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Table of Contents

Lessons

Session 1: Overview of Public Policy

The term ‘Public Policy’ may be unfamiliar, but it is crucial to consider it while investing in any market. Simply put, public policy refers to motions such as laws, regulations and proposals with the objective of solving and addressing real-world problems. Despite the unfamiliar term, you would have knowledge of laws in place, such as laws against physical harm and drugs, for example.

How would public policy help you evaluate a company? Looking at laws and regulations of a certain industry could help you understand the industry better. For example, Singapore’s ban on the sale of chewing gum may limit a firm such as Lotte Wellfood’s revenue, as chewing gum is a major contributor to the company’s revenue. Singapore did this in an effort to reduce littering and to quell potential delays in the underground train system which could have caused many negative externalities.

Understanding a local economy’s rules and regulations and how they differ from another country’s could help an investor predict how successful multinational corporations will be. A good grasp on public policy would also help one understand potential controversies and lawsuits a firm is involved in. It is commonly seen that companies with a tarnished legal image find little success in stock markets, placing them as a dangerous pick for investors.

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Session 2: Introduction to Environmental Economics

Oftentimes, a good environment results in a good economy. For example, the UK and Sweden have flourishing economies while recognised as some of the greenest countries worldwide. Why? 

A well maintained environment results in a plethora of benefits for the host nation. This includes benefits such as a wider array of high quality natural resources for producers, lower pollution, which will positively benefit residents’ health and lower negative externalities. 

However, this is a hard balance to strike. Economic growth requires an indefinite amount of resources which a country must procure from somewhere. Of the four factors of production, capital, land, and labor all affect the environment directly or indirectly. By increasing the amount of resources used, more natural resources are depleted which may be at a greater rate than the environment can restore them, creating an imbalance and sending an economy spiraling into market failure, producing negative externalities which may take a very long time to combat. 

To effectively achieve economic growth while maintaining a healthy environment, sustainable development is often looked to as an answer. Represented by 17 goals the UN has agreed upon, there are plans for sustainable development already in action with many more set to be agreed upon in the ever-worsening world. These plans involve meeting the needs of the present without compromising the ability of future generations to meet their own needs. These plans are no easy feat to achieve, mainly due to the bundle of environmental, social and economic problems they drag with them. The environment requires the immediate attention of humankind, and agreements may be too slow to act, potentially sending us hurtling past the point of no return, which is where the sense of urgency kicks in. This urgency would be acted upon if we had the choice, but the lack of economic parity between nations and popularity amongst residents complicates the whole procedure. Even if governments miraculously discover a solution, the way of life generations of yore and the current generations are accustomed to will inevitably be overridden. Society may not agree with this drastic change and resist it. 

Environmental policy, although highly important, is a relatively new concept globally. Early attempts at environmental policy include the UK’s “Clean Air Act 1956” and USA’s 1955 Air Pollution Act. Since then, scientists have discovered the effects of chlorofluorocarbons and greenhouse gasses amongst other common materials which contribute to global warming and climate change. The UN’s first two universally ratified treaties were both in relation to the problem of ozone depletion, namely the Vienna Convention for the Protection of the Ozone Layer and the Montreal Protocol in 1985 and 1987 respectively. Both are not only a major step in environmental policy but also a testament to governmental bodies’ understanding of the major problem climate change poses. From then on, ISO 14000 standards have helped nations develop a greater understanding on the importance of environmental policy. 

As previously mentioned, economic growth and environmental protection may not necessarily be attained hand in hand. With every decision there is an opportunity cost, and in this case society’s aim should be to reduce the opportunity cost in the interest of society and a sustainable future. Sustainable development is often sold as a balanced compromise to ensure one without harming the other. Specific problems faced in society today mostly relate to the external costs of economic growth. Less economically developed countries are determined to play catch up as quickly as they can. Unfortunately, as MEDCs are realizing, development caused significant harm to the environment in terms of pollution and resource depletion. For economic growth to occur, economies must produce a greater output of products to generate more revenue and by extension more profit. However, for more production to occur, more resources are required. Financial economies of scale allow firms to continue their operations at a greater output with a positive effect on their profit, however this greatly depletes resources available to a nation. More production may also release more greenhouse gasses which would cause pollution and market failure. This dangerous path is one many LEDCs are tumbling down without fully grasping them. 

Environmental issues and climate change due to economic growth has led to many calling for a universal slow-down in economic growth for humanity to reassess its methods of growth so as to maintain a healthy environment. This would also involve correcting companies’ tendency to be focussed on profit rather than society. Unfortunately, slowing economic growth will cause a global recession which may cause more harm than good. Consequences such as higher unemployment, reduced investment and increased spending on unemployment benefits while receiving a reduced tax revenue could easily be irreversible. This dilemma plagues economists globally today, hence it is important to keep in mind a company’s attitude towards the environment while investing, so as to ensure one avoids company’s which could face calls to boycott, sanctions or other such negative consequences from negative costs a company may carelessly inflict upon society. 

