Environmental Economics Notes PDF

BLUE All Notes LB1: Environmental Economics Key Points Environmental Economics is how to use environment for economy how to give value to something that is untangible/no monetary value understand how we can use e...

BLUE All Notes LB1: Environmental Economics Key Points Environmental Economics is how to use environment for economy how to give value to something that is untangible/no monetary value understand how we can use economics in the protection of the environment → how do we do that? use incentives and money to control people environmental economics is to use economics to help decision makers (the consumers) to connect to environmental concerns when have other concerns in their lives help consumers take best decisions based on environmental concerns way to give incentives to consumers to integrate the environmental impacts into the price to make market failures better: market fails in encompassing environment = externalities market failure = externalities environmental economics tries to lessen these externalities Incentives Punitive ecology = force people to change to control people, can use top down approach with pigouvian taxes OR use positive financial incentives for activities that generate positive externalities such as renewable energy subsidies can be used to renovate a house for ex by using solar panels France-relance 2030 = gov gives money to renovate buildings mostly university campuses to switch to more environmental friendly technology BLUE All Notes 1  Sustainable Development 3 pillars: economic, environment and social! trying to make resources last for future generations trying to find optimal development of resources creation of value with society and economy in mind development not always related to growth! → a circular economy moves away from the linear “take, make, dispose” model to a more regenerative approach circular economy is the continuation of Boulding idea of “space-ship” economy steady-state = move away from a constant search for growth circular = relates to the law of thermodynamics where resources lose some of their energy over time, limits in our world and therefore need to reuse our resources idea of sustainable development = to maintain development on the long- term and try to use tools to control populations to do that Policy Tools and Incentives use incentives to make people want to change nudge = encouraging people to make a decision unconsciously (monetary or action) government takes the decision = top-down / centralised approach ex: taxes on plastic bags to force companies to stop using them sugar tax = normal coke is more expensive than coke zero however, if the tax/fine is not impacting on rich individuals then is not efficient incentives to make a good choice = bottom-up approach eg Norway CO2 emission tax for carbon transport to reward ships emitting less emissions and develop tools and protocols to adapt ships to make them less polluting BLUE All Notes 2  ie Suez Canal Authorities green incentive program = tax to pay to pass is less for boats having “greener” label command and control policies = legislation says that have to do something, can be decided by a global authority Approaches to Public Policy: There are three primary approaches to public policy in environmental management: Decentralized Policies: bottom-up Examples: Liability laws, changes in property rights, and voluntary initiatives. Characteristics: Encourage self-regulation and collaborative solutions among stakeholders affected by environmental issues. Command-and-Control Policies: top-down Examples: Standards and norms that dictate specific environmental performance levels or practices. Characteristics: These regulations mandate compliance, often through strict enforcement mechanisms. Incentive-Based Policies: bottom-up Examples: Taxes, subsidies, and transferable permits that provide economic incentives for environmentally friendly practices. Characteristics: Designed to motivate change by altering the economic landscape in favor of sustainable practices. Key economics concepts externalities = cost of action on the environment that is not included in the price of the product Can externalities be social? yes ie production of a laptop has social externality through child labour Willingness-to-pay: benefits that customers will get from something and how ready are to pay, value that customers are ready to pay and benefits they think they will get from buying this product/service BLUE All Notes 3  Use value: the value people derive from direct use of the good Option value: value placed for maintaining a good based on uncertainty about future supply and potential future demand even if unlikely to use it or maybe later Altruistic value: value placed on a good for which people have no use, so that it can be used by other people Marginal cost = the more you produce, the more the cost of producing decreases per unit Cost assessment: costs are estimated through a with/without principle not a before/after principle not just assessing the before/after aspects ie cutting a tree should assess the cost of what would have been with and without the tree tricky bc timeline is not certain Circular economy and thermodynamics links to thermodynamics: because we live in a finite world wastes produced from consumption lose energy BLUE All Notes 4  Thermodynamics Energy and matter cannot be created or destroyed, only transformed = first law of thermodynamics Over time, the availability of usable energy decreases, meaning we cannot perfectly recycle materials = second law of thermodynamics, finite world relates to technology as well Spaceship economy = Boulding’s law ie concept that encompasses both laws, need to process food back into something else when on a spaceship (finite world) The spaceship economy concept is an economic framework inspired by the idea that Earth's resources are finite, much like those of a spaceship. It suggests that, as on a spaceship, the inhabitants of Earth must manage their resources sustainably and efficiently. This concept builds on the philosophy of "Spaceship Earth", which was popularized by futurist and architect Buckminster Fuller. It views the Earth as a closed system — self-contained and limited in the amount of energy, materials, and space it has. Schools of thoughts on sustainability Club of Rome = Pessimistic view following this, some countries decided to stabilise their population growth and shifting their economic model by shifting the GGP growth to something else like well-being of population no global cooperation at the time, now countries help each other in going more sustainable (ie developed countries give financial help less developed countries to pollute less) “with no strong change, we will all die” re-internalizing some externalities now but still following the Club of Rome expectations BLUE All Notes 5  Optimistic view facing a big issue and assume that as human population will react and adapt ! takes into account adaptability of the market and that some people will manage the issue better than others Sustainable Development Boulding 1960s first economist to talk about sustainable economy/development Initiated by Boulding & the Hippies that wanted the Environment as a Resource “ Economic & Social developments must be placed in their environmental context” BLUE All Notes 6  Thomas Maltus 19th Century religious turned into economist initiated the idea of exponential pop increase and linear resources increase leading to a point of crisis → conflicts David Ricardo 19th Century agriculture specialist that said that people would initially farm land that produces most food for least work BLUE All Notes 7  first idea of extensive/intensive margin: as pop increase → extend effort to less fertile soils (extensive margin)→ more labor → food prices increase → more intensive use of labor on better land → more tensions and less fertile soils (intensive margin) first mention of social + environmental impacts of mass agriculture Ernst Haeckl 19th Century first ecologist talking about ecology as economy of nature investigation of total relations of animal to (in)organic environment including relations with humans Vilfredo Pareto 19/20th Century first well-being criteria situation is Pareto-optimal when one cannot increase the well-being of an agent without reducing that of another evaluation of collective optimality of a given situation Pigou 20th Century BLUE All Notes 8  first mention of externalities: when the final price of a product does not include the consequences of this production on the environment externalities are unintended side effects of economic activities that affect others who ddi not choose to be involved these can be either positive (benefits) or negative (costs) and often lead to market inefficiencies