Unit H Being Green Chapter 23: Ecological Economics

The Tragedy of the Commons Open access systems: Open access systems: Short-term, privatized gains Short-term, privatized gains Long-term, socialized costs (degradation) Long-term, socialized costs (degradation) Communal resource management: Communal resource management: plan for sustainability plan for sustainability define boundaries define boundaries regulate community size regulate community size monitor harvest monitor harvest incentives for compliance incentives for compliance penalties for abuse penalties for abuse

Sustainability The concept of sustainability came about by merging ecology and economics. The concept of sustainability came about by merging ecology and economics. Is it possible to have perpetual growth & conservation? Is it possible to have perpetual growth & conservation? If growth means improved livelihoods, maybe so. If growth means improved livelihoods, maybe so. If growth means more possessions, maybe not. If growth means more possessions, maybe not.

Economic Fundamentals Capital: anything that can be used to produce wealth Capital: anything that can be used to produce wealth Resources: Resources: Nonrenewable: regenerate at a ‘geological’ rate Nonrenewable: regenerate at a ‘geological’ rate Minerals Minerals Fossil Fuels Fossil Fuels Renewable: can be replenished in the ‘short term’. Renewable: can be replenished in the ‘short term’. Trees Trees Water Water Fish Fish

Classical Economics Capitalism: Capitalism: maximize efficiency maximize efficiency balance price and quality balance price and quality preserve individual liberty preserve individual liberty Laissez faire systems rarely incorporate social and environmental costs. Laissez faire systems rarely incorporate social and environmental costs. Environment vs. jobs Environment vs. jobs Internal vs. external costs. Internal vs. external costs.

Modern Economic Philosophy Neoclassical Economics focuses on production and flow of goods / services. Neoclassical Economics focuses on production and flow of goods / services. Natural capital is abundant (cheap) & manufactured capital is scarce (valuable). Natural capital is abundant (cheap) & manufactured capital is scarce (valuable). Environmental impacts are external costs: Environmental impacts are external costs: Health costs from pollution Health costs from pollution Climate change Climate change Loss of biodiversity Loss of biodiversity

Incorporation of Ecology Ecological Economics Ecological Economics All components are interdependent. All components are interdependent. Natural resources are limited (valuable) Natural resources are limited (valuable) Emphasis on durability, renewable resources, and recycling. Emphasis on durability, renewable resources, and recycling. Manufactured capital is viewed as abundant (cheap) Manufactured capital is viewed as abundant (cheap) Costs are internalized. Costs are internalized.

Scarcity and Innovation Are we destined to run out of natural resources? Are we destined to run out of natural resources? Better technology: Better technology: Greater efficiency. Greater efficiency. Increased supply and lower prices. Increased supply and lower prices. Scarcity can be a catalyst for: Scarcity can be a catalyst for: discovery of new supplies. discovery of new supplies. invention of replacements. invention of replacements. increased recycling. increased recycling. increased trade. increased trade.

Who Wins the Bet Today? Copper Copper Zinc Zinc

Is There a Carrying Capacity? Tin: Tin: Tungsten: Tungsten:

Measures of Well-Being GDP & GNP ignore environmental and social issues. GDP & GNP ignore environmental and social issues. Genuine Progress Index (GPI): quality of life, distributional equity, resource depletion, etc. Genuine Progress Index (GPI): quality of life, distributional equity, resource depletion, etc. Human Development Index (HDI): life expectancy, education, and standard of living. Human Development Index (HDI): life expectancy, education, and standard of living.

Measuring Non-Market Value Value of ecological services: aesthetics, culture, science, and education: Value of ecological services: aesthetics, culture, science, and education: How much would you pay for an experience? How much would you pay for an experience? What price would you accept to sell your access to _____? What price would you accept to sell your access to _____? 150% of global GNP 150% of global GNP

Cost-Benefit Analysis What is the optimal point at which costs provide benefits. What is the optimal point at which costs provide benefits. After an oil spill, how much should we clean up a beach? After an oil spill, how much should we clean up a beach? Market based systems can reduce pollution: Market based systems can reduce pollution: Pollution taxes Pollution taxes Emissions trading Emissions trading

Green Business Triple bottom line: report net profit, environmental effects, and social justice. Triple bottom line: report net profit, environmental effects, and social justice. Ensure consumables are biodegradable or reusable. Ensure consumables are biodegradable or reusable. Design for lease and service rather than the landfill. Design for lease and service rather than the landfill.