Now, for the government’s role. Governments are tasked with researching and discovering new instruments to benefit the environment while controlling economic growth. Regardless of the type of economy, in the world today every nation has a government, and every nation is under some level of regulation. Planned economies such as North Korea may find it significantly easier to implement regulations than market economies such as the USA, however it is usually assumed that environmental policy is appropriately implemented. Furthermore, UNSDGs and resolutions are constantly dished out, greatly deepening public policy and legal frameworks relating to the environment.

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Session 3: Environmental Policy Instruments

Carrying out environmental policy, as shown, is no mean feat. This lays the foundation for multiple measures and tools for easier implementation of this crucial policy. Common policies include command-and-control regulations, emissions trading, subsidies, and tax incentives. However, it isn’t very easy to just implement all in one go. Command-and-control regulations involve setting limits for firms in terms of the amount of and process by which they carry out production to improve the environment. This allows for controlled emissions which could seem like a good solution short-term, however in the long-term this can damage hopes of economic growth. This is due to economic growth, which is an increase in national output, requiring more natural resources, whose depletion will be controlled by command-and-control regulations. This may lead to shortages which could raise prices in an economy, increasing inflation and reducing international competitiveness of a firm’s products. The other three are often seen as useful short-term measures, which shall be evaluated later, but long-term, more effective measures are required, which command-and-control regulations also fail to meet. 

That being said, there have been instances of successful environmental policy implementation. Sweden has always pushed itself into the forefront of environmental policy. In 1909, the Scandinavian nation enacted the first nature protection act which implemented protection for national parks and reserves. Despite their small population density, the nation spent decades striving to innovate in environmental policy. Various legislation passed over the years has led to reduced carbon emissions, as per the government of Sweden, with carbon emissions peaking in the early 2000s, but soon diminishing to what it is today. Black Carbon emissions, once close to 6000 tonnes, have reduced to less than 3000 tonnes as of 2019, and carbon Monoxide emissions., which in the early 1990s were clear of a million tonnes, have reduced to just above 300,000 tonnes in 2019. Sweden’s relentless breakdown has included legislation such as controlling the usage of land by tasking their use to either the public or municipalities. Through conservation programs and pollution control, Sweden has been a mainstay in the revered Environmental Performance Index top 10.

When all is said and done, policy makers still need guidance when making decisions in implementing policy. For this, cost-benefit analysis is used. Cost-benefit analysis is a critical tool in evaluating the economic and environmental impacts of policy decisions, which involves weighing up the costs of potential rewards from a decision against the total costs of the decision. Often, intangible effects such as morale are assigned a value in dollars to maintain consistency. As one can assume, assigning values to intangible items could be very controversial and opinionated, which complicates the cost-benefit analysis. That being said, it is a crucial tool for policymakers and firms. Effective cost-benefit analysis can aid decision making and appropriately evaluate opportunity costs. For example, a firm which wishes to invest in a certain automated machine would assess the cost of renting the capital and other fixed and variable costs involved in running the machine. This would be assessed against the reward from this, which would be the productivity multiplied by the amount of time the machine runs for. When effectively used, cost-benefit analysis can greatly help in planning for policymakers and is an essential tool for every investor too. In investing, cost-benefit analysis is crucial to plan for investing in companies and for lowering or terminating one’s stake in a company too. 

Once again, we shall revisit the potential to use economic incentives to reduce pollution. Emissions trading and tax incentives both involve offering incentives for firms to cut their emissions. Subsidies follow a similar line of thought, where incentives are given to firms which produce low emissions so they may scale. However, these also offer a range of drawbacks. For all 3, it could be an inefficient use of resources which could instead be used to mitigate pollution overall or on public and merit goods which there is typically a shortage of. They could also eat into the government budget and reduce the effectiveness of the government as a consumer, which could be highly dangerous due to the government typically being the largest consumer in an economy. Greenwashing is a possibility too which may end up damaging the economy as a whole. Bias towards and a sense of entitlement potentially felt by firms which receive these benefits may reduce productivity and eventually reduce the incentive for firms to produce, since without production there would be no emissions, hence maintaining eligibility to receive benefits. Green taxation faces the same issues. It involves taxing environmentally harmful activities while reducing taxes on green alternatives, which, as evaluated, would be a good short-term solution however it could backfire in future in the case of corruption. Nations which are perceived to be highly corrupt, such as Somalia, may find little success in implementing these measures due to the potential use of bribes for firms to buy their way into lower tax brackets and to greenwash in order to seem eligible to receive subsidies or other benefits. 

However, cap-and-trade schemes could potentially solve issues of bribes. These schemes involve setting a market cap for all firms to follow in terms of pollution, however, they may also purchase parts of other firms’ allowances. This may be seen as an efficient method to combat previous concerns regarding the depletion of governmental resources and stunted economic growth. However, caps may be tricky to set, considering low caps would result in less output and by extension increased prices, inflation, and damage to international competitiveness for firms to remain afloat and generate profit. High caps would have little to no effect on pollution, negating their effectiveness. Furthermore, regulation of pollution and the market of buying and selling allowance caps may also be difficult to control. Potential monopolies and oligopolies in such sectors could seriously damage an economy. There is also the concern of shell firms being created simply to sell their allowance to another firm which requires it. Businesses may also get past these regulations by creating multiple companies to spread production. Hence, unfortunately, financial incentives may not be effective in implementing environmental policy, however, in the short-term, their implementation may yield success, since most methods to sidestep governmental control require time to apply.