phenomenon that is external to markets and hence should not affect how markets operate when in fact it should internalizing a cost that was previously external to the market affects how market operates when the actions of an agent influence the well-being of another agent without going through the market examples: air pollution from factories, pollution from fertilizers, industrial waste, noise pollution, collapsing fish stocks, methane emissions Sustainable Development Goals 14 Life Below water SDGs should not be represented separately because they are all interlinked the solution to a problem that relates to 1 SDG lies within much more SDGs and to find the solution to one environmental problem, we need to work with all SDGs non-binding goals! why should people that have money care about the environment? green finance/bounds and parametric insurance systems are good bank/investment funds Parametric insurance is Parametric insurance in green finance is a type of coverage where payouts are triggered by specific environmental events (like hurricanes or droughts) based on predefined parameters, rather than assessed losses. It provides quick BLUE All Notes 9  financial relief to mitigate climate- related risks, supporting resilience in sectors like agriculture, disaster recovery, and renewable energy. Green finance is any financial instrument or investment (equity, debt, grant, purchase & sale or risk management tool, for example: green bound, investment guarantee, insurance product or commodity, credit or interest rate derivative, etc.) that is issued under a contract (to a firm, facility, person, project or agency, public or private) in exchange for the delivery of positive environmental externalities (which should be included in the price ie make the product cheaper!) to result in the creation of transferrable property rights → it is recognised within international, regional, national and sub-national legal frameworks Example: Cartier foundation for Nature invests in projects that will make their image greener and give them “rewards” → greenwashing the first green bond was in 2008 when world bank decided to mitigate CO2 emissions and adapting to the consequences A green bond is a type of fixed-income financial instrument specifically designed to raise funds for projects that have positive environmental or climate benefits. The proceeds from green bonds are used to finance projects such as renewable energy, energy efficiency, clean transportation, and sustainable water management, aligning with goals of environmental sustainability and climate action. Carbon market (ETS) Cap & trade market Cap the emissions to max for companies to self-regulate by not taxing them if they are under the emission cap BLUE All Notes 10  trade & price of products are therefore also self-regulated based on the worldwide trade Cap and trade is a market-based system used to reduce greenhouse gas (GHG) emissions in a carbon market. Here’s how it works: 1. Cap: A regulatory authority sets a limit (or cap) on the total amount of GHGs that can be emitted by companies or sectors. This cap is reduced over time to encourage lower emissions. 2. Trade: Companies are allocated or can buy emission permits (also known as carbon credits) that allow them to emit a certain amount of GHGs. If a company emits less than its allowance, it can sell or trade its surplus permits to others. Companies that exceed their limits must buy additional permits or face penalties. This system incentivizes companies to reduce emissions by making it more cost- effective to invest in cleaner technologies than to purchase additional permits. Carbon markets & carbon taxes are managed by different entities and can have both or only 1 of these in each country ETS is a market-based approach used to control pollution by providing economic incentives for reducing emissions. Companies are given or can buy a certain number of emissions allowances and can trade these allowances, which creates a financial incentive to reduce emissions. Economy & Environment Integration of nature into the economics Economies BLUE All Notes 11  Economies exist within the natural world and are encompassed by the laws of nature Economies depend on natural assets, being raw materials or energy inputs Interactions between production and consumption produce wastes (residuals) Environmental Approaches Environmental Economics = The study of consumption and residuals flows and impacts on nature developed based on Pigou’s welfare and externalities approach (1920) Natural Resource Economics = The study of nature in its role as provider of raw materials developed on the basis of Hotelling’s rule on non-renewable resources (1931) can be further subdivided into : mineral economics / forest economics marine economics / land economics energy economics / water economics agricultural economics / narrowed ways to look at how Nature provides resources with a fundamental distinction between renewable and non-renewable resources which generate trade-offs between present and future use (the founding concept of sustainable development) BLUE All Notes 12  → 2 complementary approaches developed in the 70’s Thermodynamics (Sadi Carnot) Quantity: The first law of thermodynamics states that energy can neither be created nor destroyed, can only be transferred Quality: The second law, also known as the entropy law, states that the amount of energy available for work in a closed system only decreases with use, quality decreases According to the 1st principle of thermodynamics, the amount of waste equals the amount of resources consumed We live in a closed system (not isolated/not open) where matter is limited We therefore rely on nature’s functions to absorb/recycle wastes creating a circular relation between environment and economy (Boulding, 1966) Nature will transform wastes into resources again Recycling can limit the quantity of residuals sent back to nature and the quantity of resources consumed since waste=resources (1st principle) But according to the 2nd principle of thermodynamics, recycling cannot be 100% effective → We cannot isolate ourselves from nature, and depend forever on natural systems, but Nature is the most efficient recycling system! BLUE All Notes 13  G = goods M = Import, W = export Wp = Waste of producers Rp = recycling from producers Wc = waste from consumers Rc = recycling from consumers → Wp + Wc = X = M to reduce M, can reduce Goods produced/consumer per consumer and/or globally or resource intensity of production, resources consumed per unit produced (requiring less resources per product = less waste per product) to reduce M, can reduce Wp = wastes generated per unit produced (pollution prevention/source reduction) and Wc = wastes generated per unit consumed to reduce M, can increase Rp and Rc = recycling to reduce M, our social choices go from the least to most effective: recycle, re-use, reduce wastes, refuse and reduce comsumption Parallels between economy and ecology Steady-state economy BLUE All Notes 14  where flows of resources into production and of pollutants back to the environment are kept at a steady level and in balance metaphor for achieving sustainable development Karl Marx multiple critiques of capitalism including how the concentration of land and capital among a small portion of society affected how economies worked For different distributions, the efficient use of resources is different. Ecology First full-fledged definition produced in 1870 In this initial definition of the field, a deep conceptual relationship with economics is evident body of knowledge concerning the economy of nature, the investigation of the total relations of the animal both to its inorganic and to its organic environment including above all, its friendly and inimical relations with those animals and plants with which it comes directly or indirectly into contact Lotka first to attempt an integration of ecological and economic systems in quantitative and mathematical terms viewed world of interacting biotic and abiotic components as a system where all is linked and nothing can be understood without understanding whole system so wanted to treat ecology and economics as integrated whole exhibiting nonlinear dynamics and structured by flows of energy Systems analysis the study of systems that can be thought of as groups of interacting interdependent parts linked together by complex exchanges of energy, matter, and information classical science = resolution/reduction of phenomena into isolatable causal trains reductionist approach = interaction between parts is non-existent weak or essentially linear BLUE All Notes 15  living system = strong, nonlinear interactions between parts, complex feedback loops make resolution into isolatable causal trains difficult/impossible Ecological