Category: Economics

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Economics Environment Politics & government

[430] Of logging rights as a tool against logging

The decision to join a group with a common interest may provide an individual with fascinating ideas. Some of the ideas are out of this world but yet, sound incredibly effective in reaching a common cause. I am currently with one of the local environmental groups and have been attending their meetings for a couple of weeks now. While there, one of the ideas presented with the goal of preventing excessive logging is the purchase of an acre of land somewhere in the jungle along with its logging rights. When I first heard the idea at the meeting, I was simply astounded by the effectiveness of the strategy.

Imagine there is patch of 3 by 3 acres of land somewhere in the Brazilian Amazon, Indonesian Borneo (or Malaysian Borneo for that matter) or the Russian Far East, with an acre square is considered as one unit with an acre square is the smallest available unit for sale. By simple arithmetic, there should be 9 unit of land plots. If you disagree, convince yourself for goodness’ sake!

Logging activities, especially with the devastating clearcutting method, usually cover a lot of ground. With the 3 by 3 plots under consideration, with say A to C and 1 to 3 marked on each axis to make up a Cartesian coordinate system, moving in some line continuously (e.g. say A1 to A3 or A1 to C1) or continuously harvesting neighboring plot (e.g. A1 to A2 to B2 to C2, etc) would probably provide the least operation cost for the logger rather than cutting one plot and then travel from one plot to some other plot that is unconnected (say A1 and to then C3) to first plot. As a caveat, I am making an assumption on this though I believe it is rather reasonable. I am convinced moving jumping from one plot to some other unconnected plot has some cost to it – fuel for the machines to be transported is an instance.

As a result, a logger would probably try to obtain logging rights to the plots that border each other. Therefore, say if the logger needs four plots, he would buy 1 by 4 or 2 by 2.

Now, say there is a green group that wants to stop the logging, or at least makes logging harder. There are a few ways to do that. The most common technique is ecotage (a form of sabotage or monkey-wrenching) through tree spiking or a direct sabotage on the logging machines. Another way is through tree sitting. But such approach is dangerous and worse, it is against the law in most cases. Therefore, buying the logging rights might be the best way to counter legal logging. Illegal logging unfortunately can’t be stop through this method. The only way to stop illegal logging is the strong enforcement of a strong environmental law framework (of which, I’ll certainly have a wet dream if Malaysia is ever going to have this in the near future, really. It is more frustrating when corrupt officials are up there).

Nevertheless, assuming there is no such thing as illegal logging (however silly that might be), with 9 by 9 plot, along with all the relevant assumptions, the green group needs only to purchase 3 plots, in particular with a diagonal manner – A1, B2 and C3 – to effectively increase the cost of the logger.

Let’s loosen up the assumption and say the logger needs merely 2 plots for his operation. In this case, the green group could buy four plots, A2, B1, B3 and C2 (notice the order) in order to greatly, if I may, screw the logger. With this, the logger will be forced to move to a plot away from the first harvested plot and thus, increase the cost of logging.

Indeed, the latter tactic, in general, buying odd or even horizontal or vertical coordinate in all vertical or horizontal plot or vice versa depending on the total size of the patch of land probably dominates all the other tactics, disregarding the cost of buying such rights.

With all these, there are probably a few scenarios worth mentioning if cost of purchasing such rights is considered in but I really lack the time to explore it given that I should be working with my international economics courses now rather than writing this entry. Another reason is definitely my inability to further explain such scenarios in a clear and concise manner.

However, there might be one or two problems with this. Financing such project in most possibilities will be costly since the only return to this effort is the satisfaction of knowing the existence of a guarantee of a few no-logging plots. Of course, unless we could have some influence on some legislators, assuming there is no corruption, another problem is illegal logging. With illegal logging, any private property in the middle of nowhere won’t be respected. I myself, if I found a binocular somewhere high up in the Sierra Nevada, I won’t sweat myself in returning it (this is a true story if you are wondering. Check this out if you are interested with my lame misadventure).

