Effect of Discounting on Climate Change

Effect of Discounting on Climate Change Introduction Climate change can be termed as the single largest problem that we as a humanity are facing at present. Since the 1960’s- when for the first time the perils of greenhouse gas emissions on climate were reported- the gravity associated with demand for action on climate change has only been increasing.Though the impacts of climate change are already being felt in terms of increased frequency of disasters and changing weather patterns, a majority of the impacts are to affect future generations only. This raises many questions on whether to act on climate change now or later. The role ethics has to play in tackling such an issue is immense. Individual perceptions, their choices and what defines morality for them all come in to light while determining action on climate change. Since the formation of UNFCCC, under which international negotiations on climate change are being held, the weightage on acting against climate change has been catapulted to a global level. The framework has seen many international agreements on cutting down the global emissions of greenhouse gases and building resilience among communities to tackle climate change. But the costs involved in acting against climate change and arresting the global temperature change to such a level so that it doesn’t prove catastrophic to the future generation is huge. Nicholas Stern, an economist, had published a report- The Stern Review on the Economics of Climate Change- in 2006 for the British Government which had given an estimate of one percent of global GDP that is required to arrest the impacts of climate change. This estimate was revised in 2008 to two percent of the global GDP accounting for faster than expected climate change. To put things in perspective two percent of global GDP acco unts for close to US$1.5 trillion when the World Bank estimate of the total global gross domestic product of US$74.9 trillion is taken into consideration. Such values aren’t small and require enormous funding from countries world over to act against the impacts. Hence action on climate change, though ethical, has huge implications on the global economy. This economic implication of acting on climate change becomes more precarious when we take into consideration the fact that climate change is set to have its worst impacts on the generations to come. This leaves us with the question of whether to act now or leave it to the future generations to tackle the issue of climate change. Corporations and for that matter countries in itself would act only if they see some incentives in acting now, else one wouldn’t want to sacrifice their economic growth which transcribes into well being in the present. What drives international climate negotiations in formulating policies for climate change mitigation is something called as the social cost of carbon (SCC). SCC helps us in estimating the benefits (climate) of decision making. Social cost of carbon can be termed as the the economic damages associated with a small increase in carbon dioxide. This dollar figure also represents the value of damages avoided for a small emission reduction. Hence such an economic value is what drives nations to act on climate change. Higher the value of SCC, higher is the perceived threat from climate change, which in turn increases the urgency required to act on climate change. Higher values also indicate a negative impact of climate change on the future GDP projections of nation states, hence acting on climate change is incentivising nations by insuring their future GDP against the perils of climate change. But for arriving at a social cost of carbon we need to consider what is called an optimal ‘r ate of discount.’ Arriving at a rate of discount is based on what ethical stand one takes, hence this value might hugely vary from person to person. Aspects such as how much you value intergenerational equity, how much are you ready to sacrifice in the present, how do you expect technology to improve in the future and what do you expect to happen to economic growth in the future all come into play while arriving upon a discount rate. This paper would aim to look at the ethics of discounting taking into consideration the various values for discount rates proposed by economists and the implications that these values have on the policy measures we adopt. Existing literature in this area would be reviewed, shedding light on the various arguments/viewpoints centered around choosing different discount rates for climate change action. This process of reviewing literature in itself might be a limitation as the paper would rely on the arguments put forth by authors of respective papers for choosing a certain discount rate. This paper would initially discuss about the evolution of discounting and its relation to climate change and then move onto reviewing existing literature in this field and finally concluding the discussion by stating the author’s viewpoint. Literature Survey Discounting is a financial term that which means a debtor has obtained a right to delay the payment to a person who has lended the amount, a creditor, for a defined period of time by paying a certain fee. This discount is usually associated with something called a discount rate. In simple terms discount rate can be defined as the rate at which the amount owed must be raised to delay payment for one year. A discount rate is what what determines the discount rate and not vice versa. Discounting Factor is another term that is used in context to discounting. Discount factor is the percentage rate required to calculate the present value of future cash flow. What these values mean in terms of climate change and their implications on climate policy shall be discussed in the next few paragraphs. With the basics of discounting know lets move onto the role discounting has to play on climate change mitigation decisions. To figure this out let us look at some questions that economists seem to be in love with while determining the amount we should spend to fight climate change: How much will you be willing to spend to make your child richer by certain amount in the future? And what about the amount that you would be willing to spend to make your grandchild, or your great- great-great grandchild in the distant future richer by the same amount? The answers to these questions might shed light on the future of the planet. Most economic analyses of climate change have concluded that we should be spending only small amounts to combat climate change now, ramping up slowly over time. This conclusion is argued against by climate scientists who say that immediate action is the only way to arrest the serious ramifications of climate change. And the disagreement arises from the above mention ed questions, on how much do you value the future generations’ welfare in terms of a monetary value. The worst consequences of climate change, as mentioned earlier in the introduction, are likely to unfold only over decades or centuries. This means that the present generation is only set to see the beginning of what might be the worst consequences of climate change, with the future generations bearing the maximum brunt of it. Hence, the decision of how much to spend now to arrest climate change in the future weighs itself on assessing how much it is worth to us now to prevent that future damage. As driven by human tendency we would be prefer money now over money later, and hence economists typically figure that our willingness to pay for preventing a dollar worth of damage in a year, or in a decade is less than a dollar. This percentage less is called the â€Å"social discount rate.