economics founded by Boulding drew parallels between economic & ecological systems integrative manifestation of the scientific method, while most of the traditional or classical scientific disciplines tend to dissect their subjects into smaller and smaller parts hoping to reduce the problem to its essential elements → computers then allowed to model complex systems and latest/best model so far is the Limits to Growth 1972 “Anyone who believes in indefinite growth in anything physical, on a physically finite planet, is either mad or an economist.” Kenneth Boulding Well-being of agents, internalization of Externalities Well-being criteria of Pareto allows for an evaluation of the collective optimality of a given situation: a situation is Pareto-optimal when one cannot increase the well-being of an agent without reducing that of an other not an equity criteria: a situation in which one agent has everything and others have nothing can be Pareto-optimal efficiency criteria: it avoids under-optimal allocations of resources from a global (social) perspective Pigou 20th Century elaborated how costs and benefits that are not included in market prices affect how people interrelate with their environment externality = phenomenon that is external to markets and does not affect how markets operate when in fact should BLUE All Notes 16  occur when actions of an agent influence the well-being of another without going through market not desired, necessary but can be positive or negative have to be taken into account to reach optimal social well-being ie to reach Pareto-optimal situation since consideration can enhance well being of at least one agent, without affecting that of others internalizing a cost that was previously external to the market affect how market operates → Pigou addressed problem of collective resource use, but only understood when The Tragedy of the Commons good that can be used for free and don’t belong to anyone will lead to unsustainable use if not regulated The internalization of externalities by regulation allows for an optimal social well-being Public Goods Public goods are always linked to externalities Each agent has interest in consuming public goods without financing them freeriding behaviour is rational but does not lead to optimal situation goods that everybody pays for yet are free of use and cannot be property of anyone characterized by non-rivalry: can be consumed many times and agents can consume simultaneously impossibility of exclusion: one agent cannot prevent others from consuming it obligation of use: one pays and everyone consumes the same quantity, even without direct use or any use at all BLUE All Notes 17  consideration of public goods at their real value is difficult as agents have no incentive to reveal price they grant for them but agents have incentives to announce a minimum value, hoping that others will pay more, some are ready to pay while others not → free-riding behaviour ex: global pollution each country has interest in seeing other countries reduce their emissions while not doing anything to reduce their own, but the more countries will reduce theirs, the lower the demand for oil, the lower the price, and therefore the greater the economic interest to consume oil! Economy as a guide for societal choices Nature Nature, the environment, beyond resources, is an asset that produces important (vital) services for human and non-human living organisms. Yet this ability can be degraded/affected especially by impacts/wastes Sustainability is a matter of making short-term decisions that do not threaten environmental services over the long-term It generates a trade-off between conventional economic output and environmental quality Production Possibility Curve (PPC) BLUE All Notes 18  technical constraint determined by technical capacities in specific economy and influenced by environmental factors in which society is located but where society chooses to locate itself on PPC is a social choice choice of combination adopted today will impact shape of the curve in future and range of choices 1-3 generations away pollutants are of different types Cumulative vs Non-cumulative: Cumulative pollutants build up over time in the environment or organisms, while non-cumulative pollutants break down or dissipate more quickly. Local vs Regional/Global: Local pollutants affect only the immediate area where they're released, while regional and global pollutants can spread to affect larger geographical areas. Point-source vs Non Point-source: Point-source pollution comes from a specific, identifiable location (like a factory pipe), while non point- source pollution comes from dispersed sources (like agricultural runoff). Continuous vs Episodic: Continuous pollution occurs steadily over time, while episodic pollution happens in irregular or occasional events. → pollutants interact together and are not always as obvious as emissions BLUE All Notes 19  Harold Hotelling (1895–1973) developed model of efficient resource use over time to help understand how resources are exploited over time and conditions under which conservation or depletion occur owners of resources have 2 options extracting resource and putting profits in bank for interest leaving resource in ground to appreciate in value usually choose first option unless knows that profits will increase in value at faster rate than the rate of interest model including expectations about future level of interest rate affects how biological resources are managed and hence rate and direction of ecosystem transformation Environmental value Valuing the environment has quickly emerged as an issue for environmental economics analytical tools Environmental economics rely mostly on benefit-cost analysis which requires a single unit of valuation but costs easily expressed in monetary terms while benefits are mostly non-market value no valuation method so far is perfect and brings only estimates and value may change through time! Schools of thought : divergence of modern approaches There are different visions of the future: pessimist and optimist model There are different visions of sustainability: weak and strong There are different schools of economics: ecological economics and environmental economics Pessimist model: issued from 1972’s Club of Rome The Limits to Growth using a feedback loop system dynamics simulation to recreate the complex world system BLUE All Notes 20  with no major change in physical economic or social relationships, society would run out of resources within less than 100 years decreased food and medical services lead to death rate rise → overshoot & collapse using new and more resources leads also to a collapse, with excessive pollution impacting health & lack of food supply growth is sustained longer and at higher levels but collapse happens then faster and greater impact removal of a constraint causes system to bump into another one only way to avoid overshoot and collapse is by imposing immediate limit on population and pollution and to stop economic growth end of growth will happen either by self-restraint and conscious policy or by collision with natural limits sound and serious model: exponential growth coupled with fixed limits but use of resources may improve over time, and not considering new resources we could start using ie renewables Optimistic model relies on Julian Simon’s The Ultimate Resource Along with the standard of living, income and population increases with less severe shortages, lower costs and an increased availability of resources Human resourcefulness has always overcome both scarcities of resources and environmental problems associated with economic activities amount of land for agriculture is increasing and production/productivities too → food is not to become limiting factor natural resources shortages are due to correctable human behaviours pollution levels have declined as pop and incomes have increased so pollution results from societal choices and are evitable “power of human imagination” = always find a solution when facing a wall This is also supported by Environmental Kuznets Curves BLUE All Notes 21  vision quite accepted and can be explained by mechanical relation where trade liberalization increases GNP per capita and environmental concern with more developed countries in 2nd half of curve yet some pollutions do not follow this model such as GHG emissions that keep increasing Sustainable development establishes trade-off between environmental, economic & social capitals BLUE All Notes 22  Strong vs weak vision strong vision of sustainability considers no substitution possible of one capital over another weak vision of sustainability considers perfect substitutability both are acceptable but unrealistic strong = considers losses are not reversible, eco-centered weak = considers