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Session 4: Natural Resource Management and Economic Growth

Natural resources are a gift many nations have received from their conception. Natural resources are typically a useful factor of production in the form of land. Countries with natural resources typically found themselves in prosperous situations in early days, such as the early Mesopotamian and Egyptian civilizations benefited from convenient locations near bodies of water with access to animals to prosper and set in motion events known as archaic globalization, often recognised as one of the earliest examples of globalization. Globalization is the process of utilizing technology and trade to foster a more interdependent and connected world. Naturally, freer trade and increased utilization of resources results in greater economic growth as more goods are likely to be produced if greater demand, due to more locations globally being available. Easier trade is often encouraged for merit and public goods and most other goods which aren’t deemed as demerit goods. However, as discussed in previous sessions, greater utilization of resources for production leads to resource depletion. There may be a point by which the rate of replenishment for resources is lower than the ever-increasing demand for them. This can cause shortages of valuable natural resources, especially if they are non-renewable such as coal, which will naturally decrease production and increase prices in an economy. As one may assume, a sudden increase in prices will naturally lead to higher inflation, and by extension unemployment. This will reduce international competitiveness as higher prices will be ignored in favor of cheaper alternatives, especially in the competitive global economy, and this may damage a currency’s strength which will reduce competitiveness in foreign exchange, often considered the most competitive market. So this brings forward the question, how does an economy achieve economic growth while maintaining sustainability? There are many answers to this, with varying degrees of success. That’s what will be discussed this session.

Generally, everyone feels sustainable development and the environment are very important on an individual scale, however the need for legislation directly contradicts that and creates an oxymoron presented by the title of Garrett Hardin’s 1968 essay, ‘tragedy of the commons’. The tragedy of the commons illustrates a situation in which one finite good is freely available to the public, leading to its overconsumption by society. This will inevitably lead to the major devaluation of the good, which may affect the good in other markets too. The tragedy of the commons argues that restraint is not a rational choice for individuals, further arguing that overconsumption of this finite good would be inevitable.  Of course, over-consumption would naturally deplete a good, leading to its eventual extinction. This problem is presented to all economies which wish to work with sustainable practices, and its dangerous nature towards any type of good presents legislative bodies with the task of combating it, emphasizing the importance of sustainable resource management to avoid over-exploitation. One method of combating this problem would be quotas. Quotas set a limit on the number of or monetary value of a certain type of good which is imported or exported into or out of an economy. Quotas limit the amount of certain types of goods which allow for their regulation and a set price due to the set quantity. This exploits the basic economic problem of scarcity to closely regulate consumption. Another measure would be property rights. Property rights involve relinquishing all control of a product over to the owner. This limits  ownership of certain products and allows some public goods to be controlled by the government or a few other parties to limit their overconsumption since, after all, the general public do not own the goods. However, both these measures limit demand which may be harmful to an economy’s growth in the long term, especially with globalization and increased trade. To attempt to combat this, another measure called community based resource management. This scheme aims to create the right incentives and benefits for consumers to use natural resources sustainably. This means rewarding consumers for managing their resources sustainably. These incentives may allow for greater purchasing power for individuals and eventually greater demand, greater supply, and greater economic growth. However, there is the problem of the government’s budget to consider. The budget may be better used elsewhere such as for providing merit and public goods.

For resources to be used, they must be obtained. For them to be obtained, they must be extracted. For them to be extracted, in the primary stages of production, in the primary sector of an economy, lies an industry specializing in such operations. Developing countries tend to have a large proportion of their workforce in the primary sector, meaning that their workforce is primarily involved in resource extraction or collection. This means that revenue produced by firms in these sectors are solely reliant on supplying to the secondary sector, unless a vertical forward merger occurs. However, the primary sector also tends to generate the lowest revenue, which is reflected in low salaries, and a high proportion of the workforce being in the primary sector will result in a low living standard. This may be considered one possible cause of the resource curse. The resource curse refers to the phenomenon by which countries with an abundance of natural resources have less economic growth, less democracy and worse development than those with less resources. Another cause could be said to be an abundance of one certain resource in which production is focussed, reducing the capacity to produce other goods and services which may be essential. This will also lead to a lack of conglomeration and limited multinational corporations (MNC) since only MNCs which are part of the specialized industry would be interested in investing in the nation, creating a disparity between the development of this industry compared to other crucial industries. For example a country focussed on oil extraction and production may have an underdeveloped agriculture industry which will result in unaffordable food due to scarcity. To combat this, legislation is required. Legislation which mandates longer periods of time in education would result in the general literacy rate of the population to increase and may even encourage more students to pursue education after high school. This may also result in a greater variety of workers in terms of specialization which can help develop other underdeveloped industries. Other types of legislation which could improve the situation include incentives to work in other industries, quotas or other such limits on the production of specialized industries and upskilling programs to reduce the amount of workers in the primary sector.

