4 Model analysis and results
4.2 Impact of the model parameters on the indirect utility functions
Paper 4: The relationship between intragenerational and intergenerational justice in the use of ecosystems and their services. An ecological-economic model.
87
C
C R
H * =γ if
( ( ) )
C ji
n R n
R R
R γ
γ γ
ω
θ >
+
+
− 2 2
1 , (44b)
( )
(
i j)
C R R R
n
S − +
+
−
= −1 1
*
2 1
1 1 ω
γ
θ
if
( ( ) )
,2 2
1 C
j i
R n
n
R R
R γ
γ γ
ω
θ ≤
+
+
−
( )
(
i j)
CC R R R n R
S * =ω 1− + −2 if
( ( ) )
,2 2
1 i j C
R n
n
R R
R γ
γ γ
ω
θ >
+
+
−
(45a)
(45b)
( )
( )
( )
1
1 1 1 1
1
1 1
1 1
*
2 1 1 1 2
2 1 2
−
−
−
−
−
−
−
−
+
− +
+
+
−
+
=
σ σ
σ σ θ
θ
θ θ θ
θ θ θ
σ σ σ
σ
γ γ
γ µ ω
n n
n
R R n R
Y
V
j i
C
if
( ( ) )
,2 2
1 C
j i
R n
n
R R
R γ
γ γ
ω
θ ≤
+
+
−
( ) ( ( ( ) ) )
1 1 1 1
1 1 1
* 1 2
2
− −
− −
−
−
+ − + −
+
=
σ σ σ σ θ
θ θ θ θ
σ θ σ
ω
µ γ C i j C
C R R R R nR
n
V Y
if
( ( ) )
.2 2
1 C
j i
n R n
R R
R γ
γ γ
ω
θ >
+
+
−
(46a)
(46b)
Proof. See Appendix A.2.
Paper 4: The relationship between intragenerational and intergenerational justice in the use of ecosystems and their services. An ecological-economic model.
88 in resource harvesting – on the indirect utility functions Vi (for i= A,B) and VC. A marginal increase in the value of the respective model parameter implies a marginal increase (+), decrease (-) or no change (0) in the value of the indirect utility functions for the respective model variants (MV) as follows:
Table 1: Impact of a marginal increase in the value of the particular model parameter on the values of V (for i i= A,B) and V C
Model parameter
Impact of model parameter on Vi (for i = A,B) and VC MV (a)
Vi VC
MV (b1) Vi VC
MV (b2) Vi V j VC
MV (b3) Vi VC
Y1 + + + + + + + + +
R1 0 0 + + + + + + +
Ri(i = A,B) + 0 0 0 + – – + –
RC 0 + 0 0 + 0 0 0 + 0 0 +
ω 0 0 0 + 0 0 + 0 +
n 0 – 0 –* – 0 0 –* – 0 –* –
σ – –** – – – – – – –
θ – – – – – – – – –
µ 0 + 0 + 0 0 + 0 +
γ 0 +* 0 +* + 0 0 +* + 0 +* +
* for θ <1
** for σ >1
Proof. See Appendix A.3 for model variant (a); see Appendix A.4 for model variant (b).
The non-shaded cells in Table 1 indicate solutions obtained by comparative statics; the grey-shaded cells indicate solutions obtained by numerical simulation. As there are two general model solutions in the model variants (b1), (b2) and (b3) (cf. Section 4.1), the left cell refers to general model solution a and the right cell refers to general model solution b, respectively.
If the impact of the model parameters on both of the general model solutions is the same in terms of (+), (-) and 0, the impact is indicated in a single cell.
The results regarding the impact of the respective model parameters on the indirect utility functions (as presented in Table 1) indicate the plausibility of the introduced ecological-economic model.
Paper 4: The relationship between intragenerational and intergenerational justice in the use of ecosystems and their services. An ecological-economic model.
89 4.3 Definition and analysis of efficiency
Referring to a classical definition of economics by Robbins1 (1932: 15), we generally characterize efficiency as non-wastefulness in the use of “scarce means” that have alternative uses to attain societally desired “ends”. These “ends” are not determined by Robbins’
definition of economics. Accordingly, LeGrand (1990: 559) suggests that efficiency refers to primary “social objectives”. Taking up the definition of efficiency by LeGrand (1990: 559), we define the use of instruments of justice to be efficient if it is not possible in a given system to better attain one primary social objective without worsening the attainment of the other primary social objective. In the model, the primary social objectives are intragenerational and intergenerational environmental justice. We presume that the two justices are normative objectives of equal rank regarding societal desirability. In terms of the formal model (Section 3), we define efficiency as follows:
Definition:2
A feasible assignment R=
(
RA, RB,RC)
of resource utilization rights is efficient if and only if there exists no other feasible assignment R´=(
RA', RB',RC')
for whichAJ (R´) > AJ (R) and EJ (R´) ≥ EJ (R) or, EJ (R´) > EJ (R) and AJ (R´) ≥ AJ (R).
An assignment of resource utilization rights R is feasible if the social planner can implement the assignment subject to four constraints: physical feasibility (equations (3), (6) and (7)), the political constraint on χ intragenerational distribution of resource utilization rights within generation 1 (equation (18)), the political constraint π on intergenerational distribution of resource utilization rights (equation (19)) and the political constraint ξ on access to the renewable resource stock by generation 2 (equation (20)). The set of all feasible assignments of resource utilization rights is the policy set.