that nature has sole instrumental value, anthropo- centered strong vision of strong vision = each component must be preserved weak vision of strong vision = components may be substituted as long as functions and values are preserved strong vision of weak vision = substitution within respect of fundamental components of each capital Environmental economics relies on neoclassical economics (market approach) and favors weak sustainability (anthropo-centered and substitutability) society interacts with nature through resources & impacts does not ignore equity issues but puts more emphasis on efficiency (pareto-optimal approach) Ecological economics favors strong sustainability and uses more diversified scientific principles (eco-centered and natural capital preservation) economy is a subsystem of nature less confidence in markets and technology to generate an economy- environment system to satisfy increasing human needs → both are economics anthropogenic analytical sciences based on optimising utilitarian approach BLUE All Notes 23  Understanding the Value of Environmental Resources Costs Individuals have preferences, leading to a hierarchy of choices among goods/services expressed through value willingness to pay (WTP) = what a person is willing/able to sacrifice for one thing, affected by ability to pay ability to pay = relies on individual values but also individual’s wealth diminishing willingness to pay = WTP decreases with number of units consumed/owned An individual’s WTP also expressed through demand curve (price as a function of quantity), different for different products and may be parallel or crossing elasticity = reflects this difference and sensitivity to price changes of a good BLUE All Notes 24  inelastic demand = will pay no matter the price increase elastic demand = less consumption based on price increa The aggregate demand curve of a good is simply the summation of individuals’ demand curve & Benefits higher the WTP, higher value so higher benefits logically not all can be measured in monetary value total economic value of environmental assets made of USE value: value people derive from direct use of good NON-USE value = value people assign to goods even if never have or will use them Option value = value placed for maintaining a good based on unvertainty about future supply and potential future demand even if unlikely to use it or maybe later existence value = value placed on knowing a particular good exists but will never use it bequest value = value placed on good that has no use today but to be available for future generations altruistic value = value placed on good for which people have no use so that can be used by other people (very difficult to implement in economies) BLUE All Notes 25  Pricing when no market exists, can use WTP surveys to know how much individuals will be willing to pay contingent valuations = bidding games, direct questioning, trade-off games, priority evaluation revealed preferences methods = travel cost method or hedonic price method Benefits affected by how much know about something, can go both ways giving higher value to aspects you ignore reducing value from learning about risks or impacts Costs common meaning of costs includes necessary resources traded on markets, including labor economic consideration of costs is wider opportunity cost of producing something = maximum value of other outputs we could/would have produced had we not used the resources to produce item in question measured by market value of inputs/resources used in production → all costs must be considered, even those not paid in practice and those without real market as is the case for most environmental goods & services Private costs = experienced by party making decisions Social costs = costs no matter who experiences them (include private costs) Social costs = private costs + external costs marginal (per unit) and total costs curves determine total production costs acting as supply curve shape of marginal costs function influenced mainly by technology of production process (+ price/value of inputs + time) can shift curve downards if reduced environmental impact and improved efficiency BLUE All Notes 26  Equimarginal process For a given amount of resources, to maximize the total amount produced you should distribute total production among sources as to equalize marginal costs For a given amount of goods, to minimize the total amount of goods consumed and emissions, you should distribute total production among sources as to equalize marginal costs essential component in environmental economics to reach goals of sustainable development in most optimal way essential when aimining for max emissions reduction Efficiency & Integration of Environmental Markets What is the optimal level of pollution? Under the hypothesis of a competitive markets, where actors behave as "price-takers”, considering no cost of pollution and no regulation... what quantity of pollution/production maximizes profit ? Pm = marginal profit ECm = marginal external cost y* is the optimal quantity of pollution that maximises well-being = pareto- optimal situation where the marginal cost of externalities is equal to the marginal cost of production BLUE All Notes 27  Environmental regulations objective is to set marginal benefits equal to marginal costs so that the social situation is Pareto optimal goal is not to eliminate all pollution but to reach optimal level of pollution where social-wellbeing is increased and therefore pollution is justified as long as benefits of production exceed social cost of pollution Example of polluted-polluter agreement without public intervention (1) if the polluted has the rights, the polluter is ready to pay to reach y* to give them access to the resources BLUE All Notes 28  (2) if the polluter has the rights (of natural resources) then the polluted is ready to pay to reach y* (so that the polluter pollutes less) Coase Theorem whatever initial distribution of rights, in the absence of transaction costs, economic equilibrium reached is optimal initial allocation of property rights is neutral in terms of results on the well- being reached but not in terms of who supports the costs and who gets benefits and in terms of morality of way to reach optimal situation → only optimal in economical terms Optimum Pure and perfect competition allows to reach Pareto optimum but in presence of externalities, optimum is not reached as polluter could produce less and pollute less if victims of pollution compensated polluter → ethics of such solution is questionable but leads to best solution for all agents when nature can be divided into properties individually owned, owners have incentive to use property carefully for future use but when many people use one resources without rules, resources will tend to be overexploited → back to Tragedy of Commons market left to itself is likely to malfunction & requires public intervention BLUE All Notes 29  Environmental Policy Analysis Policy questions include: identifying the level of quality of the environment desired (science) identifying the costs of meeting those goals (economics) distributing the costs and the benefits (social choice) → effective policy relies on “perfect” information = complete and exact Benefit/Cost Analysis (BCA) evaluate desirability of potential actions, comparing all gains/benefits and losses/costs from action if B/C >1 → support the action no consideration of distribution of costs and benefits: who pays the costs may not be who gets the benefits In policy-design, distributional matters must be considered along with efficiency issues, equity is either horizontal (among similar people) or vertical (among different people) 4 steps 1. Clearly specify the project/program 2. Describe quantitatively the inputs and outputs of the program 3. Estimate the social costs and benefits of these inputs and outputs 4. Compare these benefits and costs BCA: benefits often underestimated, costs often overestimated, to compare costs and benefits at different points in time have to incorporate time through discounting BLUE All Notes 30  Benefits may be evaluated through reduced damages a new policy would produce or costs avoided main way to value benefits is through WTP Costs estimated through with/without principle and NOT before/after principle compare costs polluters would have with new regulation to what costs would have been without the policy costs to polluters include investment costs and annualized costs Enforcement costs: resources necessary to enforce new policy (private but mostly public) Cost-effectiveness analysis estimates costs of different alternatives based on the objectives considered Stern Review on the Economics of Climate Change “This Review has assessed a wide range of evidence on the impacts of climate change