 2. 러시아 정보 There are basically two ways of achieving environmental policy goals. One is laws and regulations. Another is what are collectively known as market-based mechanisms. So carbon tax, you charge carbon emissions, and people reduce carbon emissions. You can legislate that you cannot emit more than certain amount of carbon. Or you can require the use of a specific low carbon technology. In terms of market-based mechanisms, taxes, your tax say flying, and people fly less, carbon emissions are reduced. Or you can use carbon markets. People can trade their permits to pollute according to their needs. Most mainstream economists think market-based methods are much more effective. Whereas many environmentalists tend to believe that we should achieve this through regulation. So on this issue, environmentalists and neoclassical environmental economists have struggled to understand each other. Robert Gooden, a leading political theorist, called this situation a veritable dialogue of the deaf. Basically, they just cannot understand each other because they don't speak the same language, they don't hear each other. So let's try to make sense of this debate and discuss what kind of tools are more effective in what way in dealing with environmental problems. So let's first consider some classic environmental problems. Overgrading of common land, overfishing of the sea, dumping of polluted water into a river, emission of carbon dioxide, or other greenhouse gases into the atmosphere. These are obviously examples of so-called negative externalities. Someone doing something without thinking about the consequences for other people. Now interestingly, some economists have suggested introducing property rights over environmental assets will solve environmental problems. A surprising insight from this line of inquiry is that it actually doesn't matter who owns the property in question. So when a factory pollutes a river in a situation where, say, fishermen downstream own the river, the factory will have to give money to the fishermen for the right to pollute their river. Alternatively, the factory owner could own the river and the fisherman will then have to pay the factory owner not to pollute his river. Obviously the fisherman will pay the factory owner not to pollute the river, only if the value that they get from polluted water is greater than the money they have to pay to do that. Now the interesting conclusion is that either way allocating property rights to someone ensures that the optimal level of pollution occurs. This outcome can be described in another way. The right to pollute basically ends up with whoever values it the most. So for example, the factory owner keeps or buys depending on who owns the river, the right to pollute, as far as it is worth more to him than preventing pollution is worth to the fisherman. Now this argument that an optimal outcome is reached regardless of how property rights are distributed is commonly known as the Coase theorem. This idea was first proposed by the English economists who taught first in LSE and then the University of Chicago, Ronald Coase. And this is quite commonly used in economics and in the law textbooks to discuss environmental problems. His point was actually that the result will hold only if there is no cost involved in allocating the property rights and conducting the necessary negotiations over the compensatory payment. He called this cost transaction cost, which is the central concept in a school of economics that he was one of the founding fathers called the so-called new institutional economics. So actually Coase's point was that transaction cost matter, market exchanges are not costless, establishing and enforcing property rights is not costless. And because of this, this so-called Coase theorem is not going to hold in reality. He saw it as a thought experiment that emphasizes the importance of transaction cost. So actually he was very unhappy that this theorem was named after him because he used it to prove that it doesn't actually happen. So according to the Coase theorem, after trading in carbon markets, the emission permits will end up being owned by the firms which value them the most. That is the firms with the 30s technologies. Basically these firms will find it most costly to reduce emission. So they would find it easier if they just bought the right to emit carbon in the carbon market. The result is that the emission reduction happens where it is least costly because it will be reduced by the firms that will find it easiest to reduce. And then they sell the remaining permits to firms that find it most difficult to reduce emission. So this is known as the least cost argument. Carbon market allows the reduction of carbon emission in the least costly way. And this is one appeal of these carbon markets among policy makers. But of course the problem is that there are some very unrealistic assumptions that have to hold