The normative criterion of efficiency considered here is different from the criterion of
‘Pareto-efficiency’3 which is commonly used in economics. Whereas ‘Pareto-efficiency’
assesses allocations in terms of the well-being of individual persons, efficiency as considered here assesses the use of instruments of justice in terms of attaining the two objectives of intra- and intergenerational environmental justice. As this criterion of efficiency is derived from the Rawlsian difference principle, which involves a maximin-optimization, the relation between Vi(R) for i = A,B,C and AJ(R) resp. EJ(R) is nontrivial – and, hence, there exists no trivial connection between efficiency and ‘Pareto-efficiency’. ‘Pareto-efficiency’ is not relevant to assess the policy set in terms of environmental justice. Thus, we focus on efficiency in the following numerical analysis.
1 Lionel Robbins (1932: 15) constitutes that economics “studies human behaviour as a relationship between ends and scarce means which have alternative uses”.
2 In this definition, it is a regulation that is defined to be efficient and not an allocation (which is the usual entity to be defined as efficient).
3 According to the original criterion of efficiency by Vilfredo Pareto (1906), an allocation is ‘Pareto-efficient’ if it is not possible in a given system to improve on one person’s individual utility without worsening the individual utility of any other person.
Paper 4: The relationship between intragenerational and intergenerational justice in the use of ecosystems and their services. An ecological-economic model.
90 Numerical simulation
To illustrate efficiency in terms of the model, we depict the outcomes of different feasible assignments of resource utilization rights in terms of intra- and intergenerational environmental justice for a specific ecological-economic system – that is, for specific values of the system determinants Y1, R1, ω, n, σ , θ, µ, γ , χ, χ, π , π , ξ and ξ. The diagrams in Figures 1-4 show for each model variant, respectively, how the policy set is assessed in terms of intragenerational environmental justice (AJ) and intergenerational environmental justice (EJ). The x-axis measures the degree of attainment of AJ, the y-axis the degree of attainment of EJ. Each cross in the diagrams represents the outcome of a specific assignment of resource utilization rights included in the policy set.
Figure 1: The opportunity set for a specific ecological-economic system in model variant (a) In model variant (a), (b2) and (b3), respectively, all outer outcomes build a curve, the ‘justice possibility frontier’ (JPF) (cf. Figure 1, 3 and 4, respectively). The area on and interior of the JPF-curve indicates the set of feasible outcomes in the given context (‘opportunity set’) – that is, for given system determinants. Outcomes outside of the JPF-curve are not feasible in the given context. All outcomes on the JPF-curve between the crosses A and B in Figure 1, 3 and 4, respectively, indicate efficient assignments of resource utilization rights: From these outcomes a higher degree of one justice cannot be attained without worsening the degree of
Paper 4: The relationship between intragenerational and intergenerational justice in the use of ecosystems and their services. An ecological-economic model.
91 attainment of the other justice. All further outcomes on and below the JPF-curve indicate inefficient assignments of resource utilization rights. In model variant (b1), there is only one efficient assignment of resource utilization rights included in the policy set: This efficient assignment produces outcome C in Figure 2.
Figure 2: The opportunity set for a specific ecological-economic system in model variant (b1)
Paper 4: The relationship between intragenerational and intergenerational justice in the use of ecosystems and their services. An ecological-economic model.
92 Figure 3: The opportunity set for a specific ecological-economic system in model variant (b2)
Paper 4: The relationship between intragenerational and intergenerational justice in the use of ecosystems and their services. An ecological-economic model.
93 Figure 4: The opportunity set for a specific ecological-economic system in model variant (b3) In all efficient outcomes, rivalry between intragenerational and intergenerational environmental justice necessarily occurs (Baumgärtner et al. 2012: 8). An example is outcome C in Figure 4: Improving on EJ from this point would necessarily reduce the degree of attainment of AJ, and vice versa. In all inefficient outcomes, either independency or facilitation between intragenerational and intergenerational environmental justice occurs (ib.).
For instance, in outcome D in Figure 4 there is facilitation between the two justices: As outcome D is located on the JPF-curve, improving on EJ from this point necessarily also increases the degree of AJ.4 In outcome E in Figure 4 there is independency between the two justices: Improving on AJ from outcome E does not necessitate any change in the degree of attainment of EJ, and vice versa.
A change in the system determinants may alter the opportunity set and therewith the shape of the JPF-curve (ib.: 7). Figures 5 and 6 give two examples on how a change in a particular system determinant shifts the JPF-curve in the specific ecological-economic system under study: An increase in the initial endowment R1 with the renewable resource stock stretches the JPF-curve in model variant (b3) both westwards and outwards to the northeast (cf. Figure 5). Thus, the social planner can, with the available policy set, attain outcomes which show
4 This facilitation is not symmetric: Improving on AJ from point E does not necessarily also increase the degree of EJ.
Paper 4: The relationship between intragenerational and intergenerational justice in the use of ecosystems and their services. An ecological-economic model.
94 higher values in terms of both AJ and EJ. An increase in the rate γ of technological progress in resource harvesting shifts the JPF-curve in model variant (a) northwards (cf. Figure 6). This change allows the social planner to attain, with the available policy set, outcomes which show higher values in terms of EJ and equally high values in terms of AJ.
Figure 5: Alteration in the opportunity set for an increase in the initial endowment with the renewable resource stock (fromR1 =700 to R1 =850 ) in model variant (b3)
Paper 4: The relationship between intragenerational and intergenerational justice in the use of ecosystems and their services. An ecological-economic model.
95 Figure 6: Alteration in the opportunity set for an increase in the rate of technological
progress in resource harvesting (from γ =2 to γ =5 ) in model variant (a)