and on the economic costs, and has used a number of different techniques to assess costs and risks. From all of these perspectives, the evidence gathered by the Review leads to a simple conclusion: the benefits of strong and early action far outweigh the economic costs of not acting.” This constitutes the most extended and complete attempt of a BCA of climate change some economists have criticized the method, some have supported it, some have made critical reviews but admitted that the final results should be acceptable (with strong critics from ecological economists) “Climate change presents a unique challenge for economics: it is the greatest and widest-ranging market failure ever seen.” Environmental Policies BLUE All Notes 31  Public policies are designed to change the way society behaves, on both production and consumption sides, so that the actual level of environmental quality becomes the socially desired optimal level = pareto optimal continuum from centralized to decentralized approaches new approaches may mix them and still room for innovative approaches 3 approaches Decentralized policies liability laws, property rights changes, voluntary initiatives not imposed by central government agents are involved and encouraged to “work it out themselves” Advantages parties involved produce and suffer externalities so strong incentive to find solutions agents involved have best knowledge of damages/abatment costs and can find most efficient solutions liability laws: make polluters liable for damages caused, purpose to encourage more careful decisions and change behaviours and way to internalise externalities in decision-making process common law: rely on court proceedings and juries to decide on compensation and amounts, require burden of proof and establish direct causal link between pollution and damage to show that pollutant is cause of damage of that pollutant came from specific defendant, can show liability from negligence statutory law: written regulations passed by public agents (gov, cities) to address public issues and aim at standardized maximum compensations to cover all possible damages that act as sufficient incentives to encourage change of behaviour property rights: defining private property rights can establish conditions under which decentralized bargaining can produce efficient levels of environmental quality voluntary actions: agents engage in pollution-control behaviours in absence of formal or legal obligation through voluntary labels, certifications, BLUE All Notes 32  rankings, listings etc despite lack of market-driven incentive, various social forces operate for effective programs: moral suasion, informal community pressure, etc moral suasion: appeals to morality to influence/change behaviour in absence of regulation, potential of widespread spillover effect, but different reactions to moral arguments, flexible & allows to react quickly and can prepare institution of future policies nudges: take benefit from less conscious dimension of brain as instinctive/emotional reactions generate cognitive biases that are put to profit of desired behaviours, can use salience: limited attention span simplification: minimize cognitive efforts social norms: example of peers concretization: immediate materialization of consequences gamification: game mechanics inertia: natural preference for status quo perception bias: optical illusions informal community pressure: does not rely on regulations and created through infliction of costs ie loss of reputation, markets, value, relies on information available Command-and-control policies standards, norms... that are imposed by government CAC approach = political authorities mandate behaviour through enforcement to obtain socially desirable behaviour in case of environmental policy relies mostly on standards = mandated levels of performance enforced in law (ie speed limits) standards optimal level of emissions with mandated upper limit, enforced by measuring and detecting violations popular: simple, direct, clear and negotiable boundary between legal and illegal BLUE All Notes 33  but not most efficient both in compliance and enforcement cost ambient: never-exceed levels of pollutants in ambient environment cannot be enforced directly and linked to specific emissions emission: never-exceed levels applied directly to emissions per pollution sources do not affect number of sources and therefore ambient level technology: specify technologies/techniques/practices potential polluters must adopt leaves no freedom of choice of way to reduce emissions and does not encourage innovation → usually used in combination for single issue Incentive-based policies taxes, subsidies, transferable permits generate interest/incentive for people to change behaviour but not imposed designed to rectify drawbacks of standards of treating all sources alike, locking-in certain technologies and facing private info public authorities set overall objectives & rules and then leave firm enough freedom that commercial incentives will lead to adoption of cost-effective pollution-control procedures & technologies favoured by environmental economists as include externalities into markets and lead to cost-effective solutions but also weaknesses 2 types that require centralised policy structure and rely on flexible responses to attain efficient pollution control taxes and subsidies: modify price of environmental services and control emissions by sending price-signal by “charging a price” for emissions = taxes pigouvian tax: amount to be paid for every unit emitted, set at optimal marginal cost so that optimal level of emission is reached, polluters left to decide on way to reduce emissions to reach point where marginal cost of additional reductions equals value of tax → minimizes cost associated and relies on competitive pressure of market BLUE All Notes 34  incentive for polluters to use private info and find best way to reduce emissions advantages: controls multiple sources of emissions and satisfies equimarginal principle: each source reduces emissions until own marginal abatement cost = charge of the tax strong incentive for technological change and innovation if technologies investment are lower than paying tax for emissions to be taxed, must be measurable at reasonable cost so rules-out non-point source emissions taxes generate 2 impacts on distribution of wealth impact on prices & output of goods & services: tax generates extra cost of production to firms passed on to BLUE All Notes 35  consumers, affecting pareto-optimal supply-demand equilibrium effects from expenditure of tax funds generated: funds should be used for unrelated issues to avoid lowering of marginal emissions tax rate that would be counter- productive → taxes could be non-uniform to adapt to firms whose emissions are geographically/temporally distant from affected agents “paying for” emission cutes = subsidies public authority pays a polluter amount per unit of emissions reduced, creates economic opportunity cost, similar principle to tax in reverse mode, transforming tax costs into subsidies revenues morally less acceptable polluter paid principle than polluter pays subsidies are not uniform across competitors → competitive advantage unfair & unbalances market competitions can effectively reduce emissions per firm but do not prevent increase in numbers of firms → making industry more attractive! → both require state intervention & optimal situation reached but with extra costs for producers or consumers → deposit.