economics, environment, and sustainability - apes -...
TRANSCRIPT
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Economics, Environment, and Sustainability
Chapter 23
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Core Case Study: A New Economic and Environmental Vision
Economic growth and development
Neoclassical economists
Environmentally sustainable economy (eco-economy) • Ecological economists • Environmental economists
Economic revolution: sustainability revolution
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Components of More Environmentally Sustainable Economic Development
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Fig. 23-1, p. 611
Forest conservation
Production of energy-efficient fuel-cell cars Underground
CO2 storage using abandoned oil wells
High-speed trains
No-till cultivation
Deep-sea CO2 storage
Solar-cell fields
Bicycling
Wind farms
Communities of passive solar homes
Landfill Recycling, reuse, and composting Water
conservation
Cluster housing development
Recycling plant
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23-1 How Are Economic Systems Related to the Biosphere? (1)
Concept 23-1A Ecological economists and most sustainability experts regard human economic systems as subsystems of the biosphere and subject to its processes and limiting factors.
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23-1 How Are Economic Systems Related to the Biosphere? (2)
Concept 23-1B Governments intervene in market economies to help correct or prevent market failures such as the failure to protect natural capital, which supports life and all economies.
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Economic Systems Are Supported by Three Types of Resources
Economic systems are supported by • Natural capital • Human capital, human resources • Manufactured capital, manufactured
resources
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Three Types of Resources Are Used to Produce Goods and Services
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Fig. 23-2, p. 613
Natural Resources
Manufactured Resources
Human Resources
Goods and Services
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Market Economic Systems Depend on Interactions between Buyers and Sellers
Supply, demand, and market price equilibrium point
Benefits of an economy with • Private ownership of all resources • No governmental interference
Opposition to such an economy
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Supply, Demand, and Market Equilibrium for a Good in a Market Economic System
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Fig. 23-3, p. 613
Demand Supply High
Pric
e
Market equilibrium
Low Low High
Quantity
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Governments Intervene to Help Correct Market Failures
Private goods
Public services
Reasons for government intervention in the marketplace
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Economists Disagree over Natural Capital, Sustainable Economic Growth
High-throughput economies • Resources flow through and end up in planetary
sinks
Models of ecological economists
Strategies toward more sustainable eco-economies
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High-Throughput Economies Rely on Ever-Increasing Energy, Matter Flow
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Fig. 23-4, p. 614
Inputs (from environment)
System throughputs
Outputs (into environment)
High-quality energy
Low-quality energy (heat)
High-waste economy
High-quality matter
Waste and pollution
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Ecological Economists: Economies Are Human Subsystems of the Biosphere
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Fig. 23-5, p. 615
Solar Capital
Goods and services
Economic Systems Heat
Production Natural Capital Depletion of nonrenewable
resources Natural resources such as air, land, soil, biodiversity, minerals, and energy, and natural services such as air and water purification, nutrient cycling, and climate control
Consumption Degradation of renewable resources (used faster than replenished)
Pollution and waste (overloading nature’s waste disposal and recycling systems)
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Active Figure: Economic types
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Active Figure: Two views of economics
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23-2 How Can We Put Values on Natural Capital, Pollution Control, Resource Use?
Concept 23-2A Economists have developed several ways to estimate the present and future values of a resource or ecological service and optimum levels of pollution control and resource use.
Concept 23-2B Comparing the likely costs and benefits of an environmental action is useful but involves many uncertainties.
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Taking into Account the Monetary Value of Natural Capital
Estimating the values of the earth’s natural capital
Estimate nonuse values • Existence value • Aesthetic value • Bequest value, option value
Estimating these types of monetary values • Mitigation cost • Willingness to pay
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Estimating the Future Value of a Resource Is Controversial
Discount rates
Proponents of a high discount rate
Critics of a high discount
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We Can Estimate Optimum Levels of Pollution Control and Resource Use
Relationship between • Marginal benefit of resource use • Marginal cost of resource production
Optimum level of resource use
Optimum level for pollution cleanup
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Optimum Resource Use
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Fig. 23-6, p. 617
High
Marginal benefit of resource use
Marginal cost of resource production
Cos
t
Optimum level of resource use
Low
0 25 75 100
Coal removed (%)
50
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Optimum Pollution Control
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Fig. 23-7, p. 618
High
Marginal cost of pollution control
Marginal benefit of pollution control
Optimum pollution clean-up level
Low
0 25
Pollution removed (%)
100 75 50
Cos
t
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Cost-Benefit Analysis Is a Useful but Crude Tool
Cost-benefit analysis follows guidelines • Use uniform standards • State all assumptions used • Include estimates of the ecological services • How reliable is the data? • Estimate short-and long-term benefits and costs • What are alternatives? • Summarize range of estimated costs and benefits
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23-3 How Can We Use Economic Tools to Deal with Environmental Problems? (1)
Concept 23-3A Using resources more sustainably will require including the harmful environmental and health costs of resource use in the market prices of goods and services (full-cost pricing).
