“Growth for the sake of growth is the ideology of the cancer cell.”
Edward Abbey

During most of the history of mankind, average incomes across the globe amounted to somewhere between $1 and $2 per day and income growth was only marginally above zero, averaging about 0.033 percent per year from year 0 to year 1868 (and probably even less during the preceding millennia). In the hundred year period from 1868 to 1968, however, real per capita income growth suddenly increased forty-fold to about 1.43 percent per year, and when I was born average per capita income in the world had reached about $10 a day. During my life-time, income growth has averaged 1.96 percent, implying that average per capita GDP in the world is now above $20/day. Growth rates have kept increasing steadily, reaching an average of about 2.94 percent per year in the first decade of this century. Such growth rates are unprecedented in the history of our species (1).

The big question is: Will growth continue at these high, and perhaps even accelerating, rates? Or is the growth spurt experienced over the last 150 years just an anomaly, which is about to come to an end?

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“Games lubricate the body and the mind.” Benjamin Franklin

Classroom games can be an excellent way of introducing economic concepts. Well-designed games, or classroom experiments, can help students obtain an intuitive understanding of a concept before it is introduced formally, thus increasing the understanding and comprehension of the theoretical concept.

This list, compiled by Greg Delemeester and Jurgen Brauer, contains descriptions of about 170 different classroom games, classified according to the topic they illuminate (e.g. externalities, wealth distribution, or international trade). The list also provides links to electronic versions of the papers describing each game in detail.

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“The world hates change, yet it is the only thing that has brought progress.”
Charles Kettering

When I was born, there were no personal computers, no Internet, no cell-phones, no wikipedia, no google, no web-sites, no blogs and no facebook. It is difficult to understand how anybody could communicate effectively or get much done at all.

Today is my 44^th birthday and the World has changed completely.  I am in awe of the technological inventions that have occurred in my lifetime, and I am amazed to see how my kids absorb all this technology into their lives as if thousands of years of evolution had prepared their brains for this. Read More »

There are some policies that are obviously correct from both environmental and economic viewpoints, but which are nevertheless difficult to implement. The elimination of fossil fuel subsidies is such an example. This year, the Bolivian government expects to spend at least US$750 million on direct subsidies to diesel (62%), gasoline (27%) and Liquefied Petroleum Gas (LPG) (10%) use (1). Apart from dramatically reducing funds available for public investment, these subsidies also encourage contamination, congestion and deforestation (2), all of which mean substantially higher social costs than the direct costs of the subsidy itself. The beneficiaries of the subsidy are dominated by the agro-industry in Santa Cruz, which profits greatly from the combination of cheap diesel and cheap land. Thus, the subsidy is by no means pro-poor, and a lot of the benefits are even lost to neighboring countries, as their nationals rent cheap land and use subsidized fuel for growing crops in Bolivia. For example, more than 70% of the area dedicated to soy production over the last decade is in the hands of foreigners (3). The Bolivian government realizes all this and has tried, unsuccessfully, to eliminate the fuel subsidy.

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“The mushrooming of consultancy firms and NGOs drawing on a large number of social scientists amounts to an internal brain drain, which is no less problematic than the external brain drain, even if it is less talked about.” Mweru, 2010

In Bolivia, as in most other developing countries, there is very little government support for scientific research and even full-time university professors are not generally expected to do research. This means that the small amount of research that does get done in these countries is the product of consultancies and other commissioned work, financed mostly by international institutions. Read More »

“Nature is like love: one of the most beautiful things on earth,
but if you put a price on it, it becomes prostitution.”
Nele Marien

Every time somebody converts a hectare of forest into a hectare of agricultural land, they have—implicitly or explicitly—compared the value of standing forest to the value of agricultural land, arriving at the conclusion that agricultural land is more valuable to them. Read More »

August has been an exciting month for INESAD. We finally managed to fully convert the Institute into a Bolivian non-profit foundation, Fundación INESAD, with all the advantages (and a few disadvantages) that this implies. This was a requirement for receiving support from the Canadian Think Tank Initiative, but also a major stepping stone towards future institutional development.

We are proud to say that we have a lot to show for it already:

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The Bolivian government has taken a strong stance against the international REDD+ mechanism, mainly because it reduces forests to a simple commodity to be traded in international carbon emissions markets. This would not only imply trading an invisible product (CO₂ emissions), but – even more complicated – trading the lack of the invisible product (reduced CO₂ emissions). Keeping track of the lack of this invisible product is so obviously difficult that both transaction costs and corruption associated with an international REDD+ mechanism would likely be enormous, thus leaving few benefits for the forest, the forest communities, and the global climate. Read More »

By: Lykke E. Andersen*

The Bolivian government has taken a strong stance against the international REDD+ mechanism, mainly because it reduces forests to a simple commodity to be traded in international carbon emissions markets. This would not only imply trading an invisible product (CO₂ emissions), but – even more complicated – trading the lack of the invisible product (reduced CO₂ emissions). Keeping track of the lack of this invisible product is so obviously difficult that both transaction costs and corruption associated with an international REDD+ mechanism would likely be enormous, thus leaving few benefits for the forest, the forest communities, and the global climate.

However, as President Evo Morales expressed in his letter of October 2010 (see box), there are many other ways of empowering local communities to protect their forests. Bolivia is currently formulating an alternative proposal for reducing deforestation through a Joint Mechanism of Mitigation and Adaptation for the Integral and Sustainable Management of Forests.

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By: Lykke E. Andersen*

“Nature is like love: one of the most beautiful things on earth,
but if you put a price on it, it becomes prostitution.”
Nele Marien

Every time somebody converts a hectare of forest into a hectare of agricultural land, they have – implicitly or explicitly – compared the value of standing forest to the value of agricultural land, arriving at the conclusion that agricultural land is more valuable to them.

The calculation they have made is probably quite accurate, because millions of years of evolution have made people quite good at evaluating which of two options is best for the survival of their family.

However, what they do not take into account is that the standing forest is also valuable to other people than their immediate family. To people nearby, to people far away, to people living now and to people living in the future, and even to other species. The benefits that other people derive from your forest are called positive externalities, and even millions of years of evolution have not prepared people to take these into account.

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