I wonder how much does it cost to buy a plot of land in the Amazon – it should be clearer in the future meeting I presume. I myself will probably be willing to help the group with its funding effort. Probably that is an understatement. I will be excited to assist the good work.

p/s – Today, the United Nations, probably the greatest symbol of our cooperation, created in the aftermath of our greatest conflict, celebrates its 59th anniversary. To eternity of peace, friends!

Fair use according to Wikipedia.org

And due to my high regard of the United Nations (fetishism rather), I think I want to meet some people related to the local International Affairs Society because Model United Nations is going to be held in February next year! I’ve already contacted the society and we’ll see what’s going to happen from there.This might be hot air but its worth the try. Wish me luck!

Categories
Economics Environment Politics & government

[429] Of Kyoto Protocol in the Duma

The Duma has ratified Kyoto with 334 ayes against 73 nays. All we need now is Putin’s signature to signal approval of the Protocol. This for certain will happen soon thanks to Putin’s explicit promise.

After the signature, 90 days later, the Kyoto Protocol, the dream that first gained momentum at the Earth Summit in Rio De Janeiro, will be a reality.

And an excerpt from the article:

Washington said the pact was too costly and unfairly exempted large rapidly industrialising countries such as China and India.

But EU Commission President Romano Prodi said Russia’s backing would put additional pressure on the United States to reconsider its position.

“The Kyoto Protocol may not be perfect but it is the only effective tool that is available to the international community,” he said in a statement.

“The United States should not abstain from the one fight that is crucial for the future of mankind.”

Bush asserts that war on terrorism requires global effort. How is he going to expect international cooperation while he himself refuses to work with the world is beyond me.

p/s – I somehow managed to mess up with my website template. I will not be able to repair it until next week at the very least.

Categories
Economics Environment Politics & government Sports

[427] Of Louis van Gaal and Ajax

van Gaal has just resigned as Ajax Techical Director amidst Ajax’s victory in a Champions’ League match. The reason for the resignation is unclear at the moment but I must say, I am glad van Gaal is out.

Inasmuch he was the one that brought Ajax to its 1990’s European glory, I have the impression that van Gaal’s presence in Amsterdam is not helpful for most of the times, especially when it comes to the surprise sale of Zlatan Ibrahimovic to Juventus a few weeks ago. In my opinion, the sale was done is a very disappointing way. Not only the timing of the transfer was unbelievable – leaving Ajax a mere 3-day cushion to find an extra striker – the amount of money recieved was way below expectation.

Nevertheless, rumor has it that van Gaal is resigning in order to get a shot at Koeman’s job. I hope that is not the case and sincerely I hope he is gone for good. Even when he arrived, I didn’t celebrate it as much. When Barcelona hates him to certain degree, you have to wonder why.

No more van Gaal. All I want is a rejuvenated Ajax and a revenge against Bayern Munich.

With the vacancy, I would very much like Johan Cruyff to be Ajax’s new Technical Director. He was considered along with van Gaal for the post earlier this year.

In any case, Ajax reported a respectable level of profit for this fiscal year. Therefore, they are expected to buy new players to strengthen their offensive capability in the near future. I hope we will find a good player because with the miserable Sonck up front and Ibrahimovic gone, Ajax doesn’t have any notable striker.

Regardless of that, a few exciting young players from the famous Ajax’s youth academy are making waves. It should be interesting to see another van der Vaart or Wesley Sneijder or, if it is not too much, another van Basten.

p/s – something is on the roll in Myanmar. I’ll just be an a-hole and say the military junta sucks.

pp/s – Unbelievable.

Newmont lawyer Luthfi Yazid told Reuters news agency that the study’s verdict “strengthens our stance that our client did not damage nor pollute the environment” around Buyat Bay.

I rather believe the locals than a lawyer that represents a multinational mining firm. The trees won’t sway if there is no wind blowing. Here, the trees were uprooted and they asserted the wind is not blowing.

I am compelled to allege that a few strings had been pulled off.

Categories
Economics Photography

[424] Of exams (else, photoblog VI)

The huddle has begun. Starting this week, four successive weeks onward, I’ll have at least one exam per week. All upper level economics.

