Unit 1 Micro: Winning the War on Deforestation
Justin Rowlatt from the BBC has been investigating some of the remarkable progress being made in controlling deforestation in Brazil. The battle focuses on an area known as the “arc of destruction” and the video reports here show the impact of a government making a clear commitment to tackling the issue and backing it up with force and with incentives.
read more...»Unit 1 Micro: Illegal logging and the human cost
This news report looks at the human cost of an example of the tragedy of the commons - illegal logging in the south Philippines which contributed to tens of deaths from the effects of flash flooding. Ecosystems and economic prospects are damaged at the same time because of failures in environmental management.
read more...»China’s newest 5 year plan - and how it could change the world!
5 year plans are synonymous with the command economies of the 20th century and although the Chinese economy bares little resemblance to what it did 30 years ago, the government still uses these plans as part of their oversight of a mostly market economy. Their latest “Weather Intervention” plan seeks to intervene in the economy on a grand scale, although not in the usual sense!
read more...»Unit 4 Macro: Natural Disasters and their Economic Impact
From tsunamis to tornadoes, from droughts to floods, 2011 was a particularly nasty year for natural disasters in many parts of the world. These natural disasters inevitably have demand and supply side effects affecting not just those countries affected but ripple impact across regions and in the broader global economy.
The Al Jazeera news video report below provides a clear overview of some of the major natural climatic shocks of 2011 and could easily be used as an introductory resource to discuss what are some of the micro and macroeconomic effects in both the short and medium term.
These include:
* Effects on the stock of physical capital / infrastructure
* Impact on a country’s human capital
* Effects on commodity prices, export revenues
* Effects on agricultural output, profits, investment, productivity
* Ripple effects on manufacturing industries and energy supply/cost
* Impact on state tax revenues and the costs of re-building and providing emergency financial support
* Effect on the movement of population following extreme climatic events
* Natural disasters and changes in the distribution of income / risk of poverty
This Economist graphic (published in Jan 2012) looks at the human cost of natural disasters and claims that “the world has succeeded in making natural disasters less deadly.”
read more...»Unit 1 Micro: Supply Shortages Drive Peanut Prices Higher
Supply shortages in key growing regions have caused the price of peanuts to surge to record highs. Peanut prices in Europe are 60% higher than a year ago and the cost of peanuts in the USA has more than doubled in the last twelve months. The price spike is the result of lower production from India, Argentina and the United States.
read more...»European Economics: Resources on the CAP
This blog entry will provide a regularly updated set of links to resources to the European Union’s Common Agricultural Policy and attempts to reform this contentious and complex system of farm support.
Check below for suggested links
read more...»Economics of Deforestation
The Human Development Report 2011 reported that deforestation is a severe problem. In the last two decades, Latin American and Sub-Saharan Africa have experienced severe forest losses, especially when compared to the rest of the world.
For economists the economic and social costs of rapid deforestation represent a telling example of the tragedy of the commons where the pursuit of individual self-interest can risk a permanent destruction of natural resources that undermines the sustainability of communities and societies for current and future generations. The United Nations calculates that deforestation and degradation is responsible for nearly 20 per cent of global greenhouse gas emissions.
Will the REDD programme make a difference?
REDD stands for Reducing Emissions from Deforestation and Forest Degradation in Developing Countries and is designed to provide financial incentives funded by advanced nations for developing countries to preserve their forests and instead invest in low-carbon paths to sustainable development.
The UN estimates financial flows of up to $30bn could come from REDD and related initiatives - the scheme effectively allows rich countries to offset their carbon emissions from domestic industries and consumers by funding clean low-carbon development projects in developing countries. But it is highly controversial and opposed by many organisations such as Friends of the Earth and the World Rainforest Movement.
In this blog we have put together some web resources on the issue of deforestation - focusing on causation, consequences and also on some of the policy approaches that might work to bring about behavioural change.
Millennium Development Goals - Uneven Progress
This blog brings together some recent videos on progress made towards meeting some of the Millennium Development Goals (MDGs).
The Millennium Development Goals include ambitious targets to
o Eradicate extreme poverty and hunger
o Achieve universal primary education
o Promote gender equality and empower women
o Reduce child mortality and improve maternal health
o Combat HIV/AIDS, malaria and other diseases
o Ensure environmental sustainability and develop a global partnership for development
Edexcel Unit 1 Marking Exercise
When it comes to answering data-response questions, my students regularly make the same mistakes- in particular not evaluating their answers when required. Hopefully this activity will help to teach them the importance of evaluation, and what it actually means.
read more...»Futures trading explained in 1 minute
This is an excellent, very short video that gets across the key point about futures contracts
read more...»Unit 1 Micro: Economists attack food price speculation
Food prices are now rising by up to 10% a year in Britain and Europe and a new forecast from the United Nations predicts that prices can be expected to rise at least 40% in the next decade. Whilst conventional theories of changes in supply and demand conditions can be used to explain some of the increase in food prices, many economists are concerned that speculation by hedge funds and other investors has amplified the natural volatility of prices driving food prices away from fair values and contributing to a huge rise in global food poverty and hunger. These days, cocoa, fruit juices, sugar, staples, meat and coffee are all now global commodities, along with oil, gold and metals.
