Chapter 20: Environmental Economics and Policy

Factors that influence Supply

Input prices, technology, expectations of future prices, and number of people selling the product

Factors that influence Demand

Income, prices of related goods, tastes, expectations, and the number of people who want the good

Law of Demand

When the price of a good rises, the quantity demanded falls - when the price of the good falls, the quantity demanded rises

Law of Supply

When the price of a good rises, the quantity supplied of that good will rise - when the price of a good falls, the quantity supplied will fall

Gross Domestic Product (GDP)

The value of all products/services produced in a year in a given country - includes consumer spending, investments, government spending, and exports minus imports - pollution and land degradation are not included - societies that have illness/elderly appear to have a higher GDP (paying for healthcare) - GDP doesn’t show the true cost of production - some scientists say to increase GDP in developed countries because as GDP increases population growth slows

Genuine Product Indicator (GPI)

A measure of economic status that includes personal consumption, income distribution, levels of higher education, resource depletion, pollution, and the health of the population - while GDP rises with time, GPI flattens out or decreases

The Kuznets Curve

As per capita income in a country increases, environmental degradation first increases and then decreases - not easily applicable to all situations

Technology Transfer

Less-developed countries adopt technological innovations that were developed in wealthy countries

Leapfrogging

Less-developed countries use new technology without first using the precursor technology (ex. solar cells without having a solid electrical grid)

Natural Capital

The resources of the planet, such as air, water, and minerals

Human Capital

Human knowledge and abilities

Manufactured Capital

All goods and infrastructure that humans produce

Environmental Economics

Examines the cost and benefits of various policies and regulations that seek to regulate or limit air and water pollution and other causes of environmental degradation

Ecological Economics

The study of economics as a component of ecological systems

Valuation

Assigning monetary value to intangible benefits and natural capital (ex. nature preserves)

Sustainable Economic Systems

Would rely more on economic services and the reuse of existing manufactured materials and less on resource extraction that requires energy - takes some of the waste stream and reuses it in the production and consumption cycle (more renewable energy, waste-to-energy systems)

Environmental Worldview and its Types

Encompasses how one thinks the world works, how one views one’s role in the world, and what one believes to be proper environmental behavior

1. Human-centered (anthropocentric)

2. Life-centered (biocentric)

3. Earth-centered (ecocentric)

Anthropocentric Worldview

Focuses on human welfare and well-being - nature is there to meet our needs - stewardship within this view supports the careful and responsible management and care for Earth and its resources

Biocentric Worldview

Life-centered and holds that humans are just one of many species on Earth, all of which have equal intrinsic value - ecosystems have instrumental value

Ecocentric Worldview

Earth-centered and places equal value on all living organisms and the ecosystems in which they live - we should adapt our needs to nature

The Precautionary Principle

When the results of an action are uncertain, it is better to choose an alternative known to be harmless - ex. Montreal Protocol

United Nations

Promotes dialogue among countries with the goal of maintaining world peace

UN Environmental Programme (UNEP)

Responsible for gathering environmental information, conducting research, and assessing environmental problems

World Bank

Provides technological and financial assistance to developing countries with the intent to reduce poverty and promote growth

World Health Organization (WHO)

Improve human health by monitoring and assessing health trends and providing medical advice to countries

UN Developmental Programme (UNDP)

Works in 170 countries to advocate change that will help people obtain a better life through development

Environmental Protection Agency (EPA)

Oversees all governmental efforts related to the environment including science, research, assessment, and education

Occupational Safety and Health Administration (OSHA)

Enforces health and safety regulations

Department of Energy (DOE)

Advances energy and economic security

World Agencies that Protect the Environment

• United Nations

• UN Environmental Programme

• World Bank

• World Health Organization

• UN Development Programme

US Agencies that Protect the Environment

• Environmental Protection Agency

• Occupational Safety and Health Administration

• Department of Energy

Human Development Index (HDI)

Looks at three basic measures of human status - life expectancy, knowledge of education, standard of living - developed countries have high HDI and developing countries have low HDI

Global Multidimensional Poverty Index (MPI)

Measures education, health, and living standards (child mortality, nutrition, school attendance, etc.) - developed countries have low MPI and developing countries have high MPI

Policy Process in the US

1. Problem Identification

2. Policy Formulation

3. Policy Adoption

4. Policy Implementation

5. Policy Evaluation

Command and Control Approach

Regulations and enforcement mechanisms for pollution control

Incentive-Based Approach

Financial and other incentives for lowering emissions based on profits and benefits

Green Tax

Put on environmentally harmful activities or emissions

Triple Bottom Line

Considers economic, environmental, and social factors - sometimes known as the three Ps (people, planet, prosperity)

Millennium Development Goals

1. Eradicate poverty and hunger

2. Universal primary education

3. Gender equality and empower women

4. Reduce child mortality

5. Improve maternal health

6. Combat HIV/AIDS, malaria, and other diseases

7. Ensure environmental sustainability

8. Develop a global partnership for development

More have been added to this later (ex. clean water, sanitation)

Environmental Justice

Equal enforcement of laws and elimination of disparities in the exposure of pollutants and other environmental harms affecting different ethnic and socioeconomic groups - fair distribution of Earth’s resources - supporting people living in degraded environments - this has become a social movement and academic field of study