Sep 10 2007
Mali’s Weed: Is this an economic development, economic growth, supply or demand issue??
Published by Michelle Close at 11:38 am under Determinants of Demand,Determinants of Supply,Development,Economic Growth,Law of Demand,Law of Supply,Supply/Demand,Sustainability
Mali’s Farmers Discover a Weed’s Potential Power – Sept 6, New York Times
Can it be possible that a new use for an old weed could change the economic health of a nation and at the same time defy the law of opportunity costs? In Mali, farmers are choosing to plant more of weed called jatropha becuase it can now be turned into biofuel. It is a unique plant in that it needs marginal soil and requires little fertilizer. In class we have talked about how discovering a new resource can cause economic growth, how this can shift the PPC curve. But, can a country actually get the benefits of using this new resource with out any opportunity cost? Is what is happening in Mali an example of economic development or economic growth in the first place? Is this a supply or a demand issue?
But now that a plant called jatropha is being hailed by scientists and policy makers as a potentially ideal source of biofuel, a plant that can grow in marginal soil or beside food crops, that does not require a lot of fertilizer and yields many times as much biofuel per acre planted as corn and many other potential biofuels. By planting a row of jatropha for every seven rows of regular crops, Mr. Banani could double his income on the field in the first year and lose none of his usual yield from his field.
You be the judge of why Mali is making the decision to produce more jatropha. Is this a case for demand or supply? Which curve would shift? Which determinant is causing this shift?
But here in Mali, one of the poorest nations on earth, a number of small-scale projects aimed at solving local problems — the lack of electricity and rural poverty — are blossoming across the country to use the existing supply of jatropha to fuel specially modified generators in villages far off the electrical grid.
“We are focused on solving our own energy problems and reducing poverty,†said Aboubacar Samaké, director of a government project aimed at promoting renewable energy. “If it helps the world, that is good, too.â€
This is very interesting information for you to consider as you are wondering about environmental sustainability, a real life economic issue.
Jatropha’s proponents say it avoids the major pitfalls of other biofuels, which pose significant environmental and social risks. Places that struggle to feed their populations, like Mali and the rest of the arid Sahel region, can scarcely afford to give up cultivable land for growing biofuel crops. Other potential biofuels, like palm oil, have encountered resistance by environmentalists because plantations have encroached on rain forests and other natural habitats.
But jatropha can grow on virtually barren land with relatively little rainfall, so it can be planted in places where food does not grow well. It can also be planted beside other crops farmers grow here, like millet, peanuts and beans, without substantially reducing the yield of the fields; it may even help improve output of food crops by, among other things, preventing erosion and keeping animals out.
So try to apply what you have learned about opportunity costs, economic growth and development, as well as supply and demand and analyze these economic events in Mali. I look forward to your comments
About the author: Michelle Close teaches AP Economics and IB Economics the Shanghai American School where she is also the CAS coordinator for the IB program. Michelle has taught in a wide variety of school settings for the last twenty years and truly values teaching, living and traveling abroad.
Michelle has been living in Shanghai with her husband Kevin and two children, Maya and Cooper since 2006 and she previously taught at the Columbus School in Medellin, Colombia. She calls Boston and The Bay Area her home away from home. Read more posts by this authorRelated posts:
The discovery of jatropha as an optimal biofuel will certainly encourage economic growth and development in Mali. There is little opportunity cost to planting jatropha, so as mentioned above, farmers can double their income by planting both regular crops and jatropha. As long as Mali harvests substantial harvest for survival, introducing jatropha has not setback. Furthermore, since jatropha provides more fuel than corn and sugar cane, demand for it will certainly increase, and supply will increase along because of high demands. While Mali extends it's PPC, increasing average income and diminishing poverty, globally, we are all benefiting from less gasoline pollution.
