IGNOU BECE 143 Solved Assignment 2022-23

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Submission Date :

31st March 2033 (if enrolled in the July 2033 Session)
30th Sept, 2033 (if enrolled in the January 2033 session).

Answer all the questions.

A. Long Answer Questions (word limit-500 words)

1) Explain Command and Control Approach (CAC) approach. Outline its advantages and disadvantages.

Command and control are established through statutory authorities, typically in the form of a disaster management law or similar act aimed at civil protection. However, the establishment of command and control does not guarantee their effectiveness. Systems for command and control must be instituted, taught to those who will use them, and exercised. Although several terms are used to describe these systems and their various components, the fundamental components are consistent wherever they are found throughout the world. The Incident Command System (ICS) is one of the most commonly encountered and is used as an example.

The Spatial Logic of the Informational City: The Space of Flows

Command and control functions within firms and within the information economy as a whole are allocated then to central cities. These cities (or the districts within them) can be seen as increasingly disconnected from the rest of the production space and increasingly interconnected between themselves in specialized global information networks. Castells has developed the concept of a space of flows to describe what he perceives to be the now dominant deterritorialized communicational space – of information, people, organizations, capital, etc. – which organizes many socioeconomic processes, and through which cities (or specific zones of cities) are interlinked. This new space of flows is the archetypal functional logic of the informational city. Supported by information and communications technologies, it is held to dominate (but not eliminate) the more traditional, historically constructed space of places. The former overlays the latter like a red carpet on the ground. Although the space of flows permits deterritorialized network connection, which is the new structural logic of the global economy, its central nodes remain at the same time anchored in the traditional space of places. Organizations are located in places, and their workers and materials are place-based, but the overall organizational or functional logic is flow-based, whether we are talking about a multinational company or an airport.

Global finance firms locate in the City of London or in lower Manhattan both for the planetary connections these nodes attract and for the dense series of place-based interactions made possible by agglomerations of similar activities. Nevertheless, information elites and information-based firms have been freed up from the local constraints of the latter and now mobilize, connect, and interrelate far more in flows than in places. Indeed, this may even be an ultimate objective of all the techno-economic change that urban regions have undergone in recent times. The organization of the global urban economy primarily in a space of flows allows production, management, and markets (economic power) to bypass as much as possible forms of territorial regulation which exist to control them.

Described by Castells, the space of flows has three layers of (mutually constituting) physical supports: a circuit of electronic impulses such as telecommunications; a network of place-based nodes and hubs; and the spatial manifestations of dominant groups and interests. In this way, while the technological infrastructure of the first layer provides a foundation for contemporary socioeconomic processes, which take place both in and between the key cities of the second layer, it is in the third layer that powerful and wealthy elites control, configure, and articulate their own spatial requirements, frequently at the expense of the disconnected masses. The space of flows does not therefore correspond only to cyberspace or to a network of urban nodes, but works through and is the outcome of dominant social practices. The flows in the space of flows are always both the basis and product of decision making, and are structured and directed in accordance, which helps to explain why access to the space of flows is sociospatially highly uneven.

Command and control instruments

Command and control instruments involve a government issuing a command, which sets a standard and then controlling performance by monitoring and requiring adherence to that standard. It is most commonly applied to pollution issues, where a command might be that no facility will emit more than ‘x’ units of pollutant per measured output unit or measure. In the case of minimizing GHG emissions and promoting renewables, including bioenergy, the pollutants of concern would obviously be GHGs. The command and control approach would therefore equate to setting a maximum limit on the amount of GHG emissions per unit of energy produced. This requires actually calculating GHG emissions for the entire energy supply chain, which is data intensive and time consuming. Different cutoff points would have to be developed for different energy demand sectors, for example, electricity is a higher grade fuel than heat with correspondingly higher levels of carbon emissions.