Mining, fishing and forestry are all crucial primary industries in the functioning of the world. All 3 industries have been used as the primary focuses of nations in the past for development. However, this trio have another thing in common; they all harm the environment. Mining is responsible for between 4 and 7% of the world’s carbon emissions. Fishing reduces biodiversity in oceans and other water bodies, which can harm the food chain. Forestry often results in deforestation with no reforestation due to the expensive and time consuming nature of the latter. We depend on trees for sequestering carbon dioxide. Without them, all of our carbon emissions would be unabsorbed and this would have catastrophic effects on the health of people all across the world. It is crucial for humanity’s survival that the correct legislation is implemented in all 3 industries to ensure their development sustainably. Hence, it is important to learn from real life examples of policy being implemented in all three. 

Firstly, to find an example of policy being implemented in mining, we shall take a look at Africa, but first, some common effects of mining. Traditionally, mining involves a lot of usage of water, with close to 1% of water usage attributed to mining. This water would be useful in other industries, especially considering the impending water crisis. Mining also causes a lot of pollution due to leaks of mining trails which can make entire bodies of water unusable. Mining also has long term effects on surrounding land and infrastructure, often weakening foundations of infrastructure and making land unable to support larger infrastructure. Lastly, mining also releases high amounts of carb emissions due to the long and tedious process of mining in one location. All in all, mining and the environment typically do not go hand in hand. Hence, a mid-tier gold producer in Africa, Pan African Resources, is trying to combat the devastating ecological impact of mining. Hence, the firm has successfully implemented policies to reduce their impact on the environment. The firm has tried to turn away from non-renewable energy, with one of their mines running on 30% solar energy. Furthermore, the firm also attempts to reuse water used in mines for surface activities. They also attempt land rehabilitation to remove waste materials at old sites, while restoring previous indigenous biodiversity and supporting local communities displaced or affected by their production. The firm also strives to improve their waste management, the general air quality near their mines and biodiversity which may be affected by mines. The firm hasn’t received any disciplinary action on environmental charges throughout 2020, and they strive to continue successfully implementing such policies. 

Next, fishing. This time we cross the world to look at Oceania. The Marine Stewardship Council, a non-profit organization which aims to set standards for sustainable fishing, has implemented their blue MSC label. This label indicates that a product follows their latest standard on sustainable fishing. This helps consumers make a better choice while reducing demands for brands founded on unsustainable fishing practices. The MSC standards are assessed by a group of marine experts who assess whether a firm follows the standard or not. Standards include anti-ghost gear practices, greater protection for marine species and protecting habitats and ecosystems. Studies conducted by MSC in the early days of the license yielded positive results for the environment. Quantifiably, firms holding the MSC license reported improved stock status and reduced bycatch, both of which indicate that fishing is carried out with more care and more attention is paid towards the environment whilst fishing by these firms. 

As for sustainable forestry, we take a look at North America, this time Ontario, Canada. In Ontario, 90% of forests are publicly owned, and 44% of these forests are actively managed by the government. In direct legislation, Ontario has set out rules and regulations to advise forests to effectively stay in line with sustainable forestry practices, while preventing the mismanagement of forests by implementing license systems for people who measure the amount of wood harvested (scalers) and the regulation of individual forest audits, amongst other protocols. This act is named the “Crown Forest Sustainability Act”, and was passed in 1994. Furthermore, companies which wish to carry out logging in any Ontario forest must submit a plan to the local government for evaluation which will detail how forest values will be upheld, how forests will be protected while the work is carried out, and whether the forest can naturally recover from the human activity and how long its recovery will take. This plan is also released to the public for evaluation. Severe punishments such as suspension or revocation of forestry licenses, imprisonment and hefty fines are in place for firms which violate submitted plans. Ontario also places an accessible customer service system related to forestry for those in need of clarification on any activity related to the forest. On a more global scale, to prevent the usage of unlicensed wood, the Forest Stewardship Council (FSC) tag which is iconic for its tree-like shape, is visible on products made using licensed wood, as per the FSC.

For examples of nations who have successfully implemented policy to manage their natural resources, we once again look at Scandinavia, this time at Norway. Norway discovered oil in their nation in 1971. At the time, the nation was relatively powerless and small in comparison to the Western powers such as the USA and the UK. Early into the development of the industry, the Norwegian government established a 78% tax on all oil companies so as to ensure the majority of the revenue from oil went back to the people, since the government has the job of redistribution of income. Investment in public healthcare and education was carried out by the government so as to raise living standards in Norway and create a workforce which is better equipped to work in the tertiary sector. During a deep recession in 1990, Norway established a sovereign wealth fund to direct all received governmental revenue to, which at the time seemed unpromising. However, as time passed, the fund saw major growth when the petroleum industry of Norway bloomed. This resulted in strong pressure to spend this increased revenue in the economy. The government did so, investing in various sections of the economy and helping it develop. Throughout this process, to maintain trust, the central bank of Norway, Norges Bank, was handed full control of the fund. A well managed bank, the Norges Bank was clearly successful in implementing this fund and tax. The government also invented a fiscal rule which planned for the future of spending of the money from petroleum revenues. This rule detailed a strategy for the long term spending of petroleum revenue. Using these policies, the Norwegian government also set up failsafe policies should the economy turn into recession in the future. Since then, the government has attempted to share their success story with other nations, particularly developing ones, in an effort to inspire similar stories.