† What is of importance is figuring out what this discount rate should be. For a short period of time, the easier way is to consider the prevailing market rate of interest. This is similar to a loan that you have taken at a certain interest rate. After all, if you happen to get a bank loan at an interest rate of 7 percent, then getting a dollar in a year is essentially equivalent to getting a tad over 93 cents now. What this essentially implies is that, economically, it would make sense for you to spend 93 cents today if it helps you in avoiding a problem that would otherwise cost you one dollar a year from now. This can be put in other words: a dollar of the projected future impacts has gotten discounted to 93 cents today. But when this is played over many years the results are very peculiar. The following example is cited from an article published in Science News: â€Å"For example, at a 5 percent annual interest rate, a penny that belonged to Julius Caesar would have expanded to the bogglingly huge sum of 3 – 1041 dollars today — more than the entire world economic output over the last 2,000 years multiplied by the number of stars in the sky.† And what this essentially means is that discounting, at a 5 percent social discount rate, would shrink any imaginable catastrophe today to far less than a penny in Caesar’s time, and an economist would have therefore recommended that Caesar not spend even so tiny an amount to avoid it. The mind boggling amount this discounting would result in besides being absurd, would also silence the people wanting action on climate change because of the huge monetary implications. It is very difficult to overlook the effect any constant discount rate (like the 5 percent rate used in the above example) on the future growth potentials which is going to be exponential and explosive. So even considering a moderate social discount rate of say, 2 to 3 percent, economists will have a very hard time trying to justify the amount spent on combating climate change in the present. Instead, economists would suggest to invest this amount in savings and our future generations will be rich enough to live well inspite of all the damages from climate change. But an exception to this is Nicholas Stern. In 2006, he wrote the The Economics of Climate Change: The Stern Review which concluded by suggesting that we should invest one percent of world GDP immediately to combat climate change. Otherwise, he said, the chaos resulting from climate change could cost twenty percent of world GDP per year. But this was arrived at by setting the social discount rate to near zero. The discount rate he had taken into consideration while arriving at the conclusion was severely criticized by many economists. Underlying assumption is that people would prefer a dollar today than a dollar in the next year are a hundred years from now. Economists are still at loggerheads over this, on whether to: Either accept an assumption that is argued as economically unjustified (a close to zero social discount rate), or conclude that we should accept climate change without a fight. A third alternative which is more likely to remain unentertained is that the economic valuations fail to shed light on the issue at hand. Let us now look into the argument put forward by Stern in his â€Å"Economics of Climate Change† report for taking a near zero discount rate. This paper has already referred to the Stern Review in its earlier sections. The Stern Review on the Economics of Climate Change is probably the most comprehensive survey of the economics of climate change published until thus. The lead author of the review, Sir Nicholas Stern, from besides being a distinguished economist, he has also made important contributions to areas of public and welfare economic theory that are particularly relevant to climate change economics. His conclusion that we should act now by investing on acting against climate change as it would have more serious implications on the future generations in strongly contended by leading economists. Stern, in his review had said that we should invest one percent, which was revised to two percent in 2008, of the global gross domestic product for acting climate in order to curtail the ravaging impacts of climate change in the future which, otherwise, might lead to huge losses to the tune of 20 percent of global GDP every year in the future. After the first chapter’s brief summary of the scientific evidence for climate change, the next few chapters have devoted considerable attention to the ethical issues revolving around the choice of discount rate. â€Å"This represents the economist’s trade-off between the welfare of different generations and is hence the key to the way that different distributions of consumption over time can be ranked in terms of social welfare.† The Review states that â€Å"The ethical framework of standard welfare economics looks first only at the consequences of actions (an approach often described as ‘consequentialism’) and then assess consequences in terms of impacts on ‘utility’ (an approach often described as ‘welfarism’). The standard welfare economic approach has no room, for example, for ethical dimensions concerning the processes by which outcomes are reached. Some different notions of ethics, including those based on concepts of rights, justice and freedoms, do consider process† (p. 29). The Review also takes a consequentialist approach, which is in line with standard welfare economics, and makes judgements that are both explicit and implicit concerning the distribution of welfare and of consumption across generations. Discounting and the Stern Review It is now well now that in h (i.e. the avoidance of the damage that climate change might otherwise do under what is known as a ‘business as usual scenario’).

