Re: post keynesian economics and environmetal sustainablity

["Ric Holt" <rholt@xxxxxxx>]

I'll read the piece by Ravetz. So what would be the suggested discount
rate  with an uncertain future? Low like zero or high? If we accept that
the predictions of science our made in an ergodic world compared to the
nonergodic world of economics wouldn't we have a better handle of
evaluating the risk associated with certain environmental outcomes and
calculating the caution  and cost we should take with environmental
policies?
-Ric

>>> ForstaterM@xxxxxxxx 01/22/02 10:52AM >>>
Uncertainty is emphasized by many in environmental policy, and the
connections to PK emphasis on same is clear, and has been pointed out
by
some.  Some of the best work on uncertainty in environmental policy is
by Funtowicz and Ravetz, and they (or maybe Ravetz by himself) had an
article in the JPKE on "Economics as a Folk Science".  The literature
on
the "precautionary principle" in environmental policy is mostly due to
uncertainty.  We don't KNOW that global climate change or ozone
depletion or whatever will happen to such and such a degree by a
certain
date and that if so it will have such and such effects, but we don't
KNOW that it won't either.  So the precautionary principle says we
should be cautious in the face of uncertainty-better to err on the
side
of caution when it comes to life, health, environment.  Stephen
Marglin
has an essay some years back where he talked about uncertainty in
environmental and uncertainty in Keynes, and he said that in Keynes,
investors are uncertain but we need action in the face of uncertainty
(animal spirits), 'otherwise there would not be much investment' just
based on cold calculation. But in the case of environmental
uncertainties we don't want action in the face of uncertainty, but
caution. mat

-----Original Message-----
From: RHolt1234@xxxxxxx [mailto:RHolt1234@xxxxxxx]
Sent: Monday, January 21, 2002 5:01 PM
To: pkt@xxxxxxxxxxxxxxxx
Subject: post keynesian economics and environmetal sustainablity

Hopefully in the near future Bill Mitchell, Mat Forstater and I will
start on a project of editing a volume on Post Keynesian economics and
the environment. Thinking a little bit about the project let me throw
out a basic issue to see how some of you will respond. A primary issue
in environmental economics has to do with long-run sustainability.
Using
a very simple model of comparing marginal abatement costs with
marginal
damages to determine a socially efficient level of emissions of a
pollutant assumes that all costs are estimated. A criticism given is
that such a model has a tendencyto put more weight on costs and
benefits
for present generations compared to future generations. This would not
be a problem if all resources were renewable and pollutants
noncumulative, but as we know this is not the case. The neoclassical
response is that through discounting we can come up with an estimated
value of the marginal abatement cost and the marginal damage functions
that takes into consideration all costs in the short-run and the
long-run associated with pollution. But this analysis is based on an
ergodic system. If we accept a non-ergodic system - a future that is
uncertain how do we evaluate all future costs associated with
pollution
and carry out a policyof sustainability?

-Ric Holt