Question 1:
The tragedy of commons is an economic concept explained by Garrett
Hardin where individuals or corporations exploit shared resources also
known as common property that aren't owned by anyone for their own
self-interests, at the expense of others. By increasing their utility by
depleting shared resources, their actions will negatively impact the local
community's welfare in the long term.
Using the article as a reference, deforestation is an ideal example of a
tragedy of commons because South America lost 30% of its forest
landscape between 2001-2023 (22 years alone) through illegal loggers
and intentionally lit fires, which caused Indigenous communities living in
the Amazon Rainforest mainly Brazil as it leads to soil erosion meaning it
harder for them to replant trees and crops and it could lead to changes to
the climate e.g., more rainfall which could create floods that can wreak
havoc to people’s homes and affect their standard of living. Hardin also
stated that society would be better in the long term if individuals and
businesses reduce their reliance/consumption on timber from the forests.
Although it will be expensive for companies to diversify their more
sustainable supply routes it would provide them with economic benefits in
the long term.
Market design in economic policy is about creating and organising markets
to work efficiently and fairly. It involves setting rules, incentives, and
structures to ensure resources are allocated well, competition is fair, and
social goals are met. These designs consist of rules, regulations and
institutions that govern the behaviour of the buyer and seller within the
market.
The market design used by Lula and Gustavo Petro has had initial success
with them implementing environmental regulations like the “” to detour
Illegal miners and loggers from establishing any illegal activities within the
forest, they also set up fines to punish those who break the rules and
legislations set by the government. This led to Brazil's deforestation
reaching its lowest rate (36%) in 2022 by reversing environmental
legislations set by the previous predecessor “Jair Bolsnaro” which became
stricter and was reinforced with the use of law enforcement, where
environmental crimes were often overlooked.
But with the partnership between the Brazilian federal police force and a
firm from America “Planet” using their satellite images, they could easily
identify areas in the Amazon forest that have had recent illegal activities
and man-made fires with more than 140 arrest warrants and a combined
collections of seized assets worth $3.1 billion. Using the estimates from
, the National Institute for Space Research (NISR), we can find out that the
current market design used by Lula has contributed to a 22% year-on-year
deforestation between August 2022 to July 2023.
With Luna reintroducing the committee responsible for allocating land to
indigenous communities as they are less likely to experience deforestation
when they are given private ownership of part of the forests. Property
rights give individuals and companies the incentive to look after the
Amazon forest, by reaping their economic benefits in the future rather
than overconsuming the shared resources because if they aren’t someone
else would reap the benefits in the short term. This removes individuals
that exploit local communities for their own self-interests while giving
access to those who acknowledge their actions/operations can have major
consequences for communities around them. However, this approach does
have some limitations as it doesn’t promote equal competition within the
market, as those with property rights can form cooperate with companies
to monopolise markets where they raise the prices of their goods sold in
an effort to maximise profits without any fear of competition.
However, the current market design used by Brazil does have some major
flaws to it, as its simply not sustainable as it shows local communities'
dependence on external authorities with the legal framework that
supports them taking up actions by themselves. For example, in 2023
there were ongoing strikes that shortened the availability of law
enforcement to patrol and protect the Amazon forest, leaving it vulnerable
to illegal miners and loggers and the Brazilian military scaled back its
operations leaving the environmental protection agency to fend for itself,
meanwhile, the environmental fines in some regions were also halved. The
Pigouvian approach used by Lula may not be as effective in discouraging
illegal activities as the financial reward for conducting illegal activities
might outweigh the risks of being caught, which can undermine their
efforts to reduce deforestation.
One solution that helps resolve deforestation is taking a Pigouvian
approach which involves developing countries from South America like
Brazil and Columbia to implement taxes on producers that produce a
certain amount of carbon emissions. This in return would encourage
producers to use a more sustainable practice to reduce their carbon
footprint when harvesting wood from the Amazon rainforest, while
punishing those with high CO2 with taxes that change the incentive of
focusing on maximising profit while neglecting the environment. This
Pigouvian approach can also be a useful way of addressing the impact
made from the tragedy of commons and shifting society focus from the
government towards corporations. Society today believes in protecting the
The tragedy of commons is an economic concept explained by Garrett
Hardin where individuals or corporations exploit shared resources also
known as common property that aren't owned by anyone for their own
self-interests, at the expense of others. By increasing their utility by
depleting shared resources, their actions will negatively impact the local
community's welfare in the long term.
