2 Sustainable Development Journey from Soil Economics to Oil Economics Environmental changes and Issue of sustainability Is the concern of recent origin? Roman cities, Victorian London and Malthus Economy and Environment: Interlinkages Environmental services Supplier of resources Supply of environmental services Sink services
3 Sustainable Development E4 E1 E2E3 R1 R2 E4 ProductionConsumption Source Sink En. Service E4
4 Sustainable Development Assimilation Capacity of Natural Resource Fixed point pollution and Threshold values debate S1 a = F1 - A t Where F is flow of pollutants and A is the amount assimilated in any period. For cumulative pollutants the stock in any period t* will be t=t* S c t * = F t ti
5 Sustainable Development Externality problem: Externality arises when consumption of production decisions of one economic unit enters into utility of production function of another economic unit without any compensation. E3 For people in Europe and America pleasure is obtained from the existence of wilderness, flora and fauna in nature.
6 Sustainable Development UA = U (X1, X2, …….Xn, Q1, Q2, Qm) Where UA is utility, (X1…Xn) are goods and services produced in the production sector and Qs are a bundle of environmental goods and services. Let the utility function of A be the one already described above UA = U (X1, X2, …….Xn, Q1, Q2, Qm) By buying a car (X1) the utility will go up, i.e., UA / X1 0; air pollution due to increase in car services will reduce the clean air availability say (q1), i.e., Q1 / X1 0
7 Sustainable Development The issue is whether the increase in utility due to car use is higher than the loss of utility by reduction in clean air. The reduction in total utility UA is thus a product that may be given as UA / Q1 Q1 / X1 The net effect is thus ambiguous.
8 Sustainable Development Maintenance of an atmospheric composition suitable for life. The earth’s atmosphere is made up largely of nitrogen (78%); oxygen (21 %); argon (0.93%); water vapour (variable) and carbon dioxide (0.035%), with numerous trace gases. The limits of variability in this mixture, from the point of view of continued existence, are small; Maintenance of temperature and climate. The naturally- occurring greenhouse effect warms the earth from its ‘effective’ mean temperature of - 18 C to the current global average of 15 C. Changes in the composition of upper atmosphere can change this warming.
9 Sustainable Development Recycling of water and nutrients. Examples are the hydrological, carbon and oxygen cycles. Clearly, economic activity operates within this environment, and thus is shown as being encapsulated by it. The dashed line between E and E indicates that emissions can these global support services.
10 Sustainable Development Link between Economic and Natural World Laws of Thermodynamics Second Law says : “ in a closed system, the use of matter- energy cause a one-way flow from low entropy resources to high entropy resources; from order to disorder.” (Hanley and others 1997, p. 12).
11 Sustainable Development the major implication of the second law of thermodynamics form the point of view of economic activity in an economy is that energy cannot be recycled in such a way that we get back all the capacity of the original energy form. There would be some energy loss in the process. The more we increase the process, the more will be the total loss. Since the system is not closed, the impact of the second law may or may not be felt so intensely. But rate of use and recycling matters. If use process is faster than regeneration, entropy may set in.
12 Sustainable Development First law of Thermo dynamics “The first law of thermodynamics states that matter, like energy, can neither be created nor be destroyed.” (Hanley and others 1997 p. 11). It is also known as material balance principle. A closed system cannot add to its stock of material and energy Earth is partly powered by solar energy Material is made of photosynthesis, earth uses one percent of total sun light Solar energy use is also very limited
13 Sustainable Development So material we are using is of past, a bank deposit Implications: 1. More is produced more is consumed more is waste, 2. Substitution has ultimate limitation Y = f (N, K, L) How does N behave in the long run?
14 Sustainable Development Sustainability Issues Is population a problem? Does population rise to environmental crisis? Or poverty is due to environmental problems Environment Kuznet Curve The concept of sustainable development can be traced back to Wantrup’s concept of “safe minimum standards” used with reference to endangered species a little above fifty years ago.
15 Within the field of environmental economics, it is now widely recognised that the goal of sustainable development is principally an equity, rather than an efficient, issue.
16 Sustainable Development Environmental degradation, reversible and irreversible, includes vulnerability due to deforestation, rangeland degradation, biodiversity loss, coastal zone erosion, air, and soil and water quality deterioration. It is caused by development and growth process, which is a direct path, and due to social inequities and injustice, which is indirect path.
17 Sustainable Development Intra generational Issues Intergenerational Issues The debate on substitution The Hartwick-Solow approach in forming sustainable rules is now well known. Production of goods and services is made possible with capital and labour. Capital includes natural and man-made. Hartwick’s argument is that so long as the society is able to maintain capital stock required for an agreed level of production for a long time to come, there is a possibility of non-declined consumption forever.
18 Sustainable Development Existence value is important and perhaps vital The Sustainable thesis of the London school sets a rule that reduction in the level of natural capital must be prevented below some constraint value. Weak Sustainability Strong sustainability
19 Sustainable Development Gandhian way of living Man the Producer Man the consumer Man and Ekadash vrat