for carbon markets to work in this way in reality. First of all, there's the assumption of perfect information. Now for the emission target to be achieved at least cost, permits must end up at the firm where emission reductions are most costly. That's obvious. But this will happen only if all firms have accurate knowledge of their own emission reduction cost and in particular how this cost may vary with emission levels. They do not necessarily know this. Even if the information is available, people have found through empirical research, firms and individuals do not seem to exploit emission reduction opportunities. So there was this famous Mackenzie report in 2009 in which it was shown that many emission reduction options like installing LED lighting or insulation retrofits of houses, they actually have negative costs. You might spend the money, but over time you're actually going to earn money by investing in these alternative technologies, but relatively few firms and households actually have done this. A bit of a puzzle, it could be the result of sheer inertia or could be the result of what Herbert Simon, the founder of the behavioralist school called satisfying. Simon pointed out that actually making the decision itself is quite costly because you have to search the alternatives and then weigh the cost and benefits. So actually he said that people typically stop their search for solution when they find a good enough solution. They are not necessarily looking for an optimal solution because that will be very costly in terms of search and decision making cost. So he says people satisfies rather than optimize. So maybe that's what is going on. Maybe people look for some alternatives. They find something good enough. They just don't look at other things. But whatever is going on is clear that perfect information doesn't exist. And more importantly, even if reasonably good information exists, people don't seem to be exploiting it. And in that kind of world, it's highly unlikely that this carbon market is going to work according to the theory. The second assumption behind the argument for the carbon markets is that a perfect competition. Promise will not be freely traded if one or a few firms dominate the market. So for example, when the EU started this carbon market known as ETS or emissions trading system, that was back in 2005, the Czech electricity company called CEZ was allocated a third of the country's emission permits because it was such a dominant emitter of carbon. Interestingly, CEZ sold these permits that year when the price was high. And bought them back later after the price collapsed. And then used the profit to invest in coal-based electricity generation. It completely undermined the purpose of the carbon market. But then you could do that because it was such a dominant player in the market. Thirdly, behind this argument for the carbon market, this is the assumption of perfect property rights. Basically, in order for the carbon market to work, permits need to be clearly defined and fully enforced. In reality, definition of the permits are debatable. Enforcement is a problem because firms can just emit carbon beyond their permit. If there is no government inspection, there is no punishment. And in many countries, these mechanisms are quite inadequate. Also firms may legitimately fear that the government may change the rules. And therefore, they might be reluctant to invest in cleaner technology today. Because what if the government suddenly stops enforcing this? What if the government suddenly stops subsidies they used to give to solar panels? These things happen. So there's a host problem there. But the most problematic assumption in the argument for carbon markets is the assumption of static technology. Carbon markets, in essence, work by encouraging short-term cost savings through the adoption of best available current technology. So you have the current technology within that technological regime. You are reducing emissions. But in the long run, the best way to reduce emissions is likely to involve the development and widespread adoption of new technologies. So-called green technologies. So if that is the best option, maybe carbon markets are just backing up the wrong tree. Well, of course, when you say that supporters of carbon markets come up with a response, carbon markets actually give people incentive to cut emissions because the more you cut your emissions, the more permits you have left and the more of them you can sell in the market and earn more money. Academic economists, including many mainstream economists, have started accepting that this is actually quite an incomplete argument that tells only half of the story. Because permit sellers, potential permit sellers obviously have a greater incentive to innovate and develop cleaner technology in carbon markets. But permit buyers actually have even less incentive to reduce emissions compared to, say, when