A Moral Hazard – Fast Rising Economies Have Incentives to Pollute More


This week NPR (National Public Radio) carried an item mentioning how fast the third world industrializes.  China’s economy has developed rapidly in the past decade or two, and a radio story this morning mentioned that the bulk of their electrical demands are going to be met with coal-fired power plants – the most polluting alternative – and that most of the plants in question are still being built.  They didn’t mention that these plants are going to be in operation for decades to come, and will inevitably be far cheaper to continue to use as opposed to building more efficient, less polluting, alternative energy sources.   There is more to this problem, however.

It is probable that this cycle will be repeated, unfortunately, and perhaps India and then Indonesia will be the next countries with huge incentives to grasp for cheap, resource-gobbling and pollution-heavy power to serve booming industrial development.  Can the rest of the developed world, already well-equipped with power infrastructure, do anything to get the boom countries to develop more ecologically responsible power plants without being disregarded and accused of trying to keep down potential competition, for instance?  Somehow, possibly through a combination of technological development, outreach funding and assistance programs to these countries, the rest of the world needs to help these countries build more efficient infrastructures and find more sustainable and ecologically responsible power sources.  The world will not do well with repetitions of the development pattern we see today in China.

I welcome your ideas.

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