& refund systems to consider? BLUE All Notes 36  transferable emission permits: create non-market goods & services allow for interaction among stakeholders once an optimal of pollution is identified, it is divided into shares (permits or allowances) and allocated as quotas among polluters who can then use those rights to pollute, as well buy more or sell some in a market according to their actual emissions also called markets of rights encourages those who can avoid pollution at lowest costs to pollute less to sell shares from economic perspective optimal value of pollution emitted without unnecessary impacts on producers or consumers while minimizing costs at which pollution is avoided (pareto optimal), so that each source of pollution will behave differently (equimarginal process) → all concepts together! price of shares determined by supply and demand of shares of pollution = free market approach internalizing externalities flexibility mechanisms reduce overall cost through equimarginal prinicple both incentive-based and decentralized approach bc price is dynamic as opposed to tax and can increase or decrease incentive 2 types of permit trading plans Credit trading programs (CRE): allows firms to sell credits they create by reducing their emissions more than required by existing regulations, compensates lack of innovation-incentive of standards and norms cap and trade programs CAP: rely on centralised decision on optimal quantity of emissions and permits distributed among sources so if total is less than current level of emissions, emitters receive fewer permits than needed, creating demand → require structure to set up & manage market (transaction costs) & to control respect of emissions (control number of permits & quantity of emissions) → enforcement costs but still efficient system! how to allocate initial quotas? how much? at what cost? how? who? BLUE All Notes 37  Do you give the same number to each competitor? but they may not be of the same size at all... Do you give a number based on current emissions? this does not recognize firms that invested in emission reduction... Is it fair to give them for free? they will instantly have a market-value... Is it fair to sell them? why pay now when it was free before? Who is concerned ? Polluters only, investors, or open to civil society? Do you allow environmental advocacy groups to buy permits and retire them from the market? NO because prevents you from reaching optimal level of pollution and may buy them at a price that exceeds true social WTP Markets of rights also bring many issues... From an ethical point of view, polluters are given the right to pollute The mechanism encourages society to reach the optimal level of pollution, not to perform better -> not a n economical issue tho It sets barriers to entry of new competitors in market, as they have to buy all quotas, that may have been given for free at first... Ecosystem Services Ocean as a valuable environment The Ocean = resource to feed 9 billion peoples ie the population expected in 2050 if fisheries are more well managed BLUE All Notes 38  until 1990s, fish to feed population was mostly wild caught but since then aquaculture started The 3 aspects of the Environment Ecology: biocenose+ biotic factors = living organisms aquatic (fisheries, eutrophication, biomass/biodiversity, species diversity, endangered sp, etc) terrestrial (forest, wildlife, species diversity, endangered species, etc) Physico chemical: biotope = abiotic factors land (erosion, bank stability, drainage, soil charact etc) surface water (regional hydrology, water pollution, silt load etc) groundwater atmosphere (air, dust, noise pollution) (ecology + physico chemical aspects = ecosystem) Human interest health(diseases, sanitation, nutrients) aesthetic (landscape, recreation) socio-economics (resources, values, employment) → EIA need to consider all these → Comprehensive conservation = holistic approach to protect the environment while safeguarding social development The environment is a resource Economic & Social developments must be placed in their environmental context (Boulding 1966) « Environmental pollution and the depletion of resources are invariably the ancillaries to economic development » BLUE All Notes 39  Different environmental capitals man-made: protect a place bc can be used as a landscape (road, schools, historic buildings, etc human capital: knowledge, skills natural:environmental capital: clean air, freshwater, rainforests, ozone layer, biological diversity, etc → how do we value this without putting a price on it? Monetary valuation Benefits we gain from nature impossible to quantify entirely and stupid to do so, ecosystem services should not be used to quantify loss & gains of money ecosystem services are just used as cost/benefit analysis for conservation management purposes ecosystem services is a fully anthropogenic concept ‘The total value of biodiversity is infinite, so having debate about what is the total value of nature is actually pointless because we can't live without it'. (Salles 2011) between US$16–54 trillion per year, with an average of US$33 trillion per year (Constanza et al. 1997, Nature) 4 groups 1. Supporting Services: necessary for the production of all other ecosystem services BLUE All Notes 40  foundation of life on earth no monetary value eg nutrient cycling, primary production, soil formation allows ecosystems to provide food supply, flood regulation, water purification, 2. Provisioning services: products directly obtained from ecosystems food raw materials genetic resources (crop improvement genes, health care) water minerals (sand, glass, coastal habitats leading to this) medicinal resources (pharmaceuticals, chemical models, test & assay organisms, often linked to genetic resources) energy (hydropower, biomass fuels) 3. Regulating services: benefits obtained from regulation of ecosystem processes similar as supporting services but linked to market & so has monetary value reinternalisation of externalities in link with SDGs carbon sequestration and climate regulation: carbon market value makes it harder for a company to destroy an ecosystem waste decomposition & detoxification purification of water & air: estuaries if healthy can purify water → free water treatment plan pest & disease control (eg ladybug) 4. Cultural services: non-material benefits through spiritual enrichment, cognitive development, reflection, recreation & aesthetic experiences BLUE All Notes 41  cultural use of nature in books, films, painting, national symbol, architecture, advertising etc depends on subjectivity eg flagship species people are ready to protect because is “cute” spiritual & historical: use of nature for religious, heritage value or natural recreational experiences: ecotourism, outdoor sports, recreation science & education: use of natural ecosystems for school excursions, scientific discovery Points of view avoided costs: costs that would have been incurred in the absence of those services eg wetlands = natural waste water treatment so no need to invest in treatment plan + avoid health costs replacement cost: could be replaced with man-made systems eg restoration of a watershed costs less than the construction of a water purification plant factor income: enhancement of incomes to protect the environment eg how to turn something non-tangible ie water quality into monetary value eg improved water quality increases the commercial take of a fishery and improves income of fishers travel cost: an ecosystem may require to travel to it, the cost of this can reflect the implied value of the service cost tourists are ready to pay to travel to a destination to enjoy it for ex value of ecotourism experience is at least what a visitor is willing to pay to get there hedonic price: how much willing to pay for something that makes you happy may be reflected in price people will pay for associated goods BLUE All Notes 42  eg coastal housing prices exceeding that of inland homes contingent valuation: no set monetary value but asking people to chose between 2 options may be elicited by posing hypothetical scenarios that involve some valuation alternatives eg visitors willing to pay for increased access to national parks Summary supporting services: for free (O2, photosynthesis) Provisioning services: monetary value, food, materials etc Regulating services: for free but can be linked to market Cultural services: can have monetary value, ie tourism depends on customer’s hedonism avoided costs replacement costs factor income: cost/benefit analysis for community travel cost: direct potential & WTP hedonism cost: non-tangible atractivity contingent valuation: last resource & have to choose whether want to pay to conserve it Marine Spatial Planning MSP part of Ecosystem-based management BLUE All Notes 43  Marine Spatial Planning (MSP) is a strategic tool for balancing environmental and societal interests in ocean management. In the context of locating Marine Protected Areas (MPAs), MSP integrates ecological data, socio-economic factors, and stakeholder input. The aim is to protect vital habitats and biodiversity while minimizing impact on human activities like fishing and tourism. By employing a multidisciplinary approach, MSP navigates complex trade-offs to identify MPA sites that are ecologically important but less disruptive to community livelihoods. This holistic approach helps ensure both conservation goals and societal needs are met, fostering a sustainable coexistence within marine ecosystems. The measures of protection The MPA Guide recognizes four levels of protection of biodiversity from extractive and destructive activities. These protection levels can be for the entire MPA or in a specific MPA zone. Effective design, compliance and enforcement are essential for each level. BLUE All Notes 44  Impacts allowed in the different levels of protection in the MPA Guide (Grorud-Colvert et al. 2021, Science) BLUE All Notes 45  Outcomes of the different levels of protection found in the MPA Guide (Grorud-Colvert et al. 2021, Science) Management planning for MPAs Stages of