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Economics & Sustainable Development > Lecture 2: Weak vs. Strong Sustainability > Flashcards

Lecture 2: Weak vs. Strong Sustainability Flashcards

1
Q

Weak Sustainability

A

relative scarcity, mainstream economics

(environmental economics)

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2
Q

Strong Sustainability

A

absolute scarcity, non-mainstream economics and pluralism

(ecological economics

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3
Q

Most important vision in economics

A

weak sustainability, because it is more implemented in the governmental policies. It is related to neo-classical economics, the most important school in economics (mainstream economics)

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4
Q

neo-classical economics

A

weak sustainability

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5
Q

mainstream economics

A

neoclassical economists

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6
Q

mainstream economics explanations

A
  • Maximization of profits and utility
  • Self-interest also implies societal interest
  • Price mechanism prevents exhaustion (scarcity is relative)
  • Rational people; homo economicus
  • Small government, markets are efficient, competition is central
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7
Q

homo economicus

A

rational people

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8
Q

rational people / homo economicus

A

-Everyone has their own choices –> actors have sets of preferences

  • Try to optimize their satisfaction by looking at all the options (when it is made to optimize satisfaction then it is rational)
  • Respond to incentives
  • Act in their self-interest
  • Make decisions at the margin
  • invisible hand
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9
Q

making decisions ‘at the margin’

A

is the change in satisfaction from the
increase of the consumption of the product or service. The more you take, the more you think about it. People take decision taking into account the satisfaction they gain according to the amount of the product

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10
Q

Invisible Hand

A

without any external intervention, if all individuals in the economy act in their self-interest, the result is automatically leading to the best interest of the collective

(self-interest –> public interest) (a free economy)

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11
Q

which two distinctions are there in the typology of goods and services

A

rivalry in consumption and excludable from consumption

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12
Q

rivalry in consumption

A

if you consume a good, it won’t be available for other people

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13
Q

Excludable from consumption

A

preventing people from getting access to a product

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14
Q

high rivalry in consumption, high excludability from consumption

A

individual (private) goods

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15
Q

high rivalry in consumption, low excludability from consumption

A

common pool resources

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16
Q

low rivalry in consumption, high excludability from consumption

A

club goods

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17
Q

low rivalry in consumption, low excludability from consumption

A

collective (public) goods

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18
Q

individual (private) goods

A

high rivalry, high excludability

food, clothing, car, house

19
Q

common pool resources

A

high rivalry, low excludability

water, energy, nature, environment

(Mostly natural resources, there is a limited amount)

20
Q

club goods

A

low rivalry, high excludability

swimming pool, cinema’s, union (subscription for access needed)

21
Q

collective (public) goods

A

low rivalry, low excludability

defense, dykes, protection, sunshine

22
Q

Natural capital

A

refers to things like the stock of raw materials and energy reserves, biodiversity and water and air quality (for example land)

23
Q

Physical capital

A

everything coming from technology supporting labor, includes machinery, buildings and infrastructure (everything that is manmade)

24
Q

Human capital

A

includes the level of development and the health of the population (everything that is related to the development of the population, the productivity and thus labor)

25
Q

Social capital

A

includes the social relations, mutual trust, standards and values (has a strong impact on environmental sustainability)

26
Q

Institutional capital

A

measures the quality of the formal institutions, such as reliability of case-law (for example the quality of the government) (institutional capital can support the human capital by f.e. education guidelines)

27
Q

Financial capital

A

money

28
Q

externalities

A

negative externalities in Marchallian cross

negative effect on other people

pollution / smoking

29
Q

what makes the external cost?

A

Difference in private and social cost

30
Q

freeriding problem

A

tragedy of the commons

When people take advantage of a public good without paying for it

31
Q

two types of market failures

A
  1. externalities
  2. free-riding problem
32
Q

why don’t you get the most efficient market situations?

A

Markets do not always enable individuals to achieve the highest level of satisfaction even when you have a self-regulated market

33
Q

weak sustainability and compensation / substitution

A

Compensation/substitution possible
o So, trees grow back themselves
o Even if we depleted natural resources and we produce more physical capital we can compensate the loss of natural resources

34
Q

strong sustainability and compensation / substitution

A

No or limited compensation / substitution possible (absolute scarcity)
o We have a specific environment with limited resources, and consider what is possible in the environment and base the economy on this

35
Q

why is scarcity relative in weak sustainability

A

thanks to price mechanisms and focus on technology and innovation

36
Q

limited rationality

A

o Can be very inconsistent. Most people don’t know what they actually prefer, because you don’t have all the information to know all the options

o You don’t always know the consequences of everything

o We should not rely too much on rational choices

37
Q

non-substitutability

A

you can’t substitute natural capital by physical capital

38
Q

why is there non-substitutability in the case of natural capital

A

Manufactured capital is reproducible and its destruction is rarely irreversible, whereas the consumption of natural capital is usually irreversible

39
Q

contribution natural capital to human-well being

A

the contribution of natural capital through the delivery of services to human wellbeing is multidimensional: security, basic materials for a good life, health, and good social relations

  • trees for air quality, natural resources against floods = security
  • need for air quality = health
  • peace needed for accessing natural resources = social relations
40
Q

complementarity natural capital

A

Natural capital is complementary to manufactured capital and other forms of capital (human and social capital, etc.) (you can’t substitute)

41
Q

intergenerational justice

A

justice between individuals and communities but also between generations

42
Q

3 interrelated goals of ecological economics

A
  • sustainable scale
  • fair distribution
  • efficient allocation
43
Q

fair distribution

A

relative of the resource flow, as embodied in final goods and services, among alternative people –> justice

44
Q

regulation

A

In weak sustainability it is a lot about competