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ECONOMIC GAMES AGAINST NATURE: THE POTENTIAL ENVIRONMENTAL CONFLICTS IN UKRAINE

ECONOMIC GAMES AGAINST NATURE:  THE POTENTIAL ENVIRONMENTAL CONFLICTS IN UKRAINE
Николай Петрушенко, доцент, кандидат экономических наук

Участник конференции

We analyze conflicts between socio-economic activities and the environment. A special attention is given to the management of natural resources. The title of this paper is a specific reflection of the linkbetween theory and method of trans-disciplinary socio-natural research.Games against nature are both the content of this research and the decision making model, and the economic-mathematical method of analysis of environmental conflicts. In the paper there is authors' definition of environmental conflict that is not just the next terminological nuance, and includes a practical orientation. We provide a complex analytical evaluation of natural resource conflicts at the territorial level in Ukraine.

Key words: environmental conflict, potential, economy, games against nature, Ukraine.

В статье анализируются конфликты между социо-экономической деятельностью и окружающей средой. Особое внимание уделено управлению природными ресурсами. Название статьи отображает специфику связи между теорией и методом трансдисциплинарных социо-природных исследований. Игры против природы являются и содержанием данного исследования, и моделью принятия решений, а также экономико-математическим методом анализа экологических конфликтов. В статье содержится также авторское определение экологического конфликта. Проведена комплексная аналитическая оценка территориальных природно-ресурсных конфликтов в Украине.

Ключевые слова: экологический конфликт, потенциал, экономика, игры против природы, Украина.

Introduction.The economy is the dominant view of modern social relations. The nature around people is the basis of life and development of society. Relationship between the economy and the nature is extremely complex. Depending on the potential of hidden contradictions, the natural resource problems and the process of their solution may have significant implications not only for some subjects of the economic and environmental activities, but also for the whole socio-economic sphere of relations.

Currently in Ukraine the general problem of management of natural resources and environmental quality is not almost related to the occurrence of acute conflicts. However in the country there are hidden environmental conflicts. Moreover, there is a growing scale and threatening potential of these conflicts.

In Ukraine confirmation for these trends is the following: the tensions about the possible lifting of the moratorium to the agricultural land sale; the prolongation of the gas crisis and energy problems; the ecological and socio-economic consequences of the Chornobyl’ catastrophe; the extensive deforestation in the Western Ukraine; the numerous unsolved issues related to natural recreational resources in the Crimea and the Carpathian mountains and more.

In other words, over the past decades ecological-economic situation in Ukraine escalates and more often takes conflict forms. Currently, around natural resource conflicts in Ukraine the situation is characterized, above all, by local environmental and economic problems throughout the country. Thus, in the village Muzhiyevo, Zacarpathia region, soil and water are significantly contaminated with heavy metals as a result of the gold extraction (e.g., the content of lead exceeds the level of 23 times); in Kalush, Ivano-Frankivsk region, the soil settles as a result of the extraction of potash ores, which endangers the local village, etc.

So, generally in the context of global trends, in Ukraine overall ecological and economic situation are conflicting. So there are not own active environmental conflicts existsng, as well a potential conflict of environmental, political, social and other problems, first of all, in field of natural resources management. In Ukraine the situation related to natural resource conflicts is not primarily crisis due to the absence of antagonistic behavior of all stakeholders.

However, in Ukraine there is too politicized ecological-economic activity that, firstly, is the hidden cause of environmental conflicts, and, secondly, can cause or prevent the conversion of natural resource conflicts from potential to active forms.

The concept of environmental conflict. From the socio-economic perspective to the concept of ‘environmental conflict’ next to the answer to the question “what is environmental in environmental conflicts” (Libiszewski S., 2004) we pay attention to the etymology of own ‘conflict’. Paradoxically it sounds, but in some definitions of environmental conflict the second part of this phrase is lost in its “environmental background” and consequently needs more concretization. In particular, the difference between environmental conflictand, for example, environmental disaster or environmentally dangerous situation is not always clear. Or, what is the difference between the environmental crisis and environmental conflict?

There are other issues and terminological uncertainty, partly due to the specifics of relevant practical countermeasures in a given region of a country or at international level. Thus, for the most hot spots caused by relationship with the environment, the researchers emphasize the antagonism of environmental conflicts and, therefore, consider war as an extreme form of its prolongation. However, in Ukraine, environmental conflicts are primarily a potential threat to the economy and society in general. However, the fact of Chornobyl’ suggests that even in the absence of antagonism in environmentally caused conflicts or close to it, the consequences of “collision” of human and nature, society and nature, false state ideology and natural values may take the form of collapse, which in its destructive power is not inferior even to wars over natural resources.

In our opinion, in the economic context the environmental conflict is a situational dynamic combination of environmental, social, political and other conditions, as well as the relationship between economic aсtors, including other stakeholders in which each of the stakeholders trying to take a position inconsistent or opposite in relation to environmental and economic interests, especially on natural resources, the opposite side. The passing of a potential conflict in an active form should be considered a fact of ecological stress and/or environmentally caused systematic social conflicts, extreme form of which is antagonistic opposition.

Methodology and specification. We consider the conflict as a component of socio-natural relations in the economic sphere:

-   the economic sphere is the part of the global sphere of human activity. According to the concept of sustainable development, this global sphere includes the economic, social (socio-cultural) and environmental vectors of human development;

-   the basis for the maintenance of the economic sphere and its sustainable development is the economic potential. The economic potential is the system of relationships between objects of economic activity that generates the maximum ability to form and satisfy the needs of the population through optimal use of natural, human and other resources of the territory;

-   conflictness is an objective characteristic of the economic sphere, which is caused by contradictory elements of the social and natural relationships between subjects ofeconomic activity;

-   the basic input elements of this system are the social and natural resources, as well as those environmental conditions that with time go to the class of natural resources. The output elements of this system are the follows: the influence on the environment (environmental degradation ?ecological damage), the impact on field of human activities (the improvement of socio-economical and ecological processes ?synergy effect);

-   the subject of economic research of this conflictness is the correlation of natural capital and social capital as forms of the economic potential. We mean, first of all, the role of partnerships that are formed on the basis of general cultural values, in the context of management of natural resources and ecosystem services to receive additional income;

-   the extreme forms of interaction of natural and social factors in the economic sphere are the synergy (compatible activities) and the conflict (opposition and contest);

-   in making management decisions in field of environmental and in particular natural resource conflicts, we pay attention to the fact that any environmental conflicts are primarily social and often economic phenomena that can perform a positive role in sustainable development.

Modeling and analytical evaluation of environmental conflicts as a dynamic phenomenon, where participants have different interests and choose different ways to achieve their goals, it is possible within the game theory (J. von Neumann, O. Morgenstern, 1944).In general, game theory is a part of management theory, which investigates the problem of existence and finding the optimal management of conflicts.Contents of game theory lies in establishing the principles of optimal behavior under uncertainty, the evidence of the existence of solutions that satisfy these principles, algorithms of finding solutions.

Game theory is a mathematical model of conflict, at the same time the method of conflict management, which reflects the follow aspects: set of stakeholders (players); the actions each of the players (strategies and moves); the interests of the players represented functions of winning (payoff) for each of the players, that can be expressed quantitatively.

We use basic concepts of game theory (games against nature) to describe and analyze of decision problems related to potential environmental conflicts of the territory of Ukraine.

Most vital questions are the follows:

What is the ecologic-economical game? (We research the game with potential environmental conflicts in Ukraine, for example Sumy district of Sumy region.)

Who is the player in this game? (The player is the territorial ecological-economic system.)

What is a strategy of the player? (These are 6 strategies, that correspond to sustainable development concept.)

What is a payoff function in this game? (This is the function of natural-resources potential of the territory.)

If an A player does not know in which games the other players play, from an A player point of view we tread the situation as a game against nature.

Games against nature on field of potential environmental conflicts management – the matrix on tables 1 and 2.

In this research game against nature is a situation when player S (a subject of socio-economical activity) doesn’t know the payoffs (VN) of player N (‘nature’ is own nature (the environment, including natural resources and environmental conditions), in contrast to the traditional economic approach, where nature is the external economic environment). But the nature is a player ‘N’ that combines the features of both natural and anthropogenic (in a negative sense, technological).

Criteria of choosing strategyin games against nature

1. The optimistic (maximax) criterion (O):

.

2. Wald’s (pessimistic) criterion (W):

.

3. Hurwicz’s criterion (H):

.

Hurwicz’s criterion is the combination of the Wald’s criterion and the optimistic criterion with the factor a.

,

where:

aP– the factor of pessimism; aO– the factor of optimism; aR– the factor of realistic;

aT– the factor of threats; aSe– the factor of security.

4. Savage’s criterion (Sa):

5. The criterion of Bayes-Laplace (BL):

- in conditions of relatively identified risk (r):

;

- relation relatively identified risks:

,

where:

 – the regret of player S.

Main results. Evaluation of games against nature carried out for example Sumy district of Sumy region (Ukraine).

The criterion of Bayes-Laplace in conditions of relatively identified risk (table 1), where:

Ncs – the state of nature, which corresponds to the current ecological-economic situation; Net – the state of nature, which corresponds to the situation reaching of ecological threshold; Nst – the state of nature, which reflect the social threshold; Nit – the state of nature, which reflect the threshold of irreversibility. S1 – the strategy of permanent technogenic growth; S2 – the strategy of unchanged dynamics of the currently situation; S3 – the strategy of the unchanged dynamics and environmental protection; S4 – the strategy of the unchanged dynamics, environmental protection, reproduction of natural resources; S5 – the strategy of reducing pollution, the passive environmental protection and the reproduction of natural resources; S6 – the strategy of reducing pollution, the active environmental protection and the reproduction of natural resources.