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Session 5: Climate Change and Economic Policy

Climate change has been dangled in front of everyone recently, with rising urgency. Greater advocacy and concerns raised globally typically focus on the impact of climate change on humanity’s survival and the effect on the environment. However, behind all this, all the heartless people who ignore climate change in favor of greater cash flow are ignorant to the economic impacts of climate change. Climate change is an externality which affects the whole globe. This makes it one of the most severe forms of market failure. Market failure occurs when a market fails to efficiently allocate resources, meaning climate change not only reduces the stock of resources available for future generations but also fails to use them efficiently resulting in their wastage. Inefficient use of resources diminishes their stock which means that their price rises due to supply being unable to meet demand after a certain point. This causes inflation at a rate which may be seen as harmful to an economy, with there being potential for hyperinflation. Hyperinflation causes unemployment which reduces the capacity of consumers to consume due to lower disposable income, which will reduce demand, and effectively cause deflation and a major slowdown in economic growth of an economy. This volatile economy is one humankind will have to adapt to if sustainability continues to be ignored. Such an economy will be very hard to adapt to, especially for middle income and lower income households which may find it hard to get by with current disposable income. Negative savings, higher interest rates and general dissatisfaction will eventually reduce trust in an economy which can have catastrophic effects on a country. Combating such an economy leaves us with one option, to go green. Sustainable practices must be adopted globally, as there are many contributing factors, as discussed in session 4. It is crucial to ensure practices are adopted appropriately by the global economy to prevent a collapse such as explained above.

The first step when discussing climate change is typically the most obvious one; greenhouse gas emissions. Much of what is done in the world produces greenhouse gasses. These gasses are essential for our survival as without them, we would likely freeze to death, and also the lack of their release would indicate a lack of usage of fuel in the world. Fuel is a key resource which is often used in production, and hence the reduction of its usage would indicate reduced economic activity which would reduce economic growth and diminish the global economy’s capacity to function. Mitigating greenhouse gas emissions still must be done, as global greenhouse gas emissions continue on an upward trajectory, with 37.55 billion metric tons of greenhouse gasses emission as per Statista in 2023. This is over 7 times the amount 80 years ago in the 1940s. Rapid industrialisation has caused this issue to escalate to the point at which we must change the way our world functions if we are to avoid a dystopian future brought about by our own doings. One common way to reduce greenhouse gas emissions is to switch to alternate reusable sources of energy. It isn’t easy to simply switch the whole world to solar, hydro, wind or tidal energy. The key word here is renewable, but nuclear energy is also being considered by some nations (not nuclear weapons but using the same process to produce energy), however this is non renewable as materials used for nuclear energy such as plutonium are extracted from earth and there is a finite supply of such materials. However it is worth noting that nuclear energy does have the benefit of releasing no carbon emissions, yet it is quite expensive and dangerous if carried out in the wrong conditions. As for each of the others, they all have their individual benefits and disadvantages, with the most common themes being the lack of certain materials such as solar panels or waves for tidal energy, cost, solar panels are very costly to install, and land space, small nations such as Singapore may not be able to fit rows of turbines to produce wind energy. Of course, every nation has the conditions which fit some of these types of energy better than others. Nonetheless, major changes to lifestyle and major costs must be incurred to switch off carbon, which brings us to the other method of mitigating greenhouse gas emissions, which is ensuring there are more sinks. As you may know, trees sequester carbon dioxide from the atmosphere, which reduces carbon emissions by 11.4%. If more trees and similar carbon sinks are planted and implemented globally, usage of greenhouse gasses may increase or maintain at the same rate, but carbon emissions would reduce significantly. A perfect world would probably involve implementing both methods to ensure a balance and a quicker diminishing of greenhouse gas emissions. 

Without any clear agreements or policy, world efforts against climate change would be scattered and minimal, as that would be cost effective and seen as more efficient in the short-term by most developing countries as they wish to continue and complete their industrialisation. So, the need for international agreements became more pronounced over time. The first agreement internationally was the United Nations Framework Convention on Climate Change (UNFCCC) of 1992. This agreement set out to reduce greenhouse gas emissions and also ensure regular meetings and scientific research into climate change by member nations of the United Nations. The party has 198 signatories. After this, a major agreement which set out clear goals and targets was the Paris Agreement of 2015. The Paris Agreement aimed to allow countries freedom in setting their own targets, however through the implementation of a global stocktake mechanism, member nations must revise their goals every 5 years to increase targets every revision, in a progressive scheme. This freedom is known as nationally determined contributions (NDCs). NDCs must aim to mitigate carbon emissions and adapt to climate change. As mentioned, they must be progressive so as to continuously achieve better results for every nation involved. The effect of the Paris Agreement is immense as of the parties in the UN, only one major party didn’t ratify it, that being Iran. The USA also briefly pulled out in 2020, but rejoined the following year. The USA’s withdrawal drew widespread criticism and caused concern as many suspected other nations would follow the nation’s example due to their influence. So far, the Paris Agreement has been successful, despite calls for more extreme NDCs, which builds a path for similar agreements in the future to encourage global cooperation and globalization. 