The first is game theory and boy, I thought game theory was easy. Nevertheless, it is an exciting class. In fact, all upper level economics classes are exciting. My favorite is currently international trade theory.

Categories
Economics Environment

[416] Of tragedy of the commons

For the past few weeks, I suddenly have an intense curiosity on tragedy of the commons. The idea is fairly simple. It is a concept in economics where everybody overused a public resource.

In the model that describes tragedy of the commons, there is a public good where nobody owns the good and may freely use it. At the same time, there are a number of resource users. If the users are agreeable, then they possibly can assure the sustainable level of resource usage by voluntarily limiting individual consumption. Let’s just say that initially, everybody limits their usage of resource.

However, since nobody owns the resource (also can be called as the commons) and everybody may use the good, then some user, in fact, every user has the incentive to go over the consumption limit and this is done at the expense of the resource sustainability. The incentive for going over the limit is the higher current consumption level with little immediate cost.

Once a person actually goes over the consumption limit (let’s call this guy as Ferguson the bastard), another individual will follow suit (this guy is van Nistelrooy the crybaby). This is because the crybaby’s future amount of consumption is being taken by the bastard and the only way for the crybaby to retake his (crybaby) future consumption is by shifting his (crybaby) future consumption to the present.

The reason for the crybaby’s reduction in future consumption is that once anybody goes over the limit, the sustainability of resource usage is reduced. Simply put, the future of the pie size will decrease. At the same time, the bastard will enjoy a larger share of the pie and the crybaby will increasingly get a smaller piece of the pie if the crybaby does not increase his consumption.

Thus, the crybaby will go over the limit for his own sake. As a result, sustainability of the resource is sacrificed in favor of current consumption. The rate of the pie getting smaller will be faster; and hence name of the model – it is clear that they all will benefit if they limit their consumption but due to self-interest — it wouldn’t be too much to recognize this as greed — all in the end suffer the cost. The cost is decreasing consumption in the future. Note that, if there is another person using the resource beside the two, then the person will also increase his current consumption for the same reason as described. In actuality, each and every user of the resource will do the same.

In this explanation, I assume that the resource is renewable – at the level where everybody agrees to limit initial, the regeneration rate of the resource equals the consumption rate of the resource. Whenever anybody goes over the limit, the consumption rate is higher than the regeneration rate.

It is not hard to relate the tragedy to the issues related to the environment. The environment in someway is a public good. Nobody owns the air, nobody owns the planet. Also, everybody breathe the same air, everybody lives on the same planet. Similarly, almost everybody is overexploiting the environment.

Knowing that everybody is better off not overexploiting, it is a tragedy indeed seeing everybody is overexploiting the environment.

After reading lightly about cases relating to tragedy of the commons for about a week, I realized and later found out from some reading that one way to reduce this hazard is to privatize everything. A total privatization will eliminate this problem completely, assuming stealing is not an option. How is the problem is eliminated? Simple! There is no public good at all after privatization!

At least in this way, every rational person will rational enough to not overuse his private property though the same can’t be said for irrational person. If an irrational person overuses his private resource, by all means he deserves to face any tragedy caused by his irrationality. Like one of my economic instructors once said, if they want to screw themselves, let them screw themselves.

But it is hard to imagine a total privatization of the planet. I can’t imagine the air being privatized though the same can’t be said for water. I am content to say not everything can be privatized and therefore, I don’t think this is viable.

Another solution is the creation of an administrator over the commons. The administrator will enforce the limit, making sure nobody will go over the limit. If somebody does go over the limit, like the bastard in the first place, sufficient punishment will be administered towards the offender.

And I asked myself: Why is there nobody to govern the environment?

One word came to my mind: Kyoto; all agreements on the environment in general act as that body that governs the “amount of damage” to the environment. But the second option has its own problem – the freeriders. People that don’t agree to the treaty will benefit as much as those that commit themselves to the treaty without incurring the cost of commitment to the treaty, at least when it concerns anything that as global as climate change.