When command and control systems are introduced for pollution control, it is generally possible to retrofit systems to existing plants that would then allow them to comply. With the exception of carbon capture and storage technology, which is, as yet, unproven at large scale, this is generally not possible when considering GHG emissions from existing facilities. This is contrary to the deregulated ‘free market’ concept on which most national electricity supply systems are now based. Also in most countries, it would effectively exclude established coal-fired electricity plants, which make a valuable contribution to the stability of national electricity grid systems. While it could be argued that other options (including nuclear and indeed biomass) could provide this base load capacity, many countries do not have substantial nuclear or biomass bases and so substantial new investment would be required. Therefore, the idea of a maximum permitted level of carbon emissions in the electricity sector is not something that could be effectively implemented straightaway – a timetable plan would be needed for energy systems to adjust with minimal user disruption.

A good example of command control instruments being used effectively in the energy sector is the phased European Union ban on incandescent filament light bulbs. However, key features to note are that this applied to an object with a relatively short lifetime, so that there was not an issue with failing to make best use of existing bulbs. This is not usually the case with energy supply, where the supply infrastructure is often fuel specific (e.g., gas pipelines) and is designed to last many years. Additionally, there is, arguably, very little difference between the functionality of a filament bulb and a low energy one. Again, this is not the case when we look at the options for wider energy supply.

If a maximum GHG limit were applied, it would be fairly straightforward to determine whether fossil fuel-based plants met the standard or not because most of the GHG emissions are related to the fuel burnt, which could be easily analyzed. However, as discussed earlier for biomass, the carbon emissions that must be considered are those involved in producing, harvesting, processing, and transporting the biomass, which requires complex and lengthy calculations with significant uncertainties. The uncertainty is often due to incomplete knowledge of all of the steps in the bioenergy supply chain (e.g., not knowing what fertilizer regime was used or how far material was transported or how and when it was dried or comminuted) but also due to scientific uncertainty (e.g., the range of possible N₂O emissions that may result for fertilizer application or the gaps in understanding related to the long-term soil carbon impacts of biomass growth). The result is that it is often difficult to be able to say with a high degree of confidence what carbon emissions are actually associated with a particular unit of bioenergy.

2) Differentiate between the stated preference and revealed preference methods of evaluating environmental resources and describe the Travel cost method.

Revealed-preferences method

The revealed-preferences method involves determining the value that consumers hold for an environmental good by observing their purchase of goods in the market that directly (or indirectly) relate to environmental quality. For example, the purchase of air fresheners, noise-reducing materials, and water-purification systems reveal the minimum amount individuals would be willing to pay for improved air and water quality. That revealed-preferences method is called the household production approach. Economists can also use revealed preferences to determine the value of clean air and clean water through differences in home prices between pristine and polluted areas. That revealed-preferences method is called the hedonic approach.

The household production and hedonic approaches have the advantage of relying on actual consumer choices to infer the value society holds for a particular environmental good, rather than relying on hypothetical scenarios. Valuation techniques are useful not only in cost-benefit analyses or in cases of extreme environmental damage but also in the subtler cases of environmental degradation that occur as a result of market failure. However, there are some environmental goods for which it can be nearly impossible to identify values through market interactions. For example, using the revealed-preferences method to determine the value that society holds for the survival of an endangered species poses a tremendous challenge. In such cases, revealed preferences may not be the preferred method of valuation.

Revealed-preferences methods have been commonly used by researchers since the late 20th century to determine the value society holds for clean air and clean water. For example, housing prices declined in the town of New Bedford, Massachusetts, in the early 1980s following severe contamination of the nearby harbour. Using the hedonic approach, economists found that homes closest to the contamination experienced a $9,000 reduction in value, with the overall loss to New Bedford homeowners estimated at about $36 million.

This type of analysis provides only a minimum value of the loss experienced as a result of the pollution of the harbour. In this case the reduction in housing values is only one measure of loss. It could be combined with others, such as the cost of increased medical care over a resident’s lifetime, which may or may not be directly attributed to the pollution of the harbour; however, such measures are more difficult to obtain. Revealed-preferences methods can be valuable in determining an appropriate fine for the firms responsible for the pollution. More generally, the results also highlight the value that individuals place on clean water.

