CDAE 237: Economics of Sustainability Course Introduction

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CDAE 237 Economics of SustainabilityCourse
Introduction

• Joshua Farley
• Assoc. Prof, CDAE
• 205 B Morrill Hall

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Quotable Quotes from famous economists

• Anyone who believes exponential growth can go on
  forever in a finite world is either a madman or
  an economist. Kenneth Boulding
• Economics makes a wonderful servant but a
  terrible master -- Joan Robinson
• You must learn economics to keep from being
  snowed by economists --Joan Robinson
• "But nobody can become a great economist who is
  only an economist-- and I am even tempted to add
  that an economist who is only an economist is
  likely to become a nuisance if not a positive
  danger." F.A. Hayek

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Quotable Quotes from Nobel Laureates

• ". . . economics has become increasingly an
  arcane branch of mathematics rather than dealing
  with real economic problems"Milton Friedman
• Economics as taught in America's graduate
  schools... bears testimony to a triumph of
  ideology over science. Joseph Stiglitz
• We live in an uncertain and ever-changing world
  that is continually evolving in new and novel
  ways. Standard theories are of little help in
  this context. Attempting to understand economic,
  political and social change requires a
  fundamental recasting of the way we think
  Douglass North

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One more Nobel Laureate, plus a valid critique...

• There is no reason we cant have a perfectly
  healthy economy with virtually no resources
  whatsoever Robert Solow
• neo-classical economics is a form of brain
  damage -- Hazel Henderson

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Course Overview
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Content

• We pick up where CDAE 61 leaves off
• Intermediate level, problem based
• The allocation of available resources among
  alternative desirable ends, primarily at macro
  level

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Content

• Transdisciplinary
• Economic system is part, not whole
• Core issues
• Ecological sustainability
• Just distribution
• Efficient allocation

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Course Goal

• Explore the three basic questions that arise from
  the definition of economics, particularly as they
  apply to essential resources with no substitutes
• What are the desirable ends towards which society
  should allocate its scarce resources?
• What are these scarce resources, and what are
  their characteristics relevant to allocation? 
• Based on the nature of the scarce resources and
  human nature and institutions, what allocative
  mechanisms are best for achieving these desired
  ends?
• All economics courses should focus on these
  questions, or they are not courses in economics
  by definition

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Course Objectives

• Apply the theories of ecological economics and
  market failure to some of the most pressing
  problems society currently faces global climate
  change, peak oil, biodiversity loss, natural
  resource depletion, and the degradation of
  ecosystem services.
• Review empirical studies of human
  behavior/psychology in order to
• Better assess the desirable ends for economic
  activity
• Examine the role of rationality and emotionality
  in the economic decision process
• Scientifically test the neoclassical assumptions
  underlying human behavior to better understand
  the potential role of competition and
  cooperation, selfishness and altruism in economic
  systems.

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Course Objectives

• Critique conventional theories of macroeconomics
  from empirical validity of underlying assumptions
  to desirability of theoretical outcomes.
• Assess the effectiveness of GNP and its
  alternatives as measures of economic welfare.
• Analyze the current monetary system, identify its
  strengths and weaknesses, investigate more
  sustainable, just and efficient alternatives.
• Analyze the current distribution of wealth and
  income and its role in quality of life and
  economic efficiency. Examine mechanisms for
  creating a more desirable distribution.
• Review monetary and fiscal policy, and apply it
  to ecological economic goals.

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Course Objectives

• Critique conventional theories of international
  economics from empirical validity of underlying
  assumptions to desirability of theoretical
  outcomes.
• Critically analyze theories of international
  trade and build superior alternatives.
• Critically review theories and outcomes of
  globalization, and build a theory of
  internationalization as an alternative.
• Analyze international fiscal crises.

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Course Objectives

• Evaluate and Design policy tools based on
  ecological economic principles
• Investigate basic policy principles
• Evaluate existing policies addressing
  sustainable scale, just distribution, and
  economic efficiency.
• Design new policies for solving specific scale,
  distribution, and efficiency problems
• Develop professional research and communication
  skills and actively contribute to creating a more
  sustainable planet by working on applied projects

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Teaching Philosophy

• My goal is not to teach you facts, but to teach
  you how to think analysis, synthesis and
  communication
• I don't know all the answers, and no professor
  does (nor does the boss in any job you'll ever
  have)
• In an evolving system, knowledge must also
  evolve. Much of what I teach is wrong now, or
  will be in the future.
• You are not here to absorb and regurgitate, but
  rather to cogitate and contribute

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Course Structure

• Follows layout of Daly and Farley textbook from
  Ch. 11 on
• Problem based projects will follow structure laid
  out in Farley, Erickson and Daly workbook
• Integration of seminar and lecture formats
• Lectures are meant to stimulate discussion
• October events
• Beyond Capitalism
• Environmental valuation
• Planet in 2050

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Instructional Approach

• Hybrid with problem based learning
• Not all material will relate to project problems
• Discussion and original thinking more important
  than memorization
• Come to class prepared review think about it
  and big ideas sections
• I hope to promote systems thinking
  Synthesis/integration more important than
  analysis.
• Learning pyramid philosophy

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Teaching Philosophy
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Administrative Stuff
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Course Resources

• Blackboard will be used to
• Post the syllabus and important announcements
• Post required and recommended readings
• Post and receive assignments
• Facilitate discussions between students
• Communicate with all of you
• Receive feedback on the course
• Keep track of grades??
• http//bb.uvm.edu/
• Log in like you do for e-mail