Table 1.Payoff matrix for game against nature for the criterion of Bayes-Laplace

Nj

Si

Ncs

Net

Nst

Nit

Weighted average of the effect

S1

3235,52

(8/6; 0)

1213,32

(5/8; –1/4)

404,44

(1/2; –3/8)

0,00

(2/5; –2/5)

1415,54

S2

2426,64

(1; 0)

2426,64

(7/8; –1/8)

808,88

(2/3; –1/3)

404,44

(1/2; –1/3)

1698,65

S3

2022,20

(5/6; 0)

2224,42

(9/10; 1/5)

1819,98

(4/5; 1/10)

1415,54

(3/5; 1/10)

1921,09

S4

1617,76

(2/3; 0)

1819,98

(7/8; 1/4)

2022,20

(7/8; 3/8)

1860,42

(9/10; 1/4)

1807,85

S5

1213,32

(1/2; 0)

1213,32

(4/5; 1/5)

1213,32

(9/10; 1/10)

1294,21

(9/10; 1/6)

1229,50

S6

1213,32

(1/2; 0)

1213,32

(4/5; 1/5)

1617,76

(7/9; 5/9)

2022,20

(8/9; 7/9)

1455,98

rj

0.3

0.3

0.2

0.2

 

 

Time period (long-term forecasting) – 20 years (within one generation).

For the criterion of Bayes-Laplace relation relatively identified risks: S3=586,44.

According to Savage’s criterion we chosen the strategy that has the smallest maximum loss: S3=1213,32.

For Hurwicz’s criterion with the factor of threats and the factor of security: S4=1787.54; S3=1957.49.

The optimistic (maximax) criterion (O), Wald’s (pessimistic) criterion (W), Hurwicz’s criterion (E) with the factor of pessimism, the factor of optimism and the factor of realistic (table 2).

Table 2.Transformed (for factors a) matrix

Nja

Si

Ncsa

Neta

Nsta

Nita

Wi

Oi

EiP

EiO

EiR

S1

0,00

404,44

1213,32

3235,52

0,00

3235,52

1003,01

2232.51

1617,76

S2

404,44

808,88

2426,64

2426,64

404,44

2426,64

1031.32

1799.76

1415,54

S3

1415,54

1819,98

2022,20

2224,42

1415,54

2224,42

1666.29

1973.67

1819.98

S4

1617,76

1819,98

1860,42

2022,20

1617,76

2022,20

1787.54

1896.82

1819,98

S5

1213,32

1213,32

1213,32

1294,21

1213,32

1294,21

1238.40

1269.13

1253,66

S6

1213,32

1213,32

1617,76

2022,20

1213,32

2022,20

1464.07

1771.45

1617,76

Vj

5864,38

7279,92

10353,66

13225,19

 

 

 

 

 

             

Conclusion. So, as a result of the research we do the following conclusions.

First, the economic games against nature are both internal and external situation of potential environmental conflicts in Ukraine and in other, especially, developing countries. Unconsciously or more consciously actors of economic activity (whole economic system on the territorial level) chase short-term and, at best, medium term goals for profit without adequate consideration of environmental and social interests of other stakeholders. This praxis conflicts with the laws of nature. That is a paradox of relations in the system “economy – society – environment”: instead of logical cooperation and synergy of these three global players we see strange games against nature. Secondly, games against nature are the decision making model in field of ecological-economic activities. In particular, this model allows analyzing different scenarios of natural resource conflicts, one of which is the transformation of these potential conflicts in an active form, which, under certain circumstances may prevent the socio-natural catastrophes. Thirdly, games against nature are the economic-mathematical method of valuation of effects of environmental conflicts. Fourth, the results of the research allow a more balanced approach to the implementation of sustainable development at the territorial level. The use of the economic potential as a function of payoffs of players against nature extends the framework of analytical analysis of environmental conflicts.

In further researches we will analyze necessity and opportunities of transformation of potential environmental conflicts in an active form. In our opinion, only the synergetic combination of social capital and natural capital with the science-based regulation can solve any conflicts.

References:

  • 1. “Advances in dynamic game theory. Numerical methods, algorithms, and applications to ecology and economics” / Edit. S. Jorgensen, M. Quincampoix, T.L. Vincent (2007). Birkh?user, Boston, pp. 507-546.
  • 2. Gleditsch N.P. (1998). “Armed conflict and the environment: a critique of the literature”. Journal of peace research, №3, Vol. 35, pp. 381–400.
  • 3. Homer-Dixon T. (1991). “On the threshold: environmental changes and acute conflict”. International security, №2, Vol. 16, pp. 76-116.
  • 4. Libiszewski S. (2004). “What is an environmental conflict?”. ENCOP papers, pp. 2-6.
  • 5. Neumann J. von, Morgenstern O. (1953). “Theory of games and economic behavior”. Oxford university press, London.
  • 6. “The economic potential of the administrative and production systems” / Edit. O.F. Balatzkiy (2006). PTH University book, Sumy, pp. 506-523.
  • 7. Rees W.E. (2001). “Economics and sustainability: conflict or convergence? (An ecological economics perspective)” University of British Columbia, Vancouver.
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