Market failure

Market failure arises when the outcome of an economic transaction is not completely efficient, meaning that all costs and benefits related to the transaction are not limited to the buyer and the seller in the transaction. Individual consumers will often purchase goods with an environmental component to make up for their inability to directly purchase environmental goods, thus revealing the value they hold for certain aspects of environmental quality. For example, someone may buy a cabin on a lake in order to enjoy not only the home itself but also the lake’s pristine environment. If the individual could exclusively capture the environmental benefits that result from owning the cabin, the demand for cabins would reflect the full value of both the home and the environmental goods it provides, and the market for cabins would be efficient. Unfortunately, in the case of environmental goods, markets often fail to produce an efficient result, because it is rare that any one individual can incur the full benefit, as well as the cost, of a particular level of environmental quality. That is because environmental goods commonly suffer from the presence of externalities (that is, consequences that no one pays for) or a lack of property rights.

There are two types of externalities, negative and positive. Negative externalities exist when individuals bear a portion of the cost associated with a good’s production without having any influence over the related production decisions. For example, parents may have to pay higher health-care costs related to pollution-induced asthma among their children because of increased industrial activity in their neighbourhood. Producers do not consider those costs to others in their decisions. As a result, they produce more goods with negative externalities than is efficient, which leads to more environmental degradation than is socially desirable.

Positive externalities also result in inefficient market outcomes. However, goods that suffer from positive externalities provide more value to individuals in society than is taken into account by those providing the goods. An example of a positive externality can be seen in the case of college roommates sharing an off-campus apartment. Though a clean kitchen may be valued by all the individuals living in the apartment, the person who decides to finally wash the dishes and scrub the kitchen floor is not fully compensated for providing value to all the roommates. Because of that, the decision to clean the kitchen undervalues the benefits of such an action and the kitchen will go uncleaned more often than is socially desirable. Such is the case with environmental quality. Because markets tend to undervalue goods with positive externalities, market outcomes provide a level of environmental quality that is lower than is socially desirable.

Corrective instruments

Once the market inefficiency relating to a particular environmental good is understood, policy makers can correct for the inefficiency by employing any number of instruments. Regardless of the instrument, the goal is to provide incentives to individual consumers and firms so that they will choose a more efficient level of emissions or environmental quality.

Command and control

Command and control is a type of environmental regulation that allows policy makers to specifically regulate both the amount and the process by which a firm should maintain the quality of the environment. Often it takes the form of a reduction of emissions released by the firm during the production of its goods. This form of environmental regulation is very common and allows policy makers to regulate goods where a market-based approach is either not possible or not likely to be popular.

The Coase theorem

British American economist Ronald Coase developed the Coase theorem in 1960, and, although not a regulatory framework, it paved the way for incentive-driven, or market-based, regulatory systems. According to the Coase theorem, in the face of market inefficiencies resulting from externalities, private citizens (or firms) are able to negotiate a mutually beneficial, socially desirable solution as long as there are no costs associated with the negotiation process. The result is expected to hold regardless of whether the polluter has the right to pollute or the average affected bystander has a right to a clean environment.

B. Medium Answer Questions (word limit-250 words)

3) Explain the efficiency in product-mix with the help of efficiency in consumption and efficiency in production.
4) Elucidate the rationale behind ‘Pigouvian Tax’. How does it work?
5) Explain the efficient provision of a public good with the help of a diagram.

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C. Short Answer Questions (word limit 100 words)

6) Differentiate between:
(a) Weak sustainability and Strong Sustainability
(b) Willingness to Pay and Willingness to Accept
(c) Negative and Positive Externality

7) Write short notes on the following.
(a) Global Commons
(b) Social Optimality
(c) Limitations of Coasian Bargaining

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