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23-3 How Can We Use Economic Tools to Deal with Environmental Problems? (2)
Concept 23-3B Governments can help to improve and sustain environmental quality by subsidizing environmentally beneficial activities and taxing pollution and waste instead of wages and profits.
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Most Things Cost a Lot More Than You Think
Market price, direct price
Indirect, external, or hidden costs
Direct and indirect costs of a car
Should indirect costs be part of the price of goods? • Economists differ in their opinions
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Using Environmental Economic Indicators Can Help Reduce Our Environmental Impact
Measurement and comparison of the economic output of nations • Gross domestic product (GDP) • Per capita GDP
Newer methods of comparison • Genuine progress indicator (GPI) • Happy Planet Index (HPI) • General National Happiness (GNH)
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Monitoring Environmental Progress: Comparing Per Capita GDP and GPI
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Fig. 23-8, p. 620
35,000
30,000
25,000
20,000 Per capita gross domestic product (GDP)
15,000
10,000 1996
Dol
lars
per
per
son
5,000
Per capita genuine progress indicator (GPI) 0
1950 1960 1970 1980 1990 2000
Year
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We Can Include Harmful Environmental Costs in the Prices of Goods, Services
Environmentally honest market system
Why isn’t full-cost pricing more widely used?
Government action to phase in such a system
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Environmentally Informed Consumers Can Vote with Their Wallets
Product eco-labeling
Certification programs
The U.S. Green Seal labeling program
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We Can Reward Environmentally Sustainable Businesses
Phase out environmentally harmful subsidies and tax breaks
Phase in environmentally beneficial subsidies and tax breaks for pollution prevention
Pros and cons
Subsidy shifts
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Individual Matters: Ray Anderson
CEO of Interface, largest commercial manufacturer of carpet tiles
Goals • Zero waste • Greatly reduce energy use • Reduce fossil fuel use • Rely on solar energy • Copying nature
How’s it working?
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We Can Tax Pollution and Wastes instead of Wages and Profits
Green taxes, ecotaxes
Steps for successful implementation of green taxes
Success stories in Europe
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Trade-Offs: Environmental Taxes and Fees, Advantages and Disadvantages
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Fig. 23-9, p. 623
TRADE-OFFS Environmental Taxes and Fees
Advantages Disadvantages Help bring about full-cost pricing
Low-income groups are penalized unless safety nets are provided
Encourage businesses to develop environmentally beneficial technologies and goods to save money
Hard to determine optimal level for taxes and fees
Easily administered by existing tax agencies
Governments may use money as general revenue instead of improving environmental quality and reducing taxes on income, payroll, and profits
Fairly easy to detect cheaters
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Environmental Laws and Regulations Can Discourage or Encourage Innovation
Regulation
Command and control approach
Incentive-based regulations
Innovation-friendly regulations
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We Can Use the Marketplace to Reduce Pollution and Resource Waste
Incentive-based regulation example
Cap-and-trade approach used to reduce SO2 emissions
Advantages
Disadvantages
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Trade-Offs: Tradable Environmental Permits, Advantages & Disadvantages
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Fig. 23-10, p. 624
TRADE-OFFS
Tradable Environmental Permits Advantages Disadvantages Flexible Big polluters and
resource wasters can buy their way out Easy to administer May not reduce pollution at dirtiest plants Encourage pollution
prevention and waste reduction
Can exclude small companies from buying permits Permit prices
determined by market transactions
Caps can be too high and not regularly reduced to promote progress
Confront ethical problem of how much pollution or resource waste is acceptable
Self-monitoring of emissions can promote cheating
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Reduce Pollution and Resource Waste by Selling Services instead of Things
1980s: Braungart and Stahl • New economic model
Service-flow economy, eco-lease (rent) services • Xerox • Carrier • Ray Anderson: lease carpets in the future
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23-4 How Can Reducing Poverty Help Us to Deal with Environmental Problems?
Concept 23-4 Reducing poverty can help us to reduce population growth, resource use, and environmental degradation.
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The Gap between the Rich and the Poor Is Getting Wider
Poverty
Trickle-down effect
Flooding up
Wealth gap
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Poor Family Members Struggling to Live in Mumbai, India
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We Can Reduce Poverty
South Korea and Singapore reduced poverty by • Education • Hard work • Discipline • Attracted investment capital
Developed countries can help • Cancel debt of the poorest nations • What else can they do?
