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Europe is Richer…AND Getting Greener

This very interesting article refers to several concepts we’ve touched on in the first few weeks of class, such as:

Expanding the PPF

As a result, Europe’s forests grew by a third over the last 100 years. At the same time, cropland decreased due to technological innovations such as motorization, better drainage and irrigation systems: Relatively fewer area was needed to produce the same amount of food.

Markets vs. government as the best way to organize economic activities, and how people respond to incentives

In eastern Europe, many forests re-grew after the end of the Soviet Union. Fuchs and his colleagues explain the development with the fact that many privatized agricultural farms were less competitive on the global market. Therefore, farmers abandoned unprofitable cropland. Particularly in Romania and Poland, former cropland was taken back by nature afterward, first turning into grassland and later into forests.

Trade and both absolute and comparative advantage

To the north of formerly communist Estonia, Latvia and Lithuania, Scandinavian countries were able to re-grow most of their forests (and are continuing to do so today) to keep up with timer demand, as they substituted most other suppliers in Europe that had practically used up most of their own wood resources.

Students who think economic growth is usually bad for the environment, requiring lots of government intervention, should at least consider that the real world might be more complex than what they’ve been told.

Read the whole thing.

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Categories: Environment
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