Environmental Economics

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Environmental Economics
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Feedbacks

• Economy feeds back onto the environment
• Environment feeds back onto the economy
• How?

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Economic Feedbacks on to the Environment

• Most recent example is President Bushs decision
  not to ratify Kyoto Protocol, citing that U.S.
  economy must take precedence
• Of course, economic growth means greater
  production and production means more use of raw
  materials, natural resources and emission of
  pollutants

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Environmental feedbacks on to the economy

• On a global scale, the following issues will
  affect the worlds economic systems
• Ozone hole
• Acid rain
• Deforestation
• Grassland degradation
• Global warming
• Desertification

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Why is economic growth important?

• Imperative to have the economy grow as long as
  human population continues to grow
• Developing countries must have a minimum of 3
  annual growth to achieve equity with developed
  world
• However, if they use current forms of development
  to achieve this growth, their energy use alone
  would have to increase by a factor of five!

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What role do developing nations play in global
economic growth?

• Huge!
• During 1980s their economic growth virtually
  stopped, resulting in a cummulative third world
  debt 1 trillion
• Annual interest on this is 60 billion
• On a global scale money is flowing from third
  world to developed world rather than the reverse

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Third world environment and economy

• Third world is shipping money and products to
  developed world
• Third world is bearing large proportion of
  environmental cost of developed worlds economic
  growth
• Deforestation of rainforests
• Desertification

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In the total tropics, 10 trees are cut down
for every one planted. In Africa, 29 trees are
cut down for every one planted.
Without natural resources, many of these nations
have nothing to sell on global market
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UN Commission on Sustainable Economic Development

• Changes in societal values and goals
• Changes in incentives
• Changes in process of decision making

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How can these changes be brought about?

• Reduce rates of population growth
• Determine stock of ecological capital and dont
  let it deteriorate or lessen
• Reform public policies that encourage
  desertification, deforestation, etc.
• E.g. agricultural subsidies that encourage use of
  marginal land, selling resources by govt below
  cost

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How can these changes be brought about?

• Agricultural production must be shifted to
  developing countries
• This is currently undermined by dumping of
  Western surpluses
• Reduce energy cost/unit of production
• This is less with recycled materials
• Will also result in reduced emissions
• Merge environment economics in decision making
• Stop externalizing environmental costs

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Revamping education

• According to Holmes Ralston, environmental
  philosopher, Colorado State Univ., new university
  agenda must be sustainability

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New University Agenda

• Students identify with their landscape in a mix
  of nature and culture
• Use local sense of place to understand world
  market impacts on OK
• Energy
• Agricultural products
• Population demands
• Acid rain, etc.

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Examine how the University is sustainable

• Energy use
• Recycling
• Nutritional quality of
• food
• How does resource usage
• influence tuition, fees, etc.?

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Alternative Economies(young ecosystem)
Growth (production)
Energy flow
Maintenance (respiration)
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Alternative Economies(mature ecosystem)
Growth (production)
Energy flow
Maintenance (respiration)
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Linear Economics
Pollution
Resource Extraction
Product production
Consumption
Discard
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Cyclic Economics
Pollution
Resource Extraction
Product production
Consumption
Discard
Recycling
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Remember our table
System property Young Mature
Environ. Control
Productivity
Production
Nutrient cycling
Diversity
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Fill this out with economic analogs
System Property Young Mature Economic Analog
Environ. Control
Production
Productivity
Nutrient Cycling
Diversity
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For a sustainable economy..

• It needs to be no growth or slow growth
• This is so we can maximize our use of resources
• Growth can occur via other mechanisms
• Diversification
• Down sizing to mid-sized rather than huge
  companies
• Use of renewable energy sources

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For a sustainable economy

• Must slow population growth
• Finally, remember that scarcity is the enemy of
  economic well-being
• Wise resource use and reuse