IB Economics - Common Access Resources

This study note for IB economics covers Common Access Resources

1. Introduction to Common Access Resources

• Common Access Resources: These are natural resources that are non-excludable but rivalrous. Non-excludable means it is difficult to prevent people from using them, while rivalrous indicates that one person's use of the resource diminishes the amount available for others.

2. Examples of Common Access Resources

• Forests: Provide timber, habitat for wildlife, and help regulate the climate.
• Oceans and Fisheries: Source of seafood and play a critical role in the global climate system.
• Atmosphere: Used by industries and individuals, particularly for carbon emissions.
• Freshwater Resources: Essential for drinking, agriculture, and industrial processes.

3. Understanding Sustainability

• Sustainability: Refers to the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs. It involves balancing economic growth, environmental protection, and social equity.

4. The Lack of Pricing Mechanism and Overuse of Common Access Resources

• Issue: Common access resources lack a pricing mechanism, meaning there is no direct cost for their use. This often leads to overuse or depletion, as individuals and companies do not account for the external costs of their actions.
• Examples:
  • Overfishing: Without regulation, fish stocks are depleted, threatening marine biodiversity.
  • Deforestation: Illegal logging and unsustainable farming practices lead to the destruction of forests, which are vital for carbon sequestration and biodiversity.

5. Economic Activity and Fossil Fuels

• Problem: Economic activities, particularly in energy production and transportation, heavily rely on fossil fuels (coal, oil, natural gas). The burning of fossil fuels releases greenhouse gases, leading to global warming and climate change.
• Impact:
  • Climate Change: Increased temperatures, rising sea levels, and extreme weather events.
  • Resource Depletion: Fossil fuels are non-renewable resources; their overuse leads to exhaustion.

6. Poverty and Over-Exploitation of Land in Less Developed Countries

• Problem: In many economically less developed countries, poverty drives over-exploitation of land for agriculture, deforestation, and unsustainable practices.
• Negative Externalities:
  • Soil Degradation: Overuse of land leads to loss of fertility and desertification.
  • Biodiversity Loss: Habitat destruction threatens various species and ecosystems.

7. Government Responses to Threats to Sustainability

Legislation

• Explanation: Governments can pass laws to protect common access resources and limit activities that harm the environment.
• Examples:
  • Brazil's Forest Code: Regulates land use in the Amazon to prevent deforestation.

Carbon Taxes

• Explanation: A tax on carbon emissions aimed at reducing the use of fossil fuels and encouraging the adoption of clean energy.
• Examples:
  • Sweden's Carbon Tax: Introduced in 1991, significantly reduced greenhouse gas emissions.

Cap and Trade Schemes

• Explanation: A market-based approach where a cap is set on emissions, and firms can trade permits to emit carbon.
• Examples:
  • European Union Emission Trading Scheme (EU ETS): A key tool for reducing greenhouse gas emissions in the EU.

Funding for Clean Technologies

• Explanation: Governments can invest in research and development of clean technologies to promote sustainable alternatives to fossil fuels.
• Examples:
  • Germany's Energiewende: A policy initiative for transitioning to a sustainable energy system, including subsidies for renewable energy.

8. Challenges of Government Responses

• Global Nature of Problems: Environmental issues like climate change are global and cannot be effectively addressed by a single country.
• Lack of Ownership: Common access resources are often not owned by any entity, making regulation difficult.
• Need for International Cooperation: Effective solutions require countries to work together, share technology, and commit to common goals.

Examples:

• Paris Agreement: An international treaty aimed at reducing carbon emissions and limiting global warming.

9. Glossary of Key Terms

• Cap and Trade: A system where a limit is set on emissions, and companies can buy and sell allowances.
• Carbon Tax: A tax imposed on carbon emissions to encourage reduction in the use of fossil fuels.
• Common Access Resources: Natural resources that are non-excludable but rivalrous.
• Externalities: Costs or benefits not reflected in market prices, affecting third parties.
• Over-Exploitation: Using resources faster than they can be replenished, leading to depletion.
• Sustainability: Meeting present needs without compromising the ability of future generations to meet their needs.

10. Cross-Curricular Related Topics

• Environmental Science: The study of ecological processes and the impact of human activities on the environment.
• Geography: Understanding the spatial distribution of resources and environmental challenges.
• Political Science: The role of government and international relations in addressing global environmental issues.
• Sociology: The impact of environmental policies on different social groups and communities.
• Business Studies: The role of corporations in sustainable development and corporate social responsibility.

11. IB Economics Essay-Style Questions

1. Discuss the challenges in managing common access resources to ensure sustainability.
2. Evaluate the effectiveness of carbon taxes and cap and trade schemes in reducing greenhouse gas emissions.
3. To what extent can international cooperation mitigate the threat to sustainability posed by the overuse of common access resources?
4. Analyze the impact of economic growth on sustainability, considering the reliance on fossil fuels.
5. How does poverty in economically less developed countries contribute to environmental degradation and what measures can address this issue?

This study guide covers the critical aspects of common access resources, the threats to sustainability, and potential government responses. The guide provides theoretical insights, practical examples, and a glossary to help students understand and apply these concepts.