Environmental Engineering Reference
In-Depth Information
Production processes that are liable to have global or transboundary e
ff
ects, for
example, could be separated from those with purely domestic e
rst could be
candidates for trade regulations and even restrictions under certain circumstances and
disciplines. But the most important point here is that all parties should engage in a process
of multilateral negotiations that would tackle three important issues: sectors and prod-
ucts, disciplines and
ff
ects. The
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nancial mechanisms to assist developing countries.
Precautionary principle (PP)
The precautionary principle is de
ned in the Rio Declaration as follows: 'Where there are
threats of serious or irreversible damage, lack of full scienti
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c certainty shall not be used
as a reason for postponing cost-e
ective measures to prevent environmental degradation.'
The PP recognizes the existence of critical ecological thresholds and seeks to prevent
breaching those thresholds. The application of the PP requires weighing the risks of inac-
tion with the costs of preventive actions. It is an important and necessary guiding princi-
ple in the relations between economic a
ff
airs and the environment, but it has generated a
major controversy due to fears that it might serve neo-protectionism or that it can sti
ff
fl
e
technological innovations that could be good for the environment.
Part of the problem arises from the ambiguities that surround the implementation of
the principle. Di
culties in determining where uncertainty and risks begin and where rea-
sonable doubt stops make the PP an awkward tool. If improperly managed, it could lead
to arbitrary and abusive decisions. For example, there are no easy answers to the question
of how to deal with 'exaggerated claims of hazard'. And although 'science by consensus'
does not necessarily lead to the best policy advice, it seems that dialogue and ventilation
of di
ering viewpoints is unavoidable in the presence of disputes.
The precautionary principle does not hold a monopoly over vagueness. But vagueness
and uncertainty is precisely what it is designed to deal with. And in order to use this prin-
ciple adequately, without transforming it into an instrument of discrimination, it must be
accompanied by legitimacy. This is only brought into the system through intensive and
protracted multilateral bona
ff
de negotiations. If we look at examples where the precau-
tionary principle has been successfully used, this is the salient feature.
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Macroeconomics and trade
Globalization and the expansion of trade go hand in hand with
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nancial deregulation.
Capital
ows underpin the expansion of trade and trade liberalization relies heavily on
deregulating the capital account. This was supposed to bring about better resource allo-
cation and lower cost of capital. Savings from developed countries would
fl
fl
ow to devel-
oping countries, spurring growth and productivity. Deregulation in
nancial and banking
systems would also allow for greater investment rates and better services through greater
competition and lower interest rates. 4
But treating money and
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nancial instruments as products that can be exchanged in a
marketplace just like any other commodity is a fallacy. As Keynes pointed out, money and
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nancial instruments lack intrinsic value; they are extremely sensitive to swings in
con
nancial liberalization
increased market volatility, opened new avenues for speculative investments and led to
lower investment rates. The result was slower growth and rising unemployment rates in
most countries.
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dence as to the future evolution of
their value. Thus
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