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Economic development is the process of striving for economic growth to increase efficiency for production, whereas economic growth is a increase in living standards throughout the country. As for Mali's scenario it cannot be looked at as black and white. On one side having a "newly" found resource, it promotes economic growth; however, once Mali begins to farm jatropha as a cash crop it will increase its economic development–making it a win-win situation. As for the opportunity costs, it will strictly depend on how much land they are going to sacrifice for this new cash crop. I am guessing, for now the government will have ask farmers to plant as much jatropha as they can around their current cash crops. However, in the future, to increase revenue, governments will start to transform entire farms into jatropha plantations. Though jatropha can grow on dry barron lands, governments will sacrifice food for cash. This may not be a bad thing. With the new income made with the jatropha plant, Mali will be able to heal its food shortage issue. However, if the profits of the jatropha plant cannot bring in as much imported food to feed its people, then people will starve. Moreover if profits are good and demand is high for the jatropha plant, Mali can even be able to buy better healthcare for her country, electricity to all its people and even transportation–economic growth increasing economic development. So call in the economists Mali and find out what is right! So can it be possible that a new use for an old weed could change the economic health of a nation and at the same time defy the law of opportunity costs? Yes.
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I think the situation in Mali leans towards the economic growth side. The three things we discussed in class that can cause an economic growth are: new resources, new technology, and better quality of products. In the case of Mali, the discovery of the new use for jatropha is both a discovery of new resources and advancement in technology. This will completely shift out Mali’s production possibility curve, because before this discovery, people didn’t label this crop as a potentially beneficial product for the nation. I’m still not so sure about what a “supply or demand†issue is, but I think the demand for this product isn’t too high currently; we haven’t started using biofuel on a large scale yet, so the farmers need to be careful, or they may over-supply the market with the weed. The opportunity cost for producing this product is very low, according to the article, for it doesn’t require much nutrients at all. However, this does not mean the opportunity cost for producing this product isn’t there; the farmers, for example, will need to plant and harvest the weed. The time they spend doing that can be seen as a cost for growing the weed.
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I think the discovery of jatropha as an ideal biofuel would contribute to the economic growth in Mali. In this situation, I think the demand for jatropha is increasing as the opportunity cost for it is lower than other sources of biofuel. Many farmers are switching to planting jatropha because it can be planted on "virtually barren land" and requires no pesticides. As supply is impacted by a reduced cost in production, supply for jatropha would most probably increase as well. However, the article states that huge plantations of jatropha are present in countries such as India, China and Philippines, which means that it is possible that the supply would exceed the demand of this biofuel. This in turn would lead to a surplus.
Even so, I think the discovery of jatropha would stimulate the economic growth in Mali.
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I think jatropha will stimulate economic growth in Mali. As the article mentions, Mali is a very poor country. By using low-cost jatropha as biofuel, Mali will free up resources currently used to get less efficient power. These resources can go into a sector Mali is more specialized at, such as peanut growing, and increase the spending power of farmers. Also taking into consideration that there is a growing global demand for alternative fuels, Mali could potentially enter the international market. Challenges standing in the way of jatropha are: the shortage of money to grow the plant, possible disagreements with environmentalists, and competition with Mali's current energy providers. If Mali can overcome these hurdles, there could be a great deal of economic prosperity in store.
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[...] Mali’s Weed: Is this an economic development, economic growth …In Mali, farmers are choosing to plant more of weed called jatropha becuase it can now be turned into biofuel. It is a unique plant in that it needs marginal soil and requires little fertilizer. In class we have talked about how … [...]
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The discovery of jatropha is definitely going to shift the PPC curve rightward, meaning that it is going to cause a economic growth or development; in this particular case, it falls into the category of the discovery of new resources. It can also be regarded as a demand + supply issue, too. Since there is a new, cheaper, and more efficient substitute for biofuels, the demand for other biofuels is going to decrease as a result (in this case, it's one of TOEISS, Substitute/Complement Price). Also, this increase in supply of jatropha will cause decrease in the supply of other agricultural crops since now the farming land is used for the jatropha production.
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With the discovery of such a weed, Mali's economy might see some economic growth and development. In the case of a PPC graph, the curve will be moved towards the right side. This is because it is a substitute for other biofuels and since it's low cost and easy to grow, it's obviously the better choice.
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