brendan moore- mi2407 economics and sustainability

8/3/2019 Brendan Moore- MI2407 Economics and Sustainability

http://slidepdf.com/reader/full/brendan-moore-mi2407-economics-and-sustainability 1/74



Economy



Human society is an opensubsystem of the biosphere...



Biosphere

Society



Society

Biosphere



The economy is an opensubsystem of human society...



Economy

Biosphere

Society



GDP

private consumption + gross investment +government spending + (exports í imports)

A few definitions...



Total real GDP

IGBP synthesis: Global Change and the Earth System, Steffen et al 2004

Nordhaus (1997) The economics of new goods. University of Chicago Press



Why does the economymatter?



Prosperityand

Well-being

A few definitions...



GDP growth

GDP de-growth



Source: Jackson 2009, 42

Sweden 1800 (off chart)

Sweden 1900

Sweden 2008



Data from CIA World Factbook, created by Mnmazur for Wikimedia Commons

GDP Growth Rate, 2009

The Great Recession



Housing Prices, U.S. Unemployment, U.S.

The Great Recession

Data from CIA World Factbook, created by Mnmazur for Wikimedia Commons



Source: Millenium Development Goals Report 2010, 10



It matters to decision makers...



Source: Stimson 2004



Source: Hibbs 2007, 6



Perhaps it¶s more sustainable?



Fossil Fuel Emissions: Actual vs. IPCC Scenarios

Raupach et al. 2007, PNAS, updated; Le Quéré et al. 2009, Nature Geoscience; International Monetary Fund 2009

Projection 2009

Emissions: -2.8%GDP: -1.1%

C intensity: -1.7%

1990 1995 2000 2005 2010 2015

F o s s i l F u e l E m i s s i o n ( G

t C y - 1

)

5

6

7

8

9

10

Projection

A1B

A1FI

A1T A2

B1

B2

Carbon Dioxide Information Analysis Center

International Energy Agency

Full range of IPCC individual scenarios

Averages



Source:HSBC 2009, 8



Source: Steffen et al. 2004, 17

How do we handle this?



Regulation



The Market



Economy



Neoclassical Economics

Environmental Economics

Ecological Economics



Price

Quantity (#)

SUPPLY

DEMAND

EQUILIBRIUM PRICE



The market allocates efficiently, given afew assumptions...

1. Static conditions for one time period2. Identical product functions3. Property rights

4. Free trade5. Full information6. No transaction costs7. Many buyers and sellers (competition)8. Everyone is a pricetaker (no one sets price unilaterally)

9. No externalities



Price

Quantity (#)

SUPPLY

DEMAND

The Self-Correcting Market



³Economics ± and macroeconomicsin particular ± is ecologically illiterate.´

-Tim JacksonProsperity without Growth



Environmental Externalityis outside of the market



Source: Millenium

Ecosystem Assessment

2005, 9



Is intervention needed?



John Maynard Keynes

Keynesian Economics

Spending by Governmentsfor Full Employment



Source:HSBC 2009, 3



Price

Quanti

ty (#)

SUPPLY

DEMAND

NEW CURVE

$4000



Value(per hectare)

0

$2000

$4000

Mangrove Shrimp Farm

Coastal Protection

(~$3,840)

Timber and Non-timber products ($90)

Fishery nursery ($70)

Net: $2,000(Gross $17,900less costs of $15,900)

Pollution Costs (-$230)

Less subsidies (-$1,700)

Restoration (-$8,240)

MangroveConversion

Private Net Present Value per hectare

Mangrove: $91

Shrimp Farm: $2000

19871999Public Net Present Value per hectare

Mangrove: $1,000 to $3,600

Shrimp Farm: $-5,400 to $200

Source: Millennium Ecosystem Assessment; Sathirathai and Barbier 2001

Source: UNEP



Fiber

Food

Spiritual & religious

Freshwater

Genetic Resources

Climate regulation

Water purification

Disease regulation

Flood/Fire regulation

Recreation & tourism

Aesthetic

Economic Value ($)

EconomicValuation

Difficult or impossible

Easy

Private BenefitCapture

Difficult

Easy

?

?

?

?

?

?

?

?

?

?

?

Many services are public goods



Ecological Economics



Price

Quantity (#)

SUPPLY

DEMAND

QUOTA



Thinking about throughput...

Decoupling



Do rich countries need growth?



Benef its level off...



Growth in the developed countries

might be unsustainable...



...but a lack of growth is unstable...



...and instability has consequences.



But why is growth necessary?

Firms

(Businesses)

Households

(Consumers)



Firms

Revenue Costs =

Prof it!

Capital

Materials

Labor



Source: Kroszner 2006



Productivity, Novelty, and Jobs



The Iron Cage of Consumerism

brendan moore- mi2407 economics and sustainability

Documents