Is this the moment to legislate to limit the scope for speculative activity in food markets? The video below provides an excellent introduction to speculation in food markets - it features Neil Kellard, Professor in Finance at the University of Essex
read more...»Unit 4 Macro: World Food Day
Here is one of the short information videos launched by the World Bank on the occasion of World Food Day - excellent as an introduction to the economics of high and volatile world food prices. Every night, 1 billion people go to bed hungry because food is too expensive.
read more...»Unit 1 Micro: Producing Coffee - Kenya in Pictures
If you are teaching the economics of commodity prices and coffee in particular - this resource - will appeal strongly to your visual learners! The Guardian Pictures web site has a quite stunning set of photos of Kenyan coffee producers - growers who are hoping that rising world prices will bring respite after years of difficulty including volatile crop yields, poverty prices and incomes and a long term decline in investment.
Unit 1 Micro: Economics of Volatile Corn Prices
Corn is a soft commodity along with the likes of coffee, tea and rubber. Referred to as “yellow gold”, corn is used in products ranging from cereals, snack foods, salad dressings, soft drink sweeteners, chewing gum and peanut butter. Little wonder that shifts in the world price of corn can have a noticeable effect on the prices that we may for many popular foods and drinks.
The world’s appetite for corn is strong. In recent months there has been a surge in the global price of corn, indeed at the end of June 2011, corn prices were up 74 per cent on a year earlier. Super-high prices affect the price of feed for livestock farmers and eventually lead to more expensive foodstuffs for consumers, including millions of people in the world’s poorest countries exposed to persistent and life-shortening food poverty. Robert Zoellick, President of the World Bank has said that high and volatile food prices are “the single gravest threat” facing developing countries at the current time.
read more...»Unit 3 Micro: Oligopsony - Dairy Losses Drive Farmers from the Fields
Hats off to the herd! Milk production in the UK is expanding yet many dairy farmers have or are likely to leave the industry over the next five years unless raw milk production becomes more economically viable. Can the stakeholders in the sector reach fresh agreement on sustainable contracts for the near 40 million litres of milk produced every day?
read more...»Where there’s muck there’s brass
I am cross-posting this from the Business Studies blog, so apologies to those who read both - but I think it is a good story for both subjects. I have changed a few of the terms and themes to cover the different emphasis for an economics student.
On the face of it, this is a good end-of-term case study which is bound to raise a smirk or a grimace from most students, but actually there is a wealth of good solid theory in it. In answer to the question “What to do with 12,000 tonnes of pig poo?” a farm in Gloucestershire has taken advantage of government grants to set up their own biogas generator, which enables them not only to provide their own power for the farm and farmhouse, but also to sell about 2.2 million kilowatts of electricity each year to the National Grid, and even better, to save money on fertiliser as the by-product has been broken down into a form that can be used on the fields. Even better, the process prevents huge amounts of methane from being released into the atmosphere - apparently each year it saves the equivalent of almost 9,000 return flights from London to New York. So lots of good positive externalities there.
read more...»AS Micro: Fears over a century of hunger
Nigel Cassidy reports in this video from BBC news on fears that the world faces “a century of hunger” if the international community cannot agree on new rules regarding food prices. Food security is a hugely important global economic, political and social issue and one of the best resources for keeping up to speed on this is the Guardian’s dedicated page of articles. Here is the link. Check the links at the bottom of the blog for past articles on this topic.
Externalities of Nitrogen Pollution in Europe
Roger Harrabin reports on fresh research on the impact of air pollution on Europe’s natural habitats. A classic example of negative externality effects - already targeted by the EU natural habitat directive, but a regulation that appears to be ineffective.
“Earlier this week, the European Nitrogen Assessment - the first of its kind - estimated nitrogen damage to health and the environment at between £55bn and £280bn a year in Europe, even though nitrogen pollution from vehicles and industry had dropped 30% over recent decades.”
More here: Nitrogen pollution ‘costs EU up to £280bn a year’
The report can be accessed here
In Praise of Farmers and Farming
Luke Johnson has written a superb comment piece on the economic importance of farming for our broader economic health. The sector now contributes less than one per cent of UK GDP (by value added) and the share of employment in farming has continued to diminish over the years. But with the continuing boom in prices of soft commodities and innovative investment in recreation services run by the farming community and organic products, there are signs of better times ahead.