establishment of MPAs https://mpatlas.org/ What is a “goal”? A broad statement of what the MPA is trying to achieve A goal is a qualitative outcome that is difficult to measure or quantify, but “you’ll know it when you see it” Simple to understand and communicate. Typically phrased as a broad mission statement. Written as the tense some years from now (“Local aquatic habitats will be protected”) or as an unspecified or indefinite endpoint (“To improve the environmental quality of local aquatic habitats”) BLUE All Notes 46  What is an “objective”? A specific measurable statement of what must be accomplished to achieve a specific goal ie to generate more revenues, etc to make the MPA more or less acceptable for the stakeholders around the MPA Usually two or more objectives are involved in attaining one goal. Should describe the intended impacts, or results of the program on participants and/or the issue. In other words it should be written in terms of what will be accomplished, not how to do it. An effective outcome should be defined within a limited time period, and achievable Also need to describe the costs of the MPA, ie the fishermen wont be able to fish anymore -> maybe create different zones for different stakeholders = marine spatial planning Example of zoning plans Evaluation of No-Take Zones in the Galapagos Marine Reserve, Zoning Plan 2000 (Moity 2018, Frontiers in Marine Science) BLUE All Notes 47  Red = no-go no-take, yellow = allowed to go but no-take Systematic Conservation Planning Marine Spatial Planning in GBR Activities: Tourism, Fishing, Conservation Preservation areas = no-go & no-take BLUE All Notes 48  Fiji’s Locally Managed Marine Areas (LMMA) = bottom-up approach where fishermen manage it activities: community-based fishing, conservation, tourism → balanced using MSP When chose an area to be implemented as MPA, need to create a zoning plan Characteristics of good Marine Spatial Planning for MPAs Representative: need to protect a variety of ecosystems/organisms, not just the most popular ones Complementary: new areas should fill gaps in protection eg if existing MPAs cover coral reefs, a new MPA should cover mangroves adequate: areas must be large and sufficient to support species or connected to other areas with corridors boundaries and surface of areas are very important! flexible: provide alternatives for human use eg providing different zones to give alternatives to stakeholders BLUE All Notes 49  efficient: maximizes benefits with minimal resources eg funded and accepted by all stakeholders portfolio considerations include irreplaceability, shape, connectivity, risk spreading to ensure resilience connectivity = if not possible to have a large one, then multiple small areas connected to each other Method Planning units are each allocated a cost value and a biodiversity value Costs maps for different sectors that will be impacted ie crustacean trawling, mining, shipping etc by MPA = pressure mapping BLUE All Notes 50  Cost calculation: Cost calculation in marine spatial planning (MSP) refers to assessing the economic, environmental, and social costs associated with different spatial uses of marine areas. These costs are analyzed to make informed decisions about how to allocate space for activities such as shipping, fishing, aquaculture, renewable energy projects, conservation, and tourism. Marxan grid Marxan analysis is a widely used decision-support tool in marine spatial planning (MSP) for designing spatial conservation plans. It helps identify optimal areas for marine protected areas (MPAs) and other conservation priorities by balancing ecological, social, and economic factors. Marxan uses a mathematical approach called simulated annealing to identify sets of planning units (spatial areas) that meet specific conservation goals at the lowest possible cost. It aims to balance the following: 1. Achieving Conservation Targets: Marxan ensures that selected areas collectively meet predefined targets, such as protecting 30% of critical habitats (e.g., coral reefs, seagrass beds). BLUE All Notes 51  Targets are typically based on ecological, biodiversity, or habitat requirements. 2. Minimizing Costs: Costs can be defined economically (e.g., the impact on fisheries or tourism) or socially (e.g., displacement of communities). Marxan seeks to reduce these costs while meeting conservation goals. 3. Minimizing Fragmentation: The algorithm encourages compact, connected areas that are easier to manage and more effective ecologically. Objective: continue to promote economic development so need to balance costs MARXAN Marine Spatial Planning Exercise protecting clumped areas = good for science BUT costs on economic development will be higher The boundary effect in marine spatial planning (MSP) refers to the ecological, social, and management challenges that arise at the edges or borders of defined spatial areas in marine environments. MSP involves designating specific zones in the ocean for various activities like fishing, conservation, shipping, and energy development, and the boundary effect can occur when there are discontinuities or conflicts across these borders. Key Aspects of the Boundary Effect in MSP: 1. Ecological Disruption: Marine ecosystems are interconnected, and species, currents, and ecological processes often transcend human-made BLUE All Notes 52  boundaries. If certain activities, like fishing or industrial development, are heavily restricted in one zone but allowed in an adjacent zone, there can be a spillover effect, where the conservation benefits or ecological protections in one area are diminished by the activities in the neighboring area. 2. User Conflicts: Different stakeholders (such as fishermen, energy developers, and conservationists) may have competing interests across boundary zones. For example, a boundary between a protected area and a fishing zone could lead to conflicts over resource use and enforcement challenges. 3. Management Complexity: Boundaries require clear definitions and enforcement. If the governance or management of adjacent marine zones is handled by different authorities or jurisdictions, inconsistencies in regulations, enforcement, and conservation goals can arise, making it difficult to manage marine resources effectively across borders. 4. Spatial Overlaps: Marine species and ecological processes do not recognize human-imposed boundaries, so an activity permitted in one zone could have unintended impacts on neighboring zones. This makes it essential to consider cross-boundary interactions when planning and managing marine spaces. Example: In the case of a Marine Protected Area (MPA) adjacent to a fishing zone, the boundary effect could manifest as: Overfishing right outside the MPA, impacting species that migrate across the boundary. Pollution or industrial activity from one zone affecting the water quality of the neighboring protected zone. Difficulty in enforcement, where illegal activities may occur near boundaries due to uncertainty or lax regulation. In summary, the boundary effect in MSP highlights the need for integrated and cross-border management approaches to ensure that the ecological and human activities in one zone do not undermine the objectives in neighboring zones. BLUE All Notes 53  LB2: The Blue Sectors INTRODUCTION: Healthy Oceans and Coasts for Sustainable Development Global market value of marine / coastal resources & industries = USD 3 trillion/y about 5% of global GDP Threats to marine environment: unsustainable fisheries pollution coastal development offshore infrastructure development although can also have potential positive ie natural no-go-zone climate change ocean acidification cumulative impacts → way to connect decision-makers with these issues but Tragedy of Commons makes changes difficult overshoot: when humanity’s demand for ecological resources exceeds what Earth can regenerate Solutions: climate change: blue carbon climate change: adaptation through innovative solutions in developing countries for ex ocean governance UN Convention on the Law of the Sea FAO Code of Conduct for Responsible Fisheries – Regional Fisheries Bodies EU Common Fisheries Policy BLUE All Notes 54  ecosystem-based management: all sectors coming together to manage an ecosystem in an integrated approach that incorporates entire ecosystem Policies, approaches, tools, capacity development, knowledge management: Integrated Coastal Zone Management Marine Spatial Planning Marine Protected Areas blue economy Blue growth = blue economy = blue sustainable development Blue growth: European Commission initiative to further harness the potential of Europe’s oceans, seas, and coasts for 1. Jobs 2. Value 3. Sustainability Five sectors with high potential for sustainable Blue Growth are to be further developed 1. Renewable energy 