Ch3 Environment Society Environmental Economics

Market Environmentalism

Suggests environmental problems can be solved by free market economy controlled by supply & demand 

Paul Erlich

neo-malthusian environmentalist

Julian Simon

cornucopian, economist

Market Response Model

scarcity & resource availability are mediated by supply & demand 

Market Failures

when there is a mismatch between economic theory & the real world

Externalities

cost/benefit not transmitted through prices or not incurred by a party that didn’t agree to the action causing the cost/benefit

Transaction costs

time, money, personnel, and materials to ensure enforcement of exchange rules 

monopoly

one seller for many buyers & seller determines prices

Monopsony

one buyer for many sellers & buyers determine price

Limitations on participation in contrast/markets

no possible to include everyone affected by an environmental problem

Coase theorem

indicates externalities can be controlled through contracts & bargaining

Public solutions

rely on government intervention

Private solutions

occur when individuals solve problems & internalize externalities

Taxes/Subsidies

incentives environmentally friendly behavior

Cap & Trade

tradable rights are considered for rights to pollute or not pollute

cap

 limits set on emissions, supposed to be lowered over time

trade

 limits set on emissions, supposed to be lowered over time

Green consumption

relies on consumer demand to change environmental conditions 

Green washing

false claims to practices green habits that don’t always align with actual practices

green certification

used to verify claims about green practices

Carbon offset

individual/corporations provide donations for conservation activities

Monetizing Ecosystem services

monterey value is assigned to ecosystem services for destruction or preservation

Green Taxes

raising prices to reduce the use of resources to push innovation/substitution

Pigouvian taxes

levied on companies that pollute/create other negative externalities

Critique of Market Based Approaches

infinite growth requires infinite resources