NRES Economics and the environment

Biotic natural resorces

all the resources that come from living or organic matter, like food, plants, trees

Abiotic natural resorces

all the resources that come from nonliving things, like water, minerals, air,

Renewable resources

resources that naturally replenish, but can be exhausted if managed poorly

nonrenewable resources

resources that exist in finite amounts, like groundwater, fossil fuel, minerals

Direct use value

the resource meets a tangibal or physical need

productive use

a type of direct use where the resource is obtained through a market or commercial exchange

it is productive to the economy

Consumptive use

a type of direct use where the resource is consumed without passing through the market

Indirect use value

the resource does not meet a tangible physical need, but is valuable still

ecosystem services

a type of service that has an indirect use value

the benefits that humans derive from the functioning of natural ecosystems

Types of ecosystem services

supporting - nutrient cycling, pollution, biodiversity

provisioning - food, water, and energy

regulating - flood control, climate regulation, carbon sequestration

cultural - spirituality, recreation, aesthetics

Market value

a way of valuing things that can be bought and sold

Non-market value

ways of valuing things that make life possible and better, but cannot be sold

Use value

the worth of something we use directly

option value

the worth of something we might use later

aesthetic value

the worth of something’s beauty

Scientific value

the worth of something that may be the subject of scientific study

Educational value

the worth of something that can teach us about ourselves and the world

Cultural value

the worth of something that sustains or helps define our culture

Existence value

the worth of something simply because it exists, even if we never experience it directly

Paradigm

school of thought/ model, or pattern based on unfalsifiable assumptions about the world

Unfalsifiable assumptions

assumptions about the world that govern many paradigms and are difficult to prove or disprove

growth is good

nature is a stock of resources for human use

the world is the best understood by isolating and analyzing separate parts

it is possible to own land

Classical economics

late 1700s

focuses on land, labor and capital

assumes that resources are finite, markets are self regulating through competition, scarcity will equal conflict and suffering, market equilibrium happens eventually

Neoclassical economics

1800s

focuses on land, labor, capital, and knowledge

assumes that people are rational, society benefits from maximizing personal utility, market equilibrium will appear in supply and demand, scarcity equals innovation

Neoclassical economics assumptions to be questioned

not all resources are infinite, sustainable, or substitutable.

this paradigm puts current needs over future needs

endless growth cannot be supported by the environment or by people

not all costs are internal

External costs

costs and benefits that are not included in the market. Nobody pays for them

includes things like pollution, and is not usually considered in the market, which results in overproduction and overconsumption

Environmental economics

late 1900s

focuses on land, labor, capital, knowledge, ecosystem services

assumes that this will correct market failures, and assigning value to the environment will account for their value in decision making

Internalizing externalities

we can make producers pay for pollution through fines and taxes, and true cost accounting, or the accounting for the sum of both internal and external costs for a good or service

Ecological economics

late 1900s

assumes that the economy is a wholly owned subsidiary of the environment and that a steady state economy would be better

steady state economy

we don’t require perpetual growth, efficiency and conservation, development instead of growth, and measure productivity in happiness instead of GDP.

Growth vs Development

Growth - quantitative increase, which is limited by physical constraints

Development - qualitative increase, which is not necessarily constrained.