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WEEK 4: PLANETARY BOUNDARY & BASIC ECONOMIC APPROACH
Nuttavikhom Phanthuwongpakdee
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“Earth provides enough to satisfy every man’s
need but not every man’s greed.”
– Mahatama Gandhi
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SUSTAINABLE DEVELOPMENT (REVISITED)
▪ Economic Growth
▪ Board-based Social Inclusion
▪ Environmental Sustainability
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SUSTAINABLE DEVELOPMENT (REVISITED)
When the world economy has become very large relative to the finite planetary resources. Human is pushing against the limit of the environment.
Remember Thomas Robert Malthus?
His idea was not 100% right, but it makes us think about the Earth’s finite resources.
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GLOBAL UNSUSTAINABILITY FACTORS
Growth Dynamics
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GLOBAL UNSUSTAINABILITY FACTORS
Energy Consumption
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GLOBAL UNSUSTAINABILITY FACTORS
Food Consumption and Production
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GLOBAL UNSUSTAINABILITY FACTORS
Population dynamics
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Of nine worldwide processes that underpin life on Earth, four have exceeded “safe” levels.
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GENERAL PERSPECTIVES ON SOLUTION TO SUSTAINABILITY
Do you think these solutions, namely education and awareness raising are effective for solving the unsustainability and achieving sustainability ?
EducationAwareness
Raising
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GENERAL PERSPECTIVES ON SOLUTIONS TO SUSTAINABILITY
Major problem of only using
education and awareness raising
• People with awareness tend to
be taken advantages of by
those ignorant people.
• The ignorant gets all the benefit.
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ECONOMIC PERSPECTIVES ON SOLUTIONS TO SUSTAINABILITY
Action choices
Sustainable Action
Unsustainable Action
Increasing BenefitReducing Cost
Reducing BenefitIncreasing Cost
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POLLUTER PAY PRINCIPLE: PPP
Polluters pollute and cause negative externalities for society and the environment. The polluters must pay for the compensation for those affected and recovery of the damages.
Cost increases Produce less Pollute less
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POLLUTER PAY PRINCIPLE: PPP
Oil spill – Samet Island, Rayong Province
Lower Klity Creek – Kanchanaburi Province
The Map Ta Phut Industrial Estate
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PAYMENT FOR ECOSYSTEM SERVICE: PES
Major Principles
• Participatory approach
• People in the area that
benefit from ecosystem
service should pay those who
take care of the ecosystem.
• The ecosystem caretakers
have more incentives to take
care of the ecosystem.
Ecosystem Service
Is
direct and indirect
benefits from
ecosystem
contributing to
human well-being.
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CASE STUDIES: MAE SA RIVER BASIN, CHIANG MAI
Upstream
Downstream
Source: Andreas Neef and Chapika Sangkapitux
(2013), Payments for Environmental Services in
Thailand: A Review of Discourses and Practices
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WITHOUT PES
Without PES, upstream
people would be using
water for their
monocrop farming,
polluting it with
pesticides and
fertilizers.
Water shortage
Water contamination
Downstream people
became a victim of
the behavior of
upstream people,
experiencing water
shortage and water
pollution
Conflicts between
upstream and
downstream
people
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WITH PES
Upstream people become
service providers, taking care
of the water source forest
ecosystem. However, they
would have opportunity cost
from not doing the mono-
cropping practices
Clean water can flow
down to downstream
Downstream people
are beneficiaries. Money is paid back to the
upstream people to off-set the
upstream people’s opportunity cost.
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ROLES OF CONSUMERS, COMMUNITIES, PRIVATE SECTOR AND THE GOVERNMENT
Consumers Communities Private Sector The Government
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CONSUMER CHOICE
ConsumersMarket of
Goods and Services
Producers
Consumers can influence producers by their
choices. Every choice the consumers make will
send signal to producers about the product and
production methods that the consumers prefer.
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CONSUMER CHOICE: LABELS
•Labels help consumers know the quality and production methods. It reduces information cost of the consumers.
• Labels are usually issue-specific.
•Organic products
• Eco-friendly
• Social issues
• Energy efficiency
• Etc.