there is a regulation. If regulation says you cannot emit more than this, then they somehow have to come up with the cleaner technology. But they would find it cheaper actually to buy the permits rather than trying to invest in developing cleaner technology and through that route cut the emissions. There was a recent study that tried to identify the impact of EU's ETS emission trading system. And this study found that ETS increased low carbon patenting by just 0.83%. Also past experience suggests that, as they say, necessity is the model of invention. New technologies tend to get developed when there's a great urgency. But unfortunately, carbon markets don't force firms to innovate. Instead, these markets enable some of the dirty polluters to postpone innovation. Your choice of technology today constrains your choice of technology in the future. These are not independent. And we can become locked in into relatively dirty technology. 그래서 많은 시pp atrocars agree that we basically need to get rid of petrol engines and move to electric cars. And the electricity generated to feed the cars should be based on low carbon or, hopefully, no carbon technology. It's this kind of scientific consensus. Yes, I mean that the cars are becoming increasingly fuel efficient. 기술의 기술을 다시 기술을 다치게 되는 것입니다. 하지만, 계속 이 기술을 사용하고 있습니다. 기술의 기술을 다치게 될 것입니다. 사실은 기술의 기술을 다치게 될 것입니다. 기술의 기술을 다치게 될 것입니다. 왜냐하면 가진 영향을 제공하는 것입니다. 다른 인간을 제공하는 것에 대한 바쁘한 공간이 있습니다. 하지만 이 영향을 제공하는 것에 대한 많은 공간이 아니었습니다. 다른 사람들이 너에게 도전할 수 있습니다. 그는 그의 일을 끌어들 수 있습니다. 하지만 그의 경험을 제공하는 것에 대한 그의 경험을 제공하는 것에 대한 그래서 너에게 그의 경험을 제공하는 것에 대한 and will do those positive externalities generating activities at a level that is lower than the socially optimal level. Now, carbon markets are not even designed to address these externalities because all it does is to control negative externalities. 이런 것들을 말하자면 더 프리 마켓 오리엔티드 에코너메스는 네, 카버마켓이 완료되지 않습니다, 그런데 어떤 건가요? 어떤 건가요? 정부가 결정하는 건가요? 어떤 건가요? 정보를 제공하는 건가요? 정부는 그룹을 그룹을 그리게 하는 건가요? 그러니까 말하자면 Partly because they are subject to lobbying pressures from sectional interest. This is known as the government failure argument, which we discussed in our lecture on the role of the state in greater detail. And indeed much of these investments in green technologies are made 부�ering of government themselves at least that recent reduction in the cost of alternative energy technologies. Most of them actually have owed their existence to government intervention. So the electricity cost have fallen by around 90% in the last decade, but did it happen through free markets. Did it happen through carbon markets? No. 그래서 영국 정부는 경제의 기술을 제공하는 것입니다 예를 들어, 전소라 기술을 제공한 것입니다 그 기술을 제공한 것입니다 기술의 기술을 제공한 것입니다 그리고 기술의 기술을 제공한 것입니다 중국 정부가 모여두기 때문에 소재의 성장에 부서적으로 사기의 원점을 줄일 수 있습니다 중국이 지금 소재의 전체 기술을 제외하는 전체 기술이 가장 우렁한 기술입니다 소재의 전체 기술은 유닛이 없습니다 예를 들어, 중국에서 전체 기술을 전문가에서 전체 기술을 전문가에서 전체 기술을 예를 들어, 엘리디라이팅은 비가 내렸습니다. 예를 들어, solar electricity에서 90%의 비가 내렸기 때문입니다. 비가 내렸기 때문이었기 때문입니다. 예를 들어, EU와 다른 국가들의 비가 내렸기 때문입니다. 그래서 arguing at low cost. Let us discuss how carbon markets are compared to taxes, the other markets based mechanism. The key advantage of permits is the certainty that they provide in meeting our pollution target. So that target is set and permits are allocated according to that target. So that will be guaranteed. So that's the strength of the carbon market. 그리고 placed everyone said that, assumptions that there'll be sufficient monitoring, enforcement, perfect information need to hold, but at least in theory that is the strength of the carbon market. On contrast, if you try to hit a pollution target by means of taxation, it's difficult to predict what kind of tax you have to implement, because you do not really know how demand will respond to tax-induced changes in prices. So, if hitting the target is important, yes, carbon markets are better than taxes. 하지만 이 시스템은 아주 높은 비용이 강한 것입니다. 이 시스템은 우정전업을 통해 매우 높은 비용이 강한 것입니다. 이 시스템은 이만한 비용이 강한 것입니다. 비용이 강한 것들은 불쌍한 것입니다. 비용이 강한 것들은 이 돈을 어떻게condها하�énd means issued for free. Will has taxes bringing government revenue. That benefit on the tax site in terms of government revenue. With the long run the most negative thing about carbon markets is it legitimizes pollution by conceptualizing emission permits as the right 사이콜자에게서는 정리되어 있는 압도적 강도의 삶을 상대시키는 것이죠. 사실은 정리된 성적돈의 정리되도록 비용이 부족하다고 생각합니다. 카본 마켓의限도는 많이들과 함께 제작되고 있습니다. 카본 마켓은 보통 택시에서 선택되고 있습니다. 큰 기업들과 많은 로빈 인플루엄을 좋아합니다. 카본 마켓을 좋아합니다. 자난주의 point taxes mean that they have to raise prices which may not always result in increased revenue because consumers might react in a negative way or they'll have to accept lower profit We believe that the ultimate problem with these market-based mechanisms 카본타xis, 카본마켓 그들 말하지 않습니다 사실, 그는 그 위장의 그룹의 기업자들이 미국에 있는 어떤 점에서 최근에報경한 이코넛매가 이 사람들이 사회, 사회, 택시, 그리고 포맷 이 문제는 전체의 경험의 문제입니다. 이 문제는 전체의 경험의 문제입니다. 시장의 기술을 통해 일반적인 경기의 문제는 이 미국의 경기기술을 매우 강한 방식으로 더 크게 필요하다고 말했습니다. 이 방법을 쉽게 말하면 이 경기기술을 극단적인 극단적인 경기의 불안을 도전한 것에 대한 불안을 찾아다녀요.