2. Biotechnology 3. Coastal and maritime tourism 4. Aquaculture 5. Mineral resources Solutions include behavioural change Defining Blue Economy range of economic sectors and related policies that determine whether the use of oceanic resources is sustainable, blue economy seen as sustainable use of marine resources A "green economy in a blue world", since "a global transition to a low- carbon, resource-efficient Green Economy will not be possible unless the BLUE All Notes 55  seas and oceans are a key part of these urgently needed transformations » (UN) → for UN, it is necessary axis to turn green economy into a blue one → but both these do not define what sustainable means Set of human activities depending on the sea and/or underpinned by land- sea interactions in the context of sustainable development, and notably including industrial and service sectors such as: Aquaculture Fisheries Blue biotechnologies Coastal and maritime tourism Shipping, ship-building/repair, ports, Ocean energy and marine renewable energy → to target specific programs that are sustainable in these sectors The GOAL of the Blue Economy is to face the global crisis (environmental, economic and social) of the last decades, looking at the ocean resources that, used sustainably, may trigger economic prosperity. → BBNJ treaty looks into this by saying that if make value out of resources that belong to nobody (areas BNJ) then have to share these benefits equally! Ensure social justice and maintain environmental integrity which is done through economic resources. BLUE All Notes 56  Framework conditions for growth – drivers & bottlenecks framework: most of the time does not work because one of these aspects is missing (often the funding/poor governance) ie need good scientific information to know how ecosystems operate, how human activities impact it, how to manage this if one of these aspects is not met, everything can collapse BLUE All Notes 57  Roles and actors of blue growth include rich corporations such as TNC, WWF or conservation international. Objectives and roles Oceans as Natural capital Primary objective: the ecosystem protection & restoration Actors: Conservation agencies & NGOs Scale: Small scale, Locally based Tools: MPAs, Ecosystem Based Management ex: Coral Guardian Oceans as livelihoods Primary objective: Poverty alleviation and food security Actors: Development agencies, SIDS, Small Scale Fisheries Scale: Small scale Locally based Tools: Community managed fisheries / MPAs, Marine Spatial Planning, Ecosystem Based Management BLUE All Notes 58  Oceans as good business Primary objective: Economic growth and employment Actors: Industry, larger global economies (EU, OECD, China, etc.) Scale: Global, national & regional Tools: Economic valuation studies, targeted investment and growth strategies Oceans as driver of innovation Primary objective: Technological or technical advances Actors: Academic institutes, industry, and Government Scale: Sub -national districts or provinces Tools: Innovation hubs/research institutes, innovation ‘challenges’, investment/ financing strategies ex: inalve first wanted to change cattle feed to algae-based but lack of skills and customers and got boosted by L’oréal CEO to find customers in aquaculture feed Institutional Framework UN SDGs: SDG 14 Life Below water: conserve and sustainably use the oceans, seas and marine resources for sustainable development UN utilises soft guidelines to encourage the fulfilment of SDG promises. Europe has a big strategy around the blue economy - channel part of the jobs created by the sea in Europe towards something else i.e. biotechnology. eg the Barcelona Convention and MED action plan Mediterranean Strategy for Sustainable Development 2016-25 Clusters are a group of actors that share common reasons to work together. Idea of European Commission Blue Growth Priority initiative BLUE All Notes 59  Tourism In Europe, 5 million people working in the maritime sector generate 500 billion euros/year. In the Med, 4.2 million jobs generating 169 billion € /y. Most of this revenue comes from tourism (79%), followed by transport (13%) and fisheries and aquaculture (8%). An MPA is not only a place to protect fish, but restore them and therefore help fishermen. In the Med, not a large area is actively protected, only 7-8% by an MPA. However, only a small proportion of these MPAs are enforced and help restore fish stocks, around 0.04% Sustainable Tourism was first discussed during the Conference of Rio 1992, and has become a UN priority. 2017 was the year for sustainable tourism. It relies on 3 pillars: 1. Environmental integrity - fair to the environment 2. Economic development – needs to allow creation of jobs and money = value 3. Social justice - needs to be beneficial for local communities FUNDAMENTAL & circular economy concept BLUE All Notes 60  350 million tourists come to the Med sea, and mostly go to the shoreline. However, all countries do not get the same benefit from tourism, the north west of the Med is overexploited whereas the south and east not as much. Therefore the growth potential is not the same either, yet these countries have political unstable climates. Mediterranean is world’s leading touristic destination both in terms of international & domestic tourism! in 1970, 60 million international tourists -> 2014 increased to 340 million!! Mostly going to the shoreline BUT not all countries in Med Sea get same benefits from presence of tourists! Most tourists go to France, Spain, Italy, Turkey and Greece = North western part of Med is targeted by international tourists Could develop sustainable tourism in South = potential to increase value of Med Sea Morocco, Egypt, Tunisia or Israel have a potential BUT political concerns! ie Tunisia has big potential for sustainable tourism as tourism already contributes to 14% of GDP & can expect a rise of touristic arrivals of 1% per annum, so can expect these numbers to increase!! Direct and indirect tourism in the Med create a contribution of 11.6% | 901 billion $ GDP, and 11.5% | 19.8 million for jobs. Challenges: If not managed properly, tourists can bring a lot of negative externalities to the environment and to social balance! BLUE All Notes 61  Pressures on local ecosystems, land and biodiversity losses Decrease in the aesthetic value of landscapes due to urbanisation and infrastructure development Demand for natural resources: Need to think about these facilities for resources in elec etc when want to develop tourism! Pollution (air and water): Half of marine litter in Med sea come from coastal tourism Opportunities and benefits of sustainable tourism: Sustainable development applies to tourism! sustainable tourism should: develop and promote practices and solutions to ensure efficient use of natural resources and reduce environmental impacts of tourism, respecting spatial, ecological, and socio-cultural carrying capacities of the destination Think of tourism as a way to develop local communities BUT for tourism to be sustainable in developing countries, have to help them to not make same mistakes that we have done in our developed countries! eg Labels for hotels to reduce their impact on nature while reducing costs in Costa Rica, CR decided to turn to new eco-conscious customers by creating environmental friendly labels for hotels, whale watching etc -> worked bc increased number of tourists AND tourists that spend more money and therefore helping local communities Med Sea could learn from this! Gold TravelLife, Green Globe, The Green Key = Labels to highlight sustainable performances of hotels and attract more tourists that want to decrease their footprint! Tourist facility can obtain these labels by paying BLUE All Notes 62  (new business models!) but for that have to change their practices to decrease energy consumption, increase local communities livelihoods, take into consideration different processes to be more sustainable Outlook Growing number of tourists? Negative effects to be avoided? Positive effects to be developed? Develop low season tourism? How to do this by valuing the facilities during rest of the year? Critical issues Public policies and regulation: Have to make sure that decision-makers take the good actions Access to finance: Huge financial gap between sustainable tourism development ideas and the access to resources needed State of the economy: Cannot propose same solutions in all countries of Med sea bc different economy status Security and stability: ie Egypt has big potential, but geopolitical uncertainties Travel and mobility patterns: transports, trains, planes etc Resilience to Climate change and other environmental issues: Large regions of world impacted by climate change and have to deal with that to create sustainable business model that can work on long-term!