Break even revised

The break-even point is a business terminology which refers to the level of output or activity wherein a firm’s total revenue exactly equals its total cost. At this point, the business entity covers all its expenses but earns no profit. The operating income is therefore zero. The break-even point is exactly where a business entity crosses the line between being a losing operation to being a profitable venture. A business entity’s total operating cost is the sum of its fixed and variable costs. Fixed costs refer to expenses that are not a function of output and thus, do not vary with the production level.Fixed costs include such items as administrative salaries, property taxes, and insurance premiums. Other things constant, the break-even point varies in proportion to the fixed cost; an increase in the fixed cost translates to a corresponding rise in the break-even point. A fixed cost increase leads to a higher break-even level of output, depending on the degree of incre ase. In reality, it corresponds to the fact that a higher fixed cost would entail the need to produce more output in order to cover the total expense.Variable costs, on the other hand, are costs that change in direct proportion to the output level; each planned percentage increase in output will yield an equal increase in the variable cost. Variable costs include such items as raw materials and direct labor costs. An increase in the variable cost actually generates an equal increase in the total cost at each level of output, thereby raising the output level at which the firm will â€Å"break even†. In this sense, a variable cost increase leads to a higher break-even level of output. On the revenue side, bigger sales receipts mean either higher sales prices or greater sales volumes.A higher unit sales price is tantamount to a higher per-unit profit and in this sense, a lower break-even level of output. The higher profits generated by a unit sales price increase lessen the outp ut level necessary for the firm to break even or cover its operating expense, thereby effectively lowering the break-even point. Unlike fixed and variable costs, the break-even point varies in inverse proportion to the unit sales price. Amidst all the modern business calculation tools, the break-even point concept will remain a useful business reference for generations to come.

Goals for Students

Goals for students So what is it that we want students to gain from a k-12 science education? What are the goals we should constantly work to promote in students? Considering that rote memorization of scientific ideas leads to little understanding, I have identified ten goals for students that focus on life learning skills, and other traits that will be valuable to them in the future, no matter their career choice. Each goal below is accompanied by more specific explanations of what I might see students doing who meet that goal. I hope whatever your goals are for your students, you have thought about them extensively. We all want great things for our students, but if we do not have well articulated goals, our efforts will not be focused. I will post later on how we can consistently work to promote the goals below. Student Goal 1) Students will demonstrate critical thinking. A student who demonstrates critical thinking will defend their viewpoint using relevant evidence. Students will pose questions when new information does not agree with their current understanding, and look for further sources of evidence to support the new idea if necessary. Students will not accept blindly new information and be willing to question teachers, texts and other sources of information. A student who is capable of critical thinking should be able to solve problems in a stepwise sequence, and be able to revise the sequence if necessary. Student Goal 2) Students will demonstrate a deep understanding of content and be able to apply this knowledge to problems in and out of the classroom. Students with a deep understanding of the content will be able to clearly articulate that understanding by citing relevant evidence and sources when confronted with a question. Students will be able to make connections between various concepts and apply multiple concepts to a single problem when needed. Students will be aware of resources to find information regarding content, and use such resources when necessary. Students will use their knowledge of content when approaching a relevant problem and will be able to recognize which concepts are of value for specific situations. Student Goal 3) Students will demonstrate creativity and curiosity. Students who are creative will propose original ways to approach or solve problems. Students will ask thought-provoking questions during class discussion, and try to answer questions by piecing together previous knowledge. Students who are curious will come up with possible investigations and ask questions seeking explanation of ideas during class discussions. Students will develop their own ways to explain their ideas and look for evidence that supports their ideas. Student Goal 4) Students will demonstrate respect. Students will not interrupt others during discussions. Students will listen to other ideas and treat them as valid. Students will discuss positive aspects of ideas they do not necessarily agree with; this helps them to understand both sides of an issue, and makes them a better critical thinker. Students will follow classroom rules, and treat school property as though it were their own. Work area will be kept clean and students will remind each other of classroom rules. Each student will work cohesively with a team and treat