Renewable energy adoption is hard. That is the cold, hard, truth. Renewable energy is cheaper in the longer term, since it can be generated effectively continuously, however, in the short-term, there are very high upfront costs due to the expensive nature of generators in general, especially with the recent Russia-Ukraine conflict, considering Ukraine was a major natural gas supplier to some nations, which has seen generators, even for renewable energies, increase their prices due to the potential for large amounts of profit. Due to these high prices, it will cost nations a large sum to replace all non-renewable energy generators with newer renewable models. Furthermore, the materials required to produce the required generators could be used elsewhere as their opportunity cost (next best alternative foregone) may have been a more efficient use of the materials. This is especially true when considering that renewable energy typically has a very low efficiency. Furthermore, as previously mentioned, many nations may suffer from geographical limitations of implementing the necessary technology for harvesting renewable energy. Hence, these problems are at the forefront of innovators’ minds. Investors should look out for energy companies which promise highly efficient, fast, compact and/or inexpensive renewable energy technologies. Clean technology will be a key investment for the future. Due to them fitting in with governments’ agendas for renewable energy and a sustainable future, they are likely to receive subsidies or be allowed to run monopolies under the supervision of the government. Alternatively, they could face competition in an attempt to lower prices by the governments, should they not implement price ceilings. Either way, clean technology could be very beneficial for the nations they are in, as they will likely develop the industry due to agreement with the government, and if they are a branch of multinational corporations, then the MNCs can help reduce the price of energy by making up for it in other sectors due to conglomeration. Overall, clean technology is a promising industry for long-term investments, with their high potential for benefit to all parties involved, while delaying the impending doomsday when we run out of fossil fuels, currently predicted for 2060 at the current rate of usage.

Revisiting reducing the emissions of greenhouse gasses, we shall take a look at two of the more common systems for reducing carbon emission, namely carbon pricing and cap-and-trade systems. Carbon pricing is applied to polluters to discourage the usage of fossil fuels. This is typically charged per tonne of carbon emitted. Carbon pricing is used to encourage producers and consumers to shift to more environmentally-friendly fuels in order to reduce carbon emissions. Carbon pricing has seen some success in many countries, however certain institutes have called for much steeper pricing per tonne in order to keep in line with the goals of the UN. However, due to the continued dependence on fossil fuels by many worldwide, carbon pricing per tonne has been kept at low rates, such as Singapore’s $5 per tonne emitted. Carbon pricing acts also act as another revenue stream for governments as a lot of revenue is generated by polluters in nations. This can help in investing more in public and merit goods for a nation which can see the nation develop a stronger workforce and a lower unemployment rate and higher literacy rate and life expectancy due to goods such as schools, universities and hospitals. At low rates, these taxes may not be highly effective, however at higher rates these will be highly effective in reducing carbon emissions. As previously mentioned, cap-and-trade schemes involve setting a cap for carbon emitted by a firm to follow, however, they may also purchase parts of other firms’ allowances to enlarge their production. This scheme may be seen as a major diseconomy of scale for relatively new or grassroots corporations which may not have a hold on large amounts of capital in order to purchase other companies’ allowances in order to scale. This could potentially see the rise of a high number of small businesses and very few to no conglomerates, which could drive prices very low and lead to high consumption due to higher purchasing power. Unfortunately, this also means that government revenue will reduce as smaller businesses will yield lower tax returns. However, this cap-and-trade system, if followed with harsh penalties for those who don’t follow them, would be highly effective in combating carbon emissions. 

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Session 6: Environmental Justice and Inclusivity in Policy

Tackling climate change remains one of the most urgent tasks today, with widespread implications for our environment, economies, and societies. As governments and entities strive to devise effective strategies in the fight against climate change, the intersection of business objectives and concerns for environmental justice has emerged as a pivotal area of focus.

Before exploring the dynamics between business and environmental justice, it’s crucial to grasp the concept itself. Environmental justice revolves around ensuring fair treatment for all individuals, regardless of background, concerning environmental regulations, policies, and practices. It seeks to rectify historical and systemic disparities, preventing marginalized communities from bearing disproportionate environmental burdens. Climate policies wield substantial influence across economic sectors. While they can drive industries toward sustainability, they might also pose challenges for businesses to stay competitive and profitable. The consequences of these policies can range from fostering innovation and resource efficiency to imposing additional operational costs. The intersection of climate policies with business interests and the principles of environmental justice isn’t necessarily a source of conflict. Instead, it offers an opportunity for collaboration that aligns economic objectives with broader goals of fairness and sustainable development.