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CONSUMER CHOICE: SHOP LOCAL PRODUCTS
▪ Local food systems and shorter food supply chains are to be encouraged
▪ Less transportation cost and less burning of fossil fuels
▪ Traceability of product is key to ensuring they are upholding their own supplier guidelines, and not engaging with producers who violate the basic human rights of their workers
▪ Allowing farmers to capture a higher percentage of the farm-value share
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CONSUMER CHOICE
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ROLES OF COMMUNITIES: NATURAL RESOURCE MANAGEMENT
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TYPOLOGY OF GOODS AND SERVICES
▪ A good is excludable if people (ordinarily, people who have not paid for it) can be prevented from using it.
▪ A good is rival, or subtractable if one person's consumption of a good necessarily diminishes another person's consumption of it.
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ExcludabilityNon-Excludability
(or difficult to exclude)
Rivalry(Subtractability)
Private Goods: Common-pool resources
Non-rivalry(Non-
subtractability)
Club goods (Toll goods) Public goods
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ROLE OF COMMUNITY IN NATURAL RESOURCE MANAGEMENT
Common-
Pool
Resources
Subtractability
Difficulty of
Exclusion
Overexploita
tion Problem
Free-rider
Problem
+
Tragedy of the Commons
=
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TRAGEDY OF THE COMMONS
▪ An economic issue where individuals tend to exploit shared resources so the demand greatly outweighs supply, and the resource becomes depleted.
▪ Work of Hardin, G. J. (1968). The Tragedy of the Commons. Science (Vol. 162).
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ROLE OF PRIVATE SECTOR
Private Sector
3R/5R + Remanufacturing
Upcycling
CSR Sustainable Brand
Innovation
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REMANUFACTURING
•Remanufacturing is the process in which parts of expired product are disintegrated. These parts will be cleaned or fixed or replaced, and then reintegrated and refurbished into a new product.
• Save natural resources and raw materials.
• Reduce waste problem.
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REMANUFACTURING
InputsProduction
ProcessProduct Usage Expiration
Throw
away
Reuse
Recycle
Remanufacturing
Natural Raw
Material
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PRODUCTS THAT CAN BE REMANUFACTURED
Product that can be remanufactured are those industrial products produced by manufacturing process such as automobile parts, electronics appliances, tractors, medical devices.
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INNOVATION
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UPCYCLING
• Upcycling is the process that transforms unwanted material or debris from expired products into new products that are eco-friendly with higher quality and value.
• Worn Again, a private company, is an example of upcycling. It uses unwanted material to produce products in fashion industry.
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CORPORATE SOCIAL RESPONSIBILITY (CSR)
“A business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders.” (Financial Times).
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TYPES OF CSREnvironment
▪ Activities on environmental conservation or rehabilitation, e.g. mangrove
reforestation
Community Development
▪ Working with community or other organizations to improve the villagers’
livelihood
Social Marketing
▪ Producing advertisement that addresses social problems or raises public
awareness
Human Resource
▪ Projects that improve wellbeing of its employees
Charity
▪ Donating money to partner non-profit or non-governmental organization
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CSR CRITIQUE: GREEN WASH
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CSR CRITIQUE: SOME CSR DESTROY LOCAL ECONOMY
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FROM CSR TO SUSTAINABLE BRAND
Normal Brand- Differentiation from
your competitors
- Driven by market
- Focus on consumers
- Focus on ads
- Focus on Brand Loyalty
Sustainable Brand- Contribute to
sustainability of the world,
society and consumers.
- Ethics and Public mind
- Brand empowerment
- Action speaks louder
- Brand lover
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GOVERNMENT AND SUSTAINABILITY
▪ Although the government has the authority and resources to lead society to sustainability, there are many limitations.
▪ The government can’t order things to happen. They need a proper plan and strategy.
▪ It can’t do several things by itself because of inefficiency of bureaucratic system and other limitations. Therefore, they need to have strategies to work with different group of people.
▪ It cannot force people to do things just because the government says so. They need to use different incentives to convince other actors to behave the way they want.
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BEFORE YOU LEAVE…
Give 3 examples of:
Private Goods
Club Goods
Common-Pool Resource
Public Goods
Do not repeat the examples given during class.