themselves as part of that team. Student Goal 5) Students will be responsible and conscientious members of communities. Students will address global problems concerning the environment, energy needs, human needs, social concerns and others. Students will seek out remedies to such problems and debate which ideas offer the most effective solutions. Students will propose possible measures to be taken as citizens when a problem is found. Student Goal 6) Students will exhibit confidence. Students who exhibit confidence will be willing to participate in class, and willing to provide ideas, even if they are unsure of the idea’s worth. These students will be willing to try new procedures and willing to try again when they fail. Students will ask the teacher to clarify when they do not fully understand, and be willing to look for additional help if needed. Student Goal 7) Students will set goals and assess their own learning and progress. Students will set realistic goals for the semester, quarter, unit, and week. As weeks go by, students will become better at setting goals they are capable of achieving. Students will revise goals as needed. Students will use a journal to track their progress and to assess their own understanding. Students will seek ways to express their learning and check for understanding of new concepts. Student Goal 8 ) Students will be active in their own learning. Students will look for further resources when they feel they do not yet fully understand. Students will ask questions in class to clarify points of confusion. Students will create models to explain their ideas. Active learners will look into topics of interest beyond the classroom. Students will bring concerns about understanding to class discussions, and also cite how current material applies elsewhere, besides the classroom. Student Goal 9) Students will use communication and cooperation skills effectively. Students will be able to communicate clearly in large groups as well as one on one. Students will be able to communicate ideas succinctly through written language. Students will use correct terminology where appropriate. Students will use correct grammar and punctuation. Students will listen to other ideas and maintain eye contact during conversation and debates, and will speak in a respectful manner during such debates and discussions. Students who are able to cooperate are willing to let others do their fair share as well as pull their own weight in a group. Students will value all suggestions of group members equally. Students will attempt to resolve problems within their group before asking the teacher. Student Goal 10) Students will understand the nature of knowledge. Students will partake in discussions about the nature of knowledge and compare different ways of knowing. Students will apply principles of the nature of knowledge to different content areas. Epistemological discussions with students can help them become more reflective concerning their own thinking. By reflecting on what it means to know something in diverse areas, students will better understand how to learn effectively. I hope these goals are lofty, children deserve no less than our highest expectations. Assessing these goals is difficult, but by carefully designing lessons and providing important experiences for students, we can promote these goals – however, like with anything, they must carry the goals to fruition. I’m sure some will tell me I’m an idealist with a goal list like that, so I leave you with some John Lennon’s Imagine:

The Root Of Civil War - Free Essay Example

Sample details Pages: 4 Words: 1105 Downloads: 7 Date added: 2019/05/18 Category History Essay Level High school Tags: Civil War Essay War Essay Did you like this example? The years leading to civil war were unpleasant for millions of Southern and Northern Americans. While a few basked in wealth and power, a selected population suffered poverty, slavery, and insecurities. A majority experienced social, cultural, and economic differences. Don’t waste time! Our writers will create an original "The Root Of Civil War" essay for you Create order Political and religious aspects also clashed among colonies and the situation grew profoundly towards civil war. Other than slavery, the Northerners and Southerners had a significant difference in the political arena. Politics was a common agenda that stimulated the economy, drove power, and profoundly affected cultural and religious concepts. During this period, slaves were willing to fight for labor rights while other people sought confrontation due to biased government interferences. Based on Bruce Levine’s book, the Northern and Southern Americans were devoted to their cause in pursuit of political goals. A majority during the antebellum era desired peace in the state as well as better economic times. They also wanted an end to slavery and a new dawn of harmony where color, religios background, or power did not cause chaos (Levine, 2005). The North and South differed in various ways. Historians identify three significant aspects that set both sides apart socially, culturally, economically, politically, and religiously. They include: Slavery In the North, slavery was not as common as in the South. Many elite people within the region grew wealthy from the slave trade, but it was not widespread. The situation in the South was substantial such that when the Northern state abolished slavery between 1774 and 1804, the south side remained adamant. The practice was an economic stepping stone for the area because slaves were essential for running agricultural activities. Politically, both sides disagreed about the oppression aspect