The size of International
Environmental Agreements
• IEA: M countries get together to form an
agreement.
▫ Stage 1 countries sort into agree to form members
and fringes
▫ Stage 2 act cooperatively and make a decision of
abate of not




Fringe will always pollute
If members choose to pollute: Π𝑖 = 1 − 𝛾𝑁
If members choose to abate: Π𝑖 = −𝛾 𝑁 − 𝑀
1
Abate if −𝛾 𝑁 − 𝑀 >1 − 𝛾𝑁
𝑀>
𝛾
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The Size of International
Environmental Agreements
• The bigger the problems, the more difficult it is
to hold a group together!
Payoff
Defection to
Fringe pays off
Fringe
1
Member payoff
1 − 𝛾𝑁
1 M* M+-1 M+
𝛾
M (IEA size)
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Government organization
• U.S.
▫ Environmental Protection Agency [1970]
▫ Department of Energy [1977]
▫ Fish and Wildlife Service (Department of Interior) [1871]
▫ Forest Service (Department of Agriculture) [1876]
• E.U.
▫ European Environment Agency
• China
▫ Ministry of Environmental Protection
• Arizona
▫ Arizona Department of Environmental Quality
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Nongovernmental Organization
• The Nature Conservancy [1951]
▫ preserve diversity of life on Earth by protecting the lands and
waters they need. It’s the largest environmental nonprofit by
assets and by revenue.
• World Wide Fund for Nature (WWF) [1961]
▫ Working on issues regarding
the conservation, research and restoration of the environment
▫ World's largest independent conservation organization with over 5
million supporters worldwide, working in more than 100 countries.
• Greenpeace [1971]
▫ Known for its direct actions and has been described as the most
visible environmental organization in the world.
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US nonprofit organizations
• Center for Climate and Energy Solutions (C2ES),
formerly Pew Center on Global Climate Change
▫ providing credible information, straight answers, and
innovative solutions in the effort to address global climate
change, top environmental think tank
• Resources For the Future (RFF) [1952]
▫ conducts independent research into environmental,
energy, and natural resource issues, primarily via
economics and other social sciences. Widely
recognized as a pioneer in the field of environmental
economics.
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US nonprofit organizations
• Unions of Concerned Scientists (UCS) [1969]
▫ initiate a critical and continuing examination of
governmental policy in areas where science and
technology are of actual or potential significance
• Environmental Defense Fund (EDF) [1967]
▫ issues including global warming, ecosystem restoration,
oceans, and human health. It is nonpartisan, and its
work often advocates market-based solutions to
environmental problems.
• Sierra Club [1892]
▫ To explore, enjoy, and protect the wild places of the earth; To
practice and promote the responsible use of the earth's ecosystems
and resources; To educate and enlist humanity to protect and
restore the quality of the natural and human environment; and to
use all lawful means to carry out these objectives.
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Group Project
Group 1 (Feb 29) on General Motor
John Casey
Alex Goetting
Blake Davey
Sheng Hao
Group 2 (Feb 29) on Danone
Pedro Valecia
Chloe Mackey
Stephen Jakubowski
Frank Willis
Group 3 (Feb 29) on Coca Cola
Joseph Wilson
XiXi Mo
Paul Rockwell
Timothy Dreschler
Group 4 (Feb 29) on Walmart
Mega Schmitt
Scott Russell
Yongqi Lu
Aaron Uribe
Antonio Roca
Group 5 (Feb 29) on Intel
Ray Siu
Xiayu Zhang
Jorge Flores
Alex Ruane
Group 6 (Feb 29) on Raytheon
Isaac Marcor
Trevor Brady
Zimiao Liao
Hua Yan
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Group Project
Group 7 (March 5) on Honda
Darryl Davis-rosa
Cliff Bradshaw
Marco Gonzales
Huabin Liang
Group 8 (March 5) on McDonalds
Cameron Haddad
Brandon Deveny
Yingjie Liu
Li Huo
Group 10 (March 5) on Bank of America
Daniella Trimble
Omar Kaif
Matthew Perez
Tze Hsin Chuang
David Rodriquez
Group 11 (March 5) on ExxonMobil Group 12 (March 5) on AT&T
Ken Cummings
Maro Choi
Qihao Zhang
Tim Dalton
Steven Cox
Sean Rocha
Group 9 (March 5) on Pepsi
Soonchun Kwon
Kuna Bhasin
Emaan Ameri
Alvin Cheung
Zachary Nigro
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Group Project
• Case Study on CSR
▫ 10-15 mins PowerPoint presentation (80%)
▫ Written executive summary
• Content
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Overview of the company and the industry
Type of CSR activities
CSR investment in dollars
Identify why it is relevant for the firm to adopt CSR
Recommendations