“Farmers face many challenges: climate, labour shortages, environmental worries and loneliness, among others. Also, an unequal relationship between growers and buyers means farmers often receive scant reward for their efforts. Yet perhaps the greatest issue facing most farmers is age and succession – more than 55 per cent of all European Union farmers are over 55 years old. Farming involves long hours and hard, physical work, which deters many young people. But if we want food security, competent stewardship of our environment for the long term and a productive agricultural economy, we must persuade more people to become farmers.”
It is a superb piece and well worth reading - here is the link
read more...»AS Micro Revision: Banana Prices
This revision note covers supply and demand factors that help to determine the world and domestic retail price of bananas. Despite rising world prices, the UK retail price of bananas has actually fallen in recent years. Can students explain why? What effect does intense competition within the UK food retail sector have on the prices we pay?
read more...»When the Water Ends
This is a 16 minute video produced by Media Storm on behalf of Yale Environment 360 which is an online magazine offering opinion, analysis, reporting and debate on global environmental issues - may be of interest to colleagues teaching water scarcity in Africa / the economics and geography of adaptation to climate change. From the Yale 360 site this video on The Warriors of Qiugang - A Chinese Village Fights Back is particularly powerful.
Economics Q&A: Should the CAP be scrapped?
The Common Agricultural Policy is a system of farm support that was set up by the EU to assist the agricultural sectors of its member states. The CAP accounts for nearly half of the EU’s budget, at approximately £48bn, and combines direct subsidy payments and price support schemes. Economic welfare is concerned with levels of human well-being, and can be achieved through an efficient allocation of resources, thereby maximising consumer and producer surplus.
read more...»Economics Q&A: What factors help to explain rising food prices?
Global food prices have risen on average by more than 135% over the last 5 years. While the price of food has been highly volatile, with a spike during 2008, there is clearly a trend pattern of a long term rise. This can be attributed to various root causes, both demand and supply side in nature.
read more...»A modern-day ‘green revolution’
The ‘green revolution’ was a massive and fundamental change in development economics, but it’s really ancient history to today’s modern students. So read on to find out about a modern-day revolution in Vietnam’s rice industry…
read more...»5 Fresh Links: Reforming the EU Common Agricultural Policy
The economic, environmental and social issues arising from farm support in developed and developing countries often figure in final year teaching for A2 economics. We are looking at this at the moment as part of our teaching of the economics of the EU. Here are five fresh links on the vexed question of how best to reform the Common Agricultural Policy of the EU - including two recent videos from BBC news.
read more...»Economics Q&A: What are some of the benefits and drawbacks of a period of rising world food prices
A sustained rise in the global prices of foodstuffs is called agflation. As our chart below shows, the Economist’s index of global food prices has shown high volatility in recent years, there have been two sizeable and steep increases in food prices and a downturn in the wake of the 2009 global recession. And now the United Nations Index of Food Prices has now risen back above levels last seen in 2008 at a record high.
A period of rising food prices affects both the demand and supply-side of an economy. And the impact will depend on many factors including:
(i) The patterns of trade for one or more countries e.g. whether a country is a net exporter or importer of food
(ii) The importance of food production and exports in economic activity e.g. the share of value added contributed by farming, food processing and other food-related industries
(iii) Average incomes for a given country / region and the percentage of incomes that must be spent on food to ensure a modest but adequate lifestyle
(iv) Possible effects of rising food prices on variables such as inflation, interest rates and the exchange rate
Trees as private and public goods
Nancy Folbre an economics professor at the University of Massachusetts Amherst provides in this short article from the New York Times a beautifully clear explanation of the economics of deforestation and the tragedy of the commons. A superb article to print out and use when studying the motives of individuals within society and ideas for how social norms and local institutions really do matter when putting together policies to reduce global deforestation. Read Tree-economics
OCR A2 Economics F585 (Feb 2011) - Suggested Reading
In this blog we will be updating some suggestions for further reading on aspects of the OCR A2 Economics Pre-Release Case Study for the February 2011 exam
read more...»Cutting up cotton subsidies?
It’s that time of year again when we’re looking at different markets in AS Microeconomics, and once more trade-distorting subsidies are back in the news- this time in the cotton markets
read more...»Watch out for the £7 chocolate bar!
Will a collapse in global cocoa production bring an end to chocolate as an affordable treat and giver of blood sugar? This article from the Independent today was timely as I am teaching price volatility in commodity markets in my AS micro class as a prelude to discussions abour price intervention strategies such as maximum prices / buffer stock schemes etc. I have attached my class homework as a word file in case it is of use to colleagues.
Cocoa Economics (AS micro)
Cocoa_Economics.docx
Here is a highly relevant section from a new report from Commodities Now
“World food prices have been trending higher as emerging markets have increased their share of global food demand due to rising populations and incomes. Food products are having to compete for finite resources such as water, land and fertiliser inputs and are increasingly being used for alternative applications such as bio-fuels. As an example, ethanol now accounts for approximately one-third of annual corn output in the US, up from 5% a decade ago.”
