Environment and Economics

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Environment and Economics
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Economics

• System of production, distribution and
  consumption of economic goods
• economic goods anything that satisfies peoples
  wants or needs
• Since we do not have class on Friday
• Instead, study Chapter 26, especially
• understand different types of economies
• understand how a market-based economy works

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Goods

• Private goods
• can be bought and sold by individual
• Public goods
• cannot be individually divided and sold in units
• no one can own, anyone can enjoy

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Basic Types of Economic Systems

• Pure Free-Market System
• Private ownership of resources and market (price
  and supply) system controls activity
• Pure Command-and-Control System
• Centralized economic planning and
  decision-making public ownership of resources

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Problems with Pure SystemsFree-Market Comman
d-Control

• Monopoly will override market controls on price
• Not all goods can be or should be privately owned
• Not all services can be or should be privately
  supplied
• Assumes perfect competition and distribution

• Inefficient
• Not responsive in a timely fashion to changes
• Lacks individual incentive therefore low
  individual productivity

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Real Economic Systems

• Mixed Economic Systems
• A combination of free-market and centralized
  decision-making.
• Which goods and services are not easily owned
  privately?
• Clean air and atmospheric services
• Ecosystems
• Clean water
• National security
• Health care

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Externalities to Market

• Price of a private good is based on its internal
  costs.
• internal costs cost of factory workers, raw
  materials, marketing, distribution
• External costs not included in price
• external costs social and environmental costs
  that arise out of making and using the good

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Externalities

• Examples of costs not included in price of a
  good?
• Gasoline and air pollution and global warming
• Solution?
• Make externalities internalities

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Tragedy of the Commons,Garrett Hardin

• Herders cattle forage on common pasture (pasture
  a public good)
• Herder rational being, seeks to maximize gain
• Will herder choose to add one more animal to
  herd?
• Herd increases without limit yet the pasture is
  limited, therefore overgrazing occurs and ALL
  suffer this is the Tragedy.
• BUT commons have been used for thousands of
  years how???

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Globalization

• Why are there protests against globalization?
• Isnt opening up more trade a good thing?
• Discuss in light of problems with economic systems

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Jobs, Economic Well-Being Environmental
Regulations

• Do regulations cost jobs? Study of economic cost
  from start of regulatory era in US (1970) to
  1995 (Goodstein, Econ Policy Inst., 1995)
• Large-scale layoffs in US only 0.1 of all US
  jobs lost were related to environmental
  regulations since 1972.
• There is no sign of significant relocation of
  plants (more than a few) due to environmental
  regulations (regulations are a small portion of
  total business cost).
• On net, environmental regulation supports more
  jobs than traditional blue-collar industries.

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Jobs, Economic Well-Being Environmental
Regulations

• Do regulations cost profits?
• Water conservation mandates result in higher
  profits

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San Jose Industrial Water Conservation
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Jobs, Economic Well-Being Environmental
Regulations

• Do regulations cost profits?
• Water conservation mandates result in higher
  profits
• Green Light program (EPA) results in higher
  profits
• The program encourage institutions to use
  energy-efficient lighting technologies
  participants are required to survey light
  technologies and upgrade when economically
  feasible.
• 1995 1900 participants, 5 billion sq. ft of
  facility space, averages 50 rates of return
  100 million/yr saved
• Domini Index (socially-responsible investing)
  higher than the SP in 1990s

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Market Economic System
Goods
INPUTS
OUTPUTS
Labor
Nonrenewable energy, renewable energy, material
resources
Waste heat, pollutants, land-filled resources
Businesses
Households


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Are Inputs Unlimited?

• How would a classical economist answer this?
• Limited input --gt lower supply--gt higher price
  --gt increase exploration or increase research --gt
  discovery of new resources
• OR
• Limited input --gt decreased supply --gt increase
  price --gt decrease demand
• PROBLEMS?
• Necessity for human life? Affordability when a
  necessity? Chaos when lost? No new frontiers.
• Consider how an ecologist would answer this
  question.

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Economic Growth?

• GDP as traditional measure of growth
• GDP measures value of output produced when sold
  to the final user.
• Pollution can be a triple positive gain
• Exxon Valdez spill boosted Alaskas GDP
• We can impoverish ourselves while imagining that
  our economies are growing. -- Nobel Prize winner
  in Economics
• GDP doesnt include goods not sold in markets

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Economic Growth?

• In economic view, growth is highly desirable,
  even necessary.
• In ecological view, can growth continue
  indefinitely?

