Chapter 23: Economics, Environment and Sustainability Flashcards
3 Types of Economic Systems
- Centrally Planned Economy
- Free-Market Economy
- Mixed Economy
5 Market Limitations
- A truly free market is rare due to external influences on prices and sales
- Subsidies: can sometimes mask the true environmental and health costs of products
- Natural Capital: Resources produced by the earth
- Human Capital: Talents of individuals contributing to labor and innovation
- Manufactured Capital: Tools and materials used in production
Market Failures
Market often fail to account for public goods, leading to negative environmental and social impacts
High Throughput Economy
Focuses on increasing the flow of resources to produce more goods and services, often at the expense of the environment
Neoclassical Theory on Limitations of Economic Growth
Believes in unlimited growth through substitution of resources
Ecological Economists on Limitations of Economic Growth
Argue that there are limits to growth due to finite nature of many vital resources. They emphasize the dependency of economies on the biosphere and its natural resources
Laws of Conservation and Thermodynamics
Highlight the limitations of resource consumption and waste production suggesting that unchecked growth can exceed the environment’s capacity to renew resources and manage waste
Steady-State Economy
An economy where resources are continually recycled or reused, with no waste and no new resource inputs
Middle Ground - Environmental Economists
While they align with the ecological economist model, environmental economist believe in adjusting current economic systems for sustainability rater than overhauling them entirely
Non-Use Values
Values not represented in market transaction
3 Non-Use Values
- Existence Value: Value derived from the mere existence of a resource (e.g. forest)
- Aesthetic Value: Value derived from the beauty of nature
- Option Value: Value based o the willingness to pay to protect natural capital
Cost-Benefit Analysis
A method where estimated costs and benefits of environmental actions are compared
2 Challenges of Cost-Benefit Analysis
- Difficulty in estimating indirect costs like human life, health, clean air, and water
- Can be used by industries to delay or avoid compliance with regulations
4 Guidelines for effective cost-benefit analysis
- Clearly state all assumptions
- Include estimates of ecosystem services
- Estimate both short/long-term benefits and costs for all affected groups
- Compare the costs and benefits of alternative actions
GDP
Measures economic welfare but doesn’t account for environmental or health impacts
Genuine Progress Indicator (GPI)
Considers GDP, beneficial transactions, and subtracts harmful environmental, health, and social costs
Green Taxes
Taxes on pollution, hazardous wastes, and resource use
3 Requirements for success with Green Taxes
- Phased introduction over 10-20 years
- Reduction of other taxes equivalent to green tax revenue
- Safety nets for low-income groups
3 Advantages Green Taxes
- Promotes full-cost pricing
- Encourages eco-friendly technologies and products
- Can be managed by existing tax agencies
3 Disadvantages Green Taxes
- Can penalize low-income groups without safety nets
- Difficult to determine optimal tax levels
- Wealthy polluters might absorb low taxes as costs
Eco-Labelling and Certification
Encourages the production of environmentally friendly products
Greenwashing
Misleading consumers by falsely marketing products as environmentally friendly
Incentive-based Regulations
Use economic forces to motivate businesses to reduce pollution and waste
Innovation-friendly Regulations
Set goals and allow industries flexibility in achieving them
Cap-and-Trade
Companies can save, use, or sell unused pollution permits
Selling Services
Focus on providing services with minimal material use and pollution, rather than selling products
Poverty
The state where individuals cannot fulfill their basic needs
Combat Malnutrition and Diseases to Alleviate Poverty
Launch a global initiative to address malnutrition and combat infectious diseases that result in millions of deaths
Education to Alleviate Poverty
Ensure universal primary education for all children and provide literacy programs for adults
Population Control to Alleviate Poverty
Assist developing countries in reducing their population growth
3 Ways to Achieve Population Control to Alleviate Poverty
- Investing in family planning initiatives
- Alleviating poverty
3 Elevating the status and rights of women
Reduce Ecological Footprint to Alleviate Poverty
Focus on significantly reducing both the total and per capita ecological footprint of developed nations and fast-growing developing countries
Invest in Small-Scale Infrastructure to Alleviate Poverty
Promote investments in small-scale, sustainable infrastructure
3 Examples to Invest in Small-Scale Infrastructure to Alleviate Poverty
- Introducing solar cells in rural villages
- Supporting sustainable agricultural practices
- Aiding developing nations in transitioning towards energy-efficient economies
Microfinancing
Encourage financial institutions to provide microloans to impoverished individuals. This can empower them to start small businesses, leading to self-sufficiency and economic growth
Low-Throughput Economy
Low-waste economy
5 Key Strategies for an Sustainable Economy
- Reuse and Recycle
- Sustainable Use of Renewable
- Efficient Resource Use
- Reduce Harmful Consumption
- Prioritize Pollution Prevention
Economic Succession
Recognize that as economies evolve, certain industries may become obsolete while new, more sustainable industries emerge
