 Hi, welcome to the ninth video lecture. This is the first video lecture of the fifth and the last module of the course namely environmental development and this video lecture will discuss the political economy of the environment. Now, let's begin by two very interesting quotes on the environment. The first one's taken by taken from Mahatma Gandhi who says earth provides enough to satisfy every man's needs but not every man's greed. And on the other hand, you have Larry Summers who is one of the most influential economists in the United States who says let the poor eat pollution. Now, what Larry Summers means is may not be immediately clear but as you go through this presentation, we'll talk a little more about the political economy of the environment and then it will become clear what Summers mean. To put it briefly one of the economic policies to measure how much people care about the environment is is to base it on how much people are willing to pay to keep the environment clean or to pay for the environmental preservation. Now, since it's a fact that poor people by virtue of being poor cannot pay enough for the environment, therefore, Summers says we should assume that since they cannot pay enough, they don't value the environment enough and since they don't value it enough, we should heap all pollution and all harmful substances in the neighborhoods and the countries of poor people because that's a sound economic logic for doing so. This is obviously, you know, this is chosen here to be more provocative but the logic that Summers is talking about is extremely, extremely pivotal to the economists thinking on the environment. So, what is the fundamental question we are interested in? The fundamental question we are interested in that the environment presents an externality which determines the role of the state in preserving the environment. So, what is an externality? Externality is a cost or a benefit that accrues to a third party that did not choose to incur the cost or the benefit. So, you can, some of the basic examples could be that I produce, I'm a paper producing firm and you buy paper from me, you pay me money and I give you paper and therefore you bear the cost and we both bear the benefits of this transaction. However, the pollution that is created in the process affects not just you and me but also a lot of other people who may have nothing to do with producing paper or consuming paper. So, that's an externality. Now, an externality is, provides a case for government action because the markets can't effectively handle the problem of externalities and some of these, some examples of externalities are given here and the process by which the market cannot account for these externalities is critical because that creates a space for the state to come and intervene in the process and therefore preserve the environment. So, what is the basic question we are interested in? So, we know the government has to be involved in environmental protection because of the presence of externalities that I just discussed but how do we evaluate government action? Do we use a benefit cost criteria or do we use the public health safety environment criteria? Now, briefly put the benefit cost criteria means that whatever the government actions cost should be compensated by the benefits of that action. So, if the government decides to limit the factories producing emissions under you know, producing emissions then that policy, the cost of imposing that policies should be compensated by benefits accruing to the environment on the basis of that policy. Now, obviously there are problems with this because A, you can measure the cost of shutting down factories but you can't fully measure the cost of the benefits accruing to the environment right. So, and benefits secondly maybe accruing to the environment over a long period of time and may have a long gestation period before you can actually see benefits. So, these are some of the problems with this criteria. The other policy we can think of is the safety and the environmental criteria where we say look we are not interested in the costs or the benefits of this policy. We want to preserve the environment from a public health point of view, from a safety point of view. We want to preserve the environment for the environment's sake and that may be another criteria on which environmental policy is designed and the rest of this presentation will go into the details of both these criteria and discuss the pros and cons of each of it and see how exactly environmental policies are determined, what are the factors and considerations that go into this and what are the challenges ahead. So, in order to get answers to these questions please continue to the main power point where these policies are discussed in greater detail and as always if you have any questions please let me know. Thank you for watching.