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Course Texts

• Ecological Economics Principles and
  Applications, by Herman Daly and Joshua Farley,
  Island Press, 2004 ABBREVIATED AS DF IN THE
  TENTATIVE SCHEDULE
• Farley, J., J. Erickson and H. Daly (2005).
  Ecological Economics A Workbook for
  Problem-Based Learning. Island Press
  Washington, DC. ABBREVIATED AS FED IN THE
  TENTATIVE SCHEDULE

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Contact Info

• Instructor Joshua Farley205 H Morrill Hall
  656-2989
• Subject line for e-mails must begin with CDAE 237
• Office Hrs. Morrill Hall, T-Th, 1000-1200 or
  by appointment

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Course Requirements

• Attending lecture is necessary
• Participation 15 of grade
• Readings must be done carefully.
• Main grade based on projects
• Homework assignments intended to help you learn
  material, reflect on material, and contribute to
  projects

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Grading

• Class Participation             15  points
• Group discussions             10  points each
• Homework assignments    15 points
• Newspaper articles 10 points
• Project Steps                     12   points
• Group Presentations         10    points
• Final Project                      30    points
• Peer Evaluations                 3
  pointsTOTAL                             105  
  points

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Assignments

• Assignments with no graphs will be due via
  Blackboard.
• Assignments must be handed in on time. If there
  is a valid reason you cannot turn an assignment
  in on time, let me know ahead of time by e-mail.
• There may be a learning curve on Blackboard

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Course Projects
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Contribute to Research on Vermonts Common Assets
Trust

• Goal contribute the background research
  necessary for Vermonts citizens and legislators
  to make informed decisions about a common asset
  trust for Vermont
• Objectives
• Identify which resources should be part of the
  common asset trust based on the criteria of
  justice, sustainability and efficiency, and
  identify mechanisms for integrating those assets
  into the trust.
• For assets that can be transformed into economic
  products or left intact to generate ecosystem
  services, determine how much should be allocated
  to either use.
• Determine the optimal allocation method (e.g.
  regulation, cap and auction, rationing, taxation,
  etc.), including institutional design and
  management structure, for each asset.

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Research and develop a funding mechanism for
salmon restoration in the Puget Sound.

• Goal research and design innovative funding
  mechanisms for salmon restoration, that account
  for the numerous ecosystem services that
  restoration projects would provide. Your target
  is 300 million (I need to check with Earth
  Economics to find out the time span involved).
• Objectives
• Conduct a literature review on existing tax
  districts
• Conduct a literature review on existing
  mechanisms for financing watershed management
• Create a list of planned infrastructure projects,
  describe the linkages between these projects and
  the ecosystem services provided by salmon
  restoration, and if possible estimate the
  financial impact on the infrastructure projects.
  
• Brainstorm mechanisms for creating a watershed
  utility along with other financing mechanisms
• Submit a complete report on your study to Earth
  Economics and draft an op-ed piece on your best
  ideas for Earth Economics to submit to local
  newspapers.

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Ecuador designing a new economic paradigm

• Goal assist Earth Economics in its efforts to
  develop an alternative development model for
  Ecuador and other countries..
• Objectives
• Conduct a literature review on existing
  development models, paying particular attention
  to their shortcomings, such as failure to achieve
  their own goals, the shortcomings of these goals,
  ecological impacts, and so on
• Work out more specific tasks in collaboration
  with Earth Economics
• Brainstorm alternative approaches to development
• Submit a complete report on your study to Earth
  Economics
• Perhaps write an op-ed piece on your best ideas
  and submit it to various newspapers.

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Alternatives to off-shore drilling in the US

• Goal research alternatives to off-shore
  drilling, including the potential for increasing
  oil production from existing megareserves, and
  write a campaign proposal for implementing the
  best alternative.
• Suggested objectives
• Research the average price for enhanced oil
  recovery from existing reserves
• Research the energy returns on energy invested
  for enhanced recovery
• Estimate the net carbon emissions of off-shore
  drilling vs. enhanced recovery
• Determine approximately how much additional oil
  we could recover using enhanced recovery as
  compared to off-shore drilling
• Estimate the impact on energy dependence
• Research existing subsidies for the oil sector
• Prepare a campaign proposal for mandating
  enhanced oil recovery.

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Alternatives to off-shore drilling in the US

• You may be able to negotiate the scope of work
  with Earth Economics, shifting your focus towards
  alternative energy. In particular, they might be
  interested in looking at the returns on research
  and development in alternative energy, and
  contrasting the returns of government supported
  research that would be freely available to anyone
  anywhere vs. patented research that forces people
  to pay monopoly prices for the use of the
  technology. This is something in which I am
  particularly interested.

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Other Earth Economics Projects

• Go to the Earth Economics Web-site
  (www.eartheconomics.org) and look at their other
  projects. If you find one that interests you, I
  will contact them and set something up.

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Class policies

• This is an upper level course. I expect you to
  act accordingly.

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What is Sustainability, and do we want it?

• Strong sustainability vs. weak sustainability
• Ethical issues
• Technological advance, like human impact on
  ecosystems, is inherently unpredictable
• Ecological impacts inherently unpredictable,
  often irreversible.
• Implications of Irreversibility
• How can we develop substitutes if we dont even
  know what we are losing?
• What we risk more sport utility vehicles and
  second homes, or basic necessities

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How much do we want it?

• Do we want to curb our consumption so the future
  can have more?
• Would we sacrifice to provide more for those who
  dont have today?
• How much of our GNP currently aids developing
  countries?
• Is the future more important than the present?
• Is sustainability a sacrifice?