such that the Northern side began antislavery movements. The Southern region still maintained the practice in that it became a cultural concept and social divide between the rich and poor. Religious wise, opinions clashed among influential individuals. According to Levine, (2005), some northerners considered slavery repugnant to humanity. George Washington was among those on the forefront against the practice, but some southerners criticized their ideologies. They even tried to prevent the north side from outlawing the importation of African slaves. Protestant clergies created societies aimed at gradually eradicating slavery. Freedom In both regions, freedom was limited, but it was practiced more in the north than the south. While the northerners expressed their rights in the open, southerners whispered in the dark for fear of government confrontation. The latter had significant limitations such that freedom offer came with many restrictions. According to Levines book, the British government of Virginia gave freedom to slaves who supported their movement. In North Carolina, freedom came at a price where masters (slave owners) carried the bargaining chip. Political opinions among poor southerners became disregarded. Economically, the black population lacked trade entitlement. The wealthy considered them handy enough for casual labor such that they had limited time personal and professional development. Regardless, the African-Americans in the south had not freedom for education. The Northern region considered the children of the slaves for fulfilling essential duties. Some slave owners took interest and sponsored their training. Religious groups were diverse before the civil wars and, therefore, both regions embraced the concept. The difference emerged due to political influence. The quakes and Methodists were highly involved in antislavery movements while others cowered. Development Cities in the North were centers of trade while most southerners owned large farms. The former was more socially friendly than the latter due to slavery. Workers lived in poor conditions while the elite accumulated wealth. The north did not have a shortage of large towns compared to the south, and therefore, northerners seemed more politically, economically, and culturally advanced. Increased migration to the north led to massive development in education, culture, and art. However, the cities became dirty and crowded, unlike the south side where plantations were self-sufficient and well-tended. Economic differences between the regions existed due to southerners being agriculturally-based while northerners specialized in manufacturing. The former grew cotton which was traded to the other side for production. Ideally, the Northern and Southern development progress emerged due to manufacturing and agricultural practices respectively. The political expansion was more advanced in the Nort h than South because in the latter, the rich held power and influence against the less privileged. Significant decisions became the elites’ responsibility while the poor followed suit. Levine (2005) explained the differences above grew more profound in the decade leading to civil war than other periods. People had become tired of the oppression by influential individuals. The North no longer considered slavery an ethical practice. They openly condemned slave owners while the victims gained a voice. During the period, newspapers were becoming popular, and opinions could get printed. Movements began to emerge as the oppressed claimed labor and entitlement rights. Levine quotes Thomas Jefferson in his attempt to express how freedom of expression triggered conflict. He initially failed to publish Notes on The State of Virginia because the article would stir issues (Levine, 2005). He was unwilling to share the material in public because slave abolition appeared impossible despite support from fellow southerners. Suffice to say, both regions became devoted to eradicating various issues. After Jefferson became the president in 1800, the tension between the areas spurred t o new heights. Many slaves gathered at the state capital of Richmond where a few were captured and hanged. The rebels were not deterred from their cause such that they proclaimed â€Å"Death or Liberty† to show their commitment. While the Northern states granted slaves emancipation gradually, the southerners remained adamant. The tension led to economic differences and the rise of discrimination. The tension between the regions heightened further after validating the constitution officially. The social atmosphere became heavy because the north and south political cooperation was contradicting. Carl Schurz was a political immigrant who observed that the slavery concept rather a struggle between two states rather than the geographic difference. Ideally, the antebellum era had enough tension in the political, social, economic, and social arena to trigger the civil war. Citizens were willing to die than live under oppression. Additionally, many migrated from the south to the north seeking freedo m and a better lifestyle. The root of civil war dates back to the early centuries, and as decades passed, states began to realize ideal ways to coexist. The northern and southern regions had contradicting approaches that caused a rift. As a result, political and economic differences emerged accompanied by social, cultural and religious conflicts. Although slavery was the most significant issue, the political platform triggered more problems than initially intended. Levines book explores both regions history from a different perspective. He covers the antebellum era at large as well.