Natural Resources and Violent Conflict - WaterWiki.net

where did it come from? 137in place, demand was generally left to adjust to market forces (apartfrom bans on products like aerosols). Although the replacements forozone-depleting substances themselves were often cheaper, significantcapital costs were involved in prematurely retiring machinery dependenton ozone-depleting substances; thus a significant latent demandfor ozone-depleting substances remained to service existing equipmentin developed countries. At the same time, such materials were cheaplyand freely available on developing-country markets. This demand wasfurther exacerbated because, despite numerous technical innovations,one critical application did not emerge: there was no quick substitutefor CFC-12, the most widely used chlorofluorocarbon (CFC) in smallrefrigeration and air conditioning. Replacing CFC-12 in car air conditioninginitially cost around $250–$500, while a recharge cost around$50 in the black market. The demand for CFC-12 was particularlyhigh in the United States (and Canada) because more than 90 percentof automobiles were fitted with CFC-dependent air conditioning, comparedwith about 10 percent in Europe. In 1995 some 110 millionautomobiles were using CFC-12; this demand was met by some10,000–20,000 tons of illegally imported CFC-12, worth more than$100 million.The illegal dumping of waste has increased as regulations governingthe safe and proper disposal of hazardous waste tighten, increasinghandling charges and decreasing the capacity for safe disposal at licensedfacilities. 18 As illegal dumpers do not have to connect buyersand sellers in a clandestine market, but simply lose the material somewhere,waste dumping does not require specialists, and entry costsinto the illegal market are low. In one New York police sting in 1992,undercover detectives, posing as illegal dumpers, went into the businessof disposing of toxic waste from small businesses for $40 a barrel,but they found the competition so fierce that they had to lowertheir price (New York Times, May 13, 1992). The cost of legal wastedisposal was about $570 per barrel.The design of tax regimes may also affect incentives to evade CTRs.The stumpage tax on most timber harvesting, based on the value oflogs at the stump (that is, the cost of extraction plus a reasonableprofit margin), provides strong incentives for tax evasion by underreportingharvests, undergrading the quality of the timber harvested,or inflating costs to show zero profits. The Cambodian forest sectorexperienced all these problems in the 1990s. In 1997 authorized logproduction was about 450,000 cubic meters, while estimated totalharvesting was 4.3 million cubic meters. Transnational subsidiariesmay also “transfer price” timber shipments by underselling and undergradingtimber shipments to their parent companies; the real value