Food requires natural resources as crucial inputs

• Cost minimization means these are often not sustainably used

  • Nitrogen on soil that runs off into water

  • use of irrigation in US south west drains aquifers

• Creates commodity crisis or at least dramatically increases costs of production and environmental damage

  • Price of oil is set to double due to climate change

  • Terrible weather conditions in olive oil production industries

Environmental Crisis: How it impacts the cost of Production

• James O’Conner: Second Contradiction of Capitalism

  • When an individual capitalist cut costs, it increases the average costs for all capitalists, makes things more expensive

  • Impact of the economy on the environment

• Negative Value: Increased costs (barriers to capital accumulation) from the depletion or pollution of environmental inputs

Externalities

Designed by Arthur Cecil Pigou

Externality: When a good or service has costs or benefits to others beyond those producing or consuming the good or service

• Positive Externality: Benefits more than the producer and consumer (ex. Vaccine, even those who didn’t get the vaccine benefit from it)

• Negative Externality: Negatively creates costs that impacts more than the producer and consumer (ex. production of shrimp)

• Costs or benefits to user are not equal to the costs or benefits to society

Total Cost = Social Cost + Private Cost

• For products with negative externalities

• Cost on society is different, therefore the total cost has to include the private cost and social cost

• The price will be too low so too much of the product will be produced and consumed

Solution: To make producers and consumers incorporate social cost into price

• The government should levy a tax that adds to the total amount of the Social Cost

  • Therefore private companies wouldn’t make more money

• An example of this would be Taxation (Environmental tax)

• Private firms will attempt to avoid paying for social costs

The Problem with Shrimp

What environmental problems are created by shrimp farming?

• Pollution problem created by the farming of shrimp

• Chemical and antibiotics pollute the surrounding mangrove forests

  • Owner of shrimp farm isn’t negatively impacted—some other group will be

Why are Mangroves good?

Mangrove: Saltwater tree that grows close to shores, stabilizes the shoreline, wildlife habitat

• Shoreline protection, trap sediment that runs into water, nurseries for small fish, provide nutrient for soil through litter fall

• Carbon sequestration

  • 1 kilo of farmed shrimp has 4x the CO2 emissions of beef

What kind of solution does this video advocate?

• “Sustainability certification has proved to be a logical way to establish best practice”

• To check labels and vote with their wallets

Any problems with this solution?

• Only 10% of shrimp are certified

• race to the bottom of standards

• always on the consumer, caring people pay, selfish people do not