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Ecological System as Example of Sustainable System
decomposer
INPUTS
OUTPUTS
Solar energy
Waste heat
producer
consumer
Finite organisms, materials recycled
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Translate to Human System
Goods
INPUTS
OUTPUTS
Labor
renewable energy
Recycling
Waste heat, No toxin build-up, No wasted
materials
Businesses
Households


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Transition closer than you may think

• The Natural Step for Business Corporations
  following Swedish model of sustainability
• Interface Carpet tile, Fortune 1000 company
• Committed to shifting from linear industrial
  processes to cyclical ones. Interface will be
  environmentally sustainablebut we will also be
  financially sustainable. CEO Ray Anderson
• They used to sell carpet now they lease it,
  giving clients the services of carpet but not its
  ownership.
• Natural Capitalism Hawkens, Lovins Lovins 1999
• Economy shifting from emphasis on human
  productivity to emphasis on resource productivity
• Combine with biomimicry to reduce waste, flows of
  services (rather than goods alone) and
  reinvestment in natural resource stock

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The Big Picture

• Make the Connections

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Systems View Beyond Intro ESS examples

• Conservation Biology
• Changing biodiversityhow where when why
• EX Defining viable populations
• Hydrology
• Changing surface water flowshow where when why
• EX Managing flood risk
• Geographic Information Systems
• Tool to understand spatial relations
• Hydrogeology
• Changing subsurface water flowshow where when
  why ..

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Developing Understanding of Ecological Economic
Systems

• Thomas Maxwell
• Robert Costanza
• University of Maryland

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STELLA Model
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Spatial Modeling Framework
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Environmental Modeling Workbench
Spatial Modeling Environment
Inputs to multiple models
Coupled Bio-Hydro Simulation
Integrated wireless Sensor web
CavernSoft Collaborative Environment
Environmental Hydrology Applications Team
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Coal Bed Gas Drilling

• Natural gas (methane) exists in cracks within
  coal deposits.
• First developed in Montana, Colorado, Wyoming,
  Alaska
• Drilling methods to extract methane have been
  developed.
• Your thoughts on this?

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Methane not alone in cracks

• Groundwater is also present in coal-bed deposits
• It is necessary to remove the groundwater before
  pumping up the gas.
• Any other reaction?

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Who owns methane?

• In many states, especially in the West, surface
  rights are separate from mineral rights
• ? severed rights
• Landowners may not have voice in mining
  decisions, may not have ability to lease surface
• pooled rights
• Any other reaction?

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Water from Coal-Bed Methane

• Reduces groundwater in the area
• Drinking water wells in region go dry or have
  reduced quality
• Difficult for well owners to prove
• Water quality of 20 of produced water does
  not meet drinking water standards
• Water disposal problematic
• Reinjection works but is costly to gas leases
• Any other reaction?

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Aerial view of a coal bed methane field in
Wyoming. Along with wells come drill pads,
access roads, containment ponds, and compressor
stations (noise!). 
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Aerial view of coal bed methane development. The
Bureau of Land Management predicts that 1.4
million acres of wildlife habitat will be
impacted by intensive methane development in
Montana. 
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Leaking coal bed methane impoundment in Wyoming.
Though often suitable for drinking, methane
wastewater is toxic to plants and crops because
of high sodium levels.
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Thoughts on Coal Bed Methane now

• with a greater systems view of issue?

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Systems Views

• If you do not understand the connections between
  things, your solutions can become your problems.
• EXAMPLES???

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Systems Views

• If you do understand the connections between
  things, you may choose to change your behavior.
• EXAMPLES???
• IMPLICATIONS FOR ENVIRONMENTAL IMPROVEMENT???

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Nortons Axioms for Ecological Management

• The Axiom of Dynamism.
• Nature is more profoundly a set of processes than
  a collection of objects all is in flux.
  Ecosystems develop and age over time.
• The Axiom of Relatedness.
• All processes are related to all other processes.
  
• The Axiom of Hierarchy.
• Processes are not related equally, but unfold in
  systems within systems, which mainly differ
  regarding the temporal and spatial scale on which
  they are organized.
• The Axiom of Autopoiesis self-organizing.
• The autonomous processes of nature are creative,
  and represent the basis for all
  biologically-based productivity. The vehicle of
  that creativity is energy flowing through systems
  that in turn find stable contexts in larger
  systems, that provide sufficient stability to
  allow self-organization within them through
  repetition and duplication.
• The Axiom of Differential Fragility.
• Ecological systems, which form the context of all
  human activities, vary in the extent to which
  they can absorb and equilibrate human-caused
  disruptions in their autonomous processes.

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The Ferry Analogy

• When traditions can be deadly

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