Establishing a Collaborative Framework

Effective climate policies necessitate collaboration between governments, businesses, and advocates for environmental justice. By fostering partnerships that encompass diverse perspectives, policies can accommodate both the economic imperatives of businesses and the rights of marginalized communities. Numerous real-world instances demonstrate the potential of collaborations between the private sector, governments, and environmental justice groups. Examples include renewable energy projects generating jobs in disadvantaged communities or corporate initiatives investing in local environmental programs. These partnerships underscore that economic growth and environmental justice can complement each other. Aligning business interests with environmental goals goes beyond mere compliance. It’s about recognizing that sustainable practices drive innovation, enhance brand reputation, and ensure long-term viability. This alignment guarantees that businesses contribute positively to the ecosystems and societies sustaining them.

Designing Inclusive Climate Policies

The core of effective climate policies lies in their inclusivity. Policies must incorporate perspectives from businesses, environmental justice advocates, communities, and experts to form a comprehensive framework addressing complex challenges. Involving input from diverse stakeholders in policy development enhances the legitimacy and effectiveness of climate strategies. Engaging with those directly affected enables tailoring policies to meet the unique needs and concerns of various groups. Regulatory frameworks and incentives play a pivotal role in steering businesses towards sustainable practices. Clear guidelines and rewards for environmentally responsible behavior encourage long-term investments in sustainability.

Addressing Challenges and Managing Conflicts

Balancing business interests and environmental justice poses challenges due to differing priorities and perceived trade-offs. Identifying these challenges and addressing them directly is crucial for effective policy implementation. Equitable distribution and risk mitigation measures can aid businesses in managing the adverse impacts of climate policies. Ensuring fair distribution of resources and benefits helps bridge the gap between economic growth and social equity. This might involve employing locals in areas of substantial development or establishing response systems for environmental disasters. Building trust among stakeholders is paramount—transparent communication and mechanisms to hold businesses and governments accountable foster collaboration and shared responsibility.

Monitoring and Evaluating Progress

Effective climate policies require continuous monitoring and evaluation. Regular assessments enable policymakers, businesses, and communities to gauge progress and make informed adjustments as needed. Measuring policy success involves tracking key performance indicators (KPIs) reflecting both business growth and environmental justice. These metrics offer insights into whether policies are achieving their intended outcomes. An example of a significant KPI is the Biden Administration’s goal of having 50% of new vehicle sales as electric by 2030. This initiative has spurred innovation and growth in the EV market, potentially creating numerous jobs. Cases like this illustrate how policy evaluation can lead to positive outcomes, showcasing the transformative power of adaptive strategies and evidence-based decision-making.

Adapting to Evolving Dynamics

Business landscapes, scientific understandings, and societal dynamics are in constant flux. Hence, climate policies must be flexible enough to accommodate new information and emerging challenges. Maintaining open communication between policymakers, businesses, and environmental justice advocates is crucial. Regular dialogues ensure policies remain relevant and effective in a rapidly changing world.

Lessons from Successful Cases

Several real-world examples highlight companies successfully balancing business needs and environmental concerns. For instance, Canon’s efforts in developing eco-friendly products and establishing recycling systems or Patagonia’s commitment to environmental causes through significant donations are illustrative. These cases demonstrate that with meticulous planning, collaboration, and innovative approaches, common ground between business and environmental justice interests is attainable. Successful innovative strategies lie at the heart of effective climate policies. By encouraging businesses to innovate in their operations, products, and services, policies pave the way for a sustainable future.

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Session 7: Technology and Public Policy

The pivotal role of public policy in shaping technology’s development and utilization significantly impacts how technology engages with society, governance, democracy, and public services. Policymakers face the intricate task of managing the complex relationship between technology and society, striving to balance the potential advantages and risks of technological advancements.

Establishing platforms and forums for dialogue and collaboration among policymakers, technologists, and citizens fosters cooperation. These avenues may include public consultations, expert panels, and government, industry, and academia partnerships. Engaging a diverse array of stakeholders in policymaking can lead to more inclusive and adaptable technology policies that align with societal needs and values. An inherent challenge in technology policy lies in ensuring that regulations remain abreast of rapid technological progress. Policymakers must harmonize the imperative for innovation and economic growth with safeguarding privacy, security, and societal values. This necessitates a flexible, situation-specific regulatory approach capable of evolving alongside the ever-changing technological landscape.

Public Policy and AI

Governments have begun utilizing artificial intelligence (AI) to enhance services and streamline operations, yet its application in shaping policy is just commencing. AI excels in the fundamental aspects of policymaking, like identifying patterns of necessity, establishing evidence-based programs, predicting outcomes, and analyzing effectiveness.

AI doesn’t come without risks. Its algorithms, which generate intelligence from data, can perpetuate existing discriminatory practices. Additionally, tools like facial recognition can encroach upon privacy rights. The solution isn’t to abandon this capability but to adhere to the principles of “responsible AI,” including accountability, transparency, and fairness (as outlined in the sidebar “The Principles of Responsible AI in the Public Sector”).

