Environmental Decisionmaking

Problem Set #5:

1) (5 pts) Explain Nordhaus's critique of Beyond the Limits in your own words.

I wanted you to touch on Nordhaus's idea that the World3 model has a number of "lethal conditions" that are built into the model which can be demonstrated through empirical analysis to be false (according to Nordhaus). Malthus and other doomsayers have always been wrong in the past because they have underestimated the human ability to innovate and substitute.

2) (5 pts) How do you think Meadows et al. would respond to this critique?

The answer to this question depends upon your answer to question 1, but most answers would include discussions of the possibility for shortsightedness in human economies, such that they might overtrade some ecological commodities and cause its eventual decline. Even if human foresight acts exactly as Nordhaus assumes it does, it can only be as good as human science allows for the elucidation of future prices (though a similar argument can be made against ecological scenario-building). If economics relies upon models that necessarily exclude the possibility of complex dynamics (overshoot and collapse), but if at the same time such a possibility exists in the real world, then Nordaus's methods will miss it because of the structure of his models.

In fact, it is pretty clear that overshoot and collapse can happen on at least a small scale, even in modern economies. In class Aaron pointed to the idea of "bubbles" in various prices; business cycles are another example. More complex examples might be found in comparing poor, war-torn countries such as Guatemala or Nicaragua with wealthier countries such as Costa Rica, and asking if sustainability had anything to do with the difference.

3) (10 pts) Now, you are an all-powerful policy maker. You have read Beyond the Limits and Lethal Model II, and you have to decide what to do. Should we invest a large fraction of our income in trying to figure out a way to move towards a "sustainabl society"? Should we continue on our present course with only minor corrective measures? Discuss how you would approach the issues, and your reasons behind your points. Try to use facts and academic arguments from the sources (or outside sources that you may be familiar with), rather than simply personal opinions, though obviously your opinions will inform your response.

This is a fairly open-ended question where I was mostly looking for a response that indicated non-superficial consideration of the issues raised here. You need to not just say that one side or the other is full of it.