indirect drivers Flashcards
what is ecological economics
brings together viewpoints from different academic disciplines and views the economic system as a subset of the broader ecosystem and subject to biophysical laws
what is environmental economics
applies mainstream economic principles to environmental and natural resource issues
what are the four principles env. economics is based on
the theory of environmental externalities
· the optimal management of common property and public goods
· the optimal management of natural resources over time
· the economic valuation of environmental goods and services
externalities
an affect of a market transaction that impacts the utility positively or negatively, of those outside the transaction
market failure
a situation in which an unregulated market fails to produce an outcome that is the most beneficial to society as a whole
common property resource
a resource that is available to everyone, but use of the resource may diminish the quantity of quality available to others
public goods
goods that are available to all and whose use by one person does not reduce their availability to others
core concepts of ecological economics
-the economics system is a subset of the broader ecological system
-sustainability should be defined according to ecological rather than economic criteria
-it is essential to rely upon a range of academic disciplines and perspectives, in addition to economics, to provide insight into environmental issues
standard circular flow model
a diagram that illustrates the ways goods, services, capital and money flows between households and businesses
what does the standard circular flow model emit
the effects of waste and pollution generation in [production processes as well as the processes by which natural resources regenerate
Market based solutions
policies that create economic incentives for behavioral changes such as taxes and subsidies, without specific control of firm or individual decisions
Neo-malthusian perspective
human population growth can lead to catastrophic ecological consequences and an increase in the human death rate
Population cohorts
the group of people born within a specific period in a country
Demographic transition
the tendency for the first death rates and then birth rates to fall as a society develops economically; population growth rates first increase and eventually decrease
Constant return scale
a proportional increase or decrease in one or more inputs results in the same proportional increase in output
Law of diminishing returns
principle that a continual increase in production inputs will eventually yield decreasing marginal output
Capital shallowing
a decrease in the availability of capital per worker, leading to reduced productivity per worker
Economics of scale
an expanded level of output reduced per unit production costs
Ways that population growth may negatively affect economic development
Increased dependency ratios: comparing the total number of people who are not working (children/elders) to the total population gives the dependency ratio for a country
Increased income inequality: a rapidly growing population creates an excess supply of labor, which begins down wage rates
Natural resource limitations: the inclusion of fixed factors such as a limited supply of land or nonrenewable natural resources, in the production function can lead to diminishing returns to labor and capital
Kuznets curve
-Have to grow economically in order to arrive at an equal society
-Gradually policies will be introduced so that inequality will be less
-Used for environmental impact