Using the article as a reference, deforestation is an ideal example of a
tragedy of commons because South America lost 30% of its forest
landscape between 2001-2023 (22 years alone) through illegal loggers
and intentionally lit fires, which caused Indigenous communities living in
the Amazon Rainforest mainly Brazil as it leads to soil erosion meaning it
harder for them to replant trees and crops and it could lead to changes to
the climate e.g., more rainfall which could create floods that can wreak
havoc to people’s homes and affect their standard of living. Hardin also
stated that society would be better in the long term if individuals and
businesses reduce their reliance/consumption on timber from the forests.
Although it will be expensive for companies to diversify their more
sustainable supply routes it would provide them with economic benefits in
the long term.
Market design in economic policy is about creating and organising markets
to work efficiently and fairly. It involves setting rules, incentives, and
structures to ensure resources are allocated well, competition is fair, and
social goals are met. These designs consist of rules, regulations and
institutions that govern the behaviour of the buyer and seller within the
market.
The market design used by Lula and Gustavo Petro has had initial success
with them implementing environmental regulations like the “” to detour
Illegal miners and loggers from establishing any illegal activities within the
forest, they also set up fines to punish those who break the rules and
legislations set by the government. This led to Brazil's deforestation
reaching its lowest rate (36%) in 2022 by reversing environmental
legislations set by the previous predecessor “Jair Bolsnaro” which became
stricter and was reinforced with the use of law enforcement, where
environmental crimes were often overlooked.
But with the partnership between the Brazilian federal police force and a
firm from America “Planet” using their satellite images, they could easily
identify areas in the Amazon forest that have had recent illegal activities
and man-made fires with more than 140 arrest warrants and a combined
collections of seized assets worth $3.1 billion. Using the estimates from
, the National Institute for Space Research (NISR), we can find out that the
current market design used by Lula has contributed to a 22% year-on-year
deforestation between August 2022 to July 2023.
With Luna reintroducing the committee responsible for allocating land to
indigenous communities as they are less likely to experience deforestation
when they are given private ownership of part of the forests. Property
rights give individuals and companies the incentive to look after the
Amazon forest, by reaping their economic benefits in the future rather
than overconsuming the shared resources because if they aren’t someone
else would reap the benefits in the short term. This removes individuals
that exploit local communities for their own self-interests while giving
access to those who acknowledge their actions/operations can have major
consequences for communities around them. However, this approach does
have some limitations as it doesn’t promote equal competition within the
market, as those with property rights can form cooperate with companies
to monopolise markets where they raise the prices of their goods sold in
an effort to maximise profits without any fear of competition.
However, the current market design used by Brazil does have some major
flaws to it, as its simply not sustainable as it shows local communities'
dependence on external authorities with the legal framework that
supports them taking up actions by themselves. For example, in 2023
there were ongoing strikes that shortened the availability of law
enforcement to patrol and protect the Amazon forest, leaving it vulnerable
to illegal miners and loggers and the Brazilian military scaled back its
operations leaving the environmental protection agency to fend for itself,
meanwhile, the environmental fines in some regions were also halved. The
Pigouvian approach used by Lula may not be as effective in discouraging
illegal activities as the financial reward for conducting illegal activities
might outweigh the risks of being caught, which can undermine their
efforts to reduce deforestation.
One solution that helps resolve deforestation is taking a Pigouvian
approach which involves developing countries from South America like
Brazil and Columbia to implement taxes on producers that produce a
certain amount of carbon emissions. This in return would encourage
producers to use a more sustainable practice to reduce their carbon
footprint when harvesting wood from the Amazon rainforest, while
punishing those with high CO2 with taxes that change the incentive of
focusing on maximising profit while neglecting the environment. This
Pigouvian approach can also be a useful way of addressing the impact
made from the tragedy of commons and shifting society focus from the
government towards corporations. Society today believes in protecting the