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Case Study: Making Microloans to the Poor (1)
Micro-lending or microfinance
1983: Muhammad Yunus • Grameen (Village) Bank in Banglash • Provides microloans; mostly to women • “Solidarity” groups • How does it work?
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Case Study: Making Microloans to the Poor (2)
2006: Muhammad Yunus • Nobel Peace Prize
2006: Citibank and TIAA-Cref • Microloans
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We Can Achieve the World’s Millennium Development Goals
2000: Millennium Development Goals • Sharply reduce hunger and poverty • Improve health care • Empower women • Environmental sustainability by 2015 • Developed countries: spend 0.7% of national
budget toward these goals
How is it working?
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What Should Our Priorities Be?
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23-5 Making the Transition to More Environmentally Sustainable Economics
Concept 23-5 We can use the four principles of sustainability and various economic and environmental strategies to develop more environmentally sustainable economies.
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We Can Shift from High-Throughput to Matter Recycling and Reuse Economies
Matter recycling and reuse economies
Mimic nature
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We Can Put More Emphasis on Localizing Economic Production
Increase local environmental and economic stability
Businesses selling goods and services globally might decline
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We Can Use Lessons from Nature to Shift to More Sustainable Economies
Donella Meadows: contrasts the views of neoclassical economists and ecological economists
Best long-term solution is a shift to • Low-throughput, low-waste, economy
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Solutions: Lessons from Nature: A Low Throughput Economy
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Fig. 23-13, p. 629
Inputs (from environment)
System throughputs
Outputs (into environment)
High-quality energy
Energy conservation
Low-quality energy (heat)
Low-waste economy Waste and
pollution prevention
Pollution control
Waste and pollution
High-quality matter
Recycle and reuse
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We Can Make Money and Create Jobs by Shifting to an Eco-Economy (1)
Hawken, Brown, and other environmental business leaders • Transition to environmentally sustainable
economies • Some companies will disappear • New jobs will be created
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We Can Make Money and Create Jobs by Shifting to an Eco-Economy (2)
General Electric: “ecoimagination plan”
Bainbridge Graduate Institute and Presidio graduates • Triple bottom line: people, planet, and profit
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Solutions: Principles for Shifting to More Environmentally Sustainable Economies
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Fig. 23-14, p. 630
Environmentally Sustainable Economy (Eco-Economy)
Economics Reward (subsidize) environmentally sustainable economic development Penalize (tax and do not subsidize) environmentally harmful economic growth Shift taxes from wages and profits to pollution and waste Use full-cost pricing Sell more services instead of more things Do not deplete or degrade natural capital Live off income from natural capital Reduce poverty Use environmental indicators to measure progress Certify sustainable practices and products Use eco-labels on products
Resource Use and Pollution
Cut resource use and waste by reducing, reusing, and recycling Improve energy efficiency Rely more on renewable solar and geothermal energy
Shift from a nonrenewable carbon-based (fossil fuel) economy to a non-carbon renewable energy economy
Ecology and Population Mimic nature
Preserve biodiversity Repair ecological damage Stabilize human population
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Fig. 23-14, p. 630
Environmentally Sustainable Economy (Eco-Economy)
Economics Reward (subsidize) environmentally sustainable economic development Penalize (tax and do not subsidize) environmentally harmful economic growth Shift taxes from wages and profits to pollution and waste Use full-cost pricing Sell more services instead of more things Do not deplete or degrade natural capital Live off income from natural capital Reduce poverty Use environmental indicators to measure progress Certify sustainable practices and products Use eco-labels on products
Stepped Art
Resource Use and Pollution Cut resource use and waste by reducing, reusing, and recycling Improve energy efficiency Rely more on renewable solar and geothermal energy Shift from a nonrenewable carbon-based (fossil fuel) economy to a non-carbon renewable energy economy
Ecology and Population Mimic nature Preserve biodiversity Repair ecological damage Stabilize human population
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Green Careers: Some Eco-Friendly Businesses and Careers
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Fig. 23-15, p. 630
Environmentally Sustainable Businesses and Careers Aquaculture Environmental law Biodiversity protection Environmental nanotechnology
Biofuels Fuel cell technology
Climate change research Geographic information systems (GIS)
Conservation biology Geothermal geologist
Eco-industrial design Hydrogen energy Marine science
Ecotourism management Pollution prevention
Energy efficient product design
Reconciliation ecology Selling services in place of products Environmental chemistry Solar cell technology
Environmental (green) design
Sustainable agriculture
Environmental economics Sustainable forestry
Environmental education Waste reduction
Environmental engineering Watershed hydrologist
Water conservation Environmental health Wind energy