The policymaking cycle comprises six stages—identification, formulation, adoption, implementation, evaluation—and AI can substantially enhance each phase:

  1. Identification: AI swiftly synthesizes vast data to detect patterns, notably useful during crises like the COVID-19 pandemic. For instance, in Australia, the Victoria State Government’s “syndromic surveillance” program identified several public health concerns within four months of implementation.
  2. Formulation: AI accelerates the analysis of projected costs, benefits, and outcomes of policy options. Quebec uses AI tools to understand economic disparities among regions by analyzing diverse datasets, expediting economic development plans.
  3. Adoption: AI aids decision-makers by providing insights garnered from preceding stages, improving the understanding of issues and projecting a policy’s potential impact.
  4. Implementation: AI assists in efficient policy implementation through automation and real-time analysis. In New Orleans, AI optimized ambulance placement to improve emergency response times.
  5. Evaluation: AI expedites assessment post-implementation, identifying areas for improvement or potential fraud. For instance, the UK uses AI to estimate the impact of a carbon tax on emissions and business productivity.

Implementing AI in policymaking involves three main workstreams: building the business case, designing operating capabilities, and creating the data infrastructure. It’s crucial to pilot projects, establish priorities, develop skills, manage vendors, and ensure public trust in AI’s safety and effectiveness.

Adapting operating models and fostering a culture of responsible AI within government agencies is crucial. Governments must collaborate with private sectors, universities, and technology partners to access new insights and implementation expertise. Furthermore, establishing a robust digital platform that accesses diverse data sources is critical for AI application. Governments should break down topic silos and leverage AI to address issues comprehensively, enhancing decision-making and policy effectiveness.

Technology’s role in addressing societal challenges and fulfilling public objectives is substantial. It can enhance public services, bolster government transparency, and encourage citizen engagement. Collaborating closely with technologists, policymakers should seek innovative solutions to pressing societal issues while carefully considering potential unintended consequences of technology implementation. Moreover, the mounting significance of data and artificial intelligence in decision-making raises ethical and governance concerns. Policymakers must formulate frameworks ensuring the responsible and ethical use of data and AI, addressing matters like algorithmic bias, data privacy, and transparency.

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Session 8: Taxation and Environmental Sustainability

Governments play a major role in sustainable development, since they’re in direct contact with the UN and other associated bodies which set out parameters for sustainable development. A major tool of governments is fiscal policy which involves using revenue collection and government expenditure to influence an economy. Fiscal policy includes tools such as carbon tax and tax exemption which are used for maintaining sustainability in an economy. This session will look into some of the more notable policies used by governments related to taxation.

One of the most popular and widely implemented policies is Corporate Social Responsibility (CSR). This is a scale which assesses metrics such as waste, water, footprint, ethics and philosophical aspects of a firm. Firms typically publish information relating to such metrics in a separate report from annual reports which helps assess a company’s ESG better. Companies which assess their CSR performance typically attract more investors due to the firm striving to help its customers rather than stay profit-motivated. Such companies which are assessed to pass a certain limit of CSR-related metrics, for example emitting less than a certain number of carbon tonnes, could be rewarded by the government in methods such as subsidies, non-tangible benefits and a lower tax burden. However, this brings up a dilemma which has been previously discussed in session 3, in which incentivising lowering emissions may result in greenwashing and other such activities simply to procure more benefits from the government while refusing to scale, potentially slowing economic growth and depleting governmental purchasing power in other industries or for other goods such as public and merit goods. However, as mentioned, incentivisation is useful in the short-term, especially with the alarming rate of emissions globally.

Another popular method of incentivising a more sustainable approach to business are tax credits. Tax credits involve subtracting totals from a company’s tax due according to certain criteria. For example, philanthropic campaigns might warrant some tax credits for a firm. Tax credits come in a few types, refundable, non-refundable and partially refundable. Of these, refundable tax credits are often considered the most useful and beneficial for a firm, since if a firm’s credit warrants them negative taxes, they will receive a refund from the government, equivalent to the monetary value of their credit score. Such tax breaks will lower production costs for firms and should incentivise them to produce more, expand, and enjoy this purchasing and financial economy of scale. This will help increase the output of the economy, leading to economic growth. However, this will come at the cost of the environment, as the environment is affected by the depletion of natural resources (factor of production classified as land). 

Lastly, we have dynamic taxation. Dynamic taxation, as the name suggests, is a tax which applies to select products, typically demerit goods. Outside the world of sustainability, such taxes are also placed on products potentially injurious to health, and are commonly applied to products bad for the environment. Such products include alcohol and cigarettes. By taxing these products, their price increases, discouraging their purchase and reducing demand. This will see firms involved in their production suffer in terms of profit which may slow economic growth, but still create positive externalities by encouraging substitutes which do not cause damage. Overall, dynamic taxation reduces demerit goods and their production in the long-term, but could cause short-term stagnation or reduction in economic growth until the economy corrects itself. This means it may not be good to implement such taxation in developing nations or nations which specialize in demerit goods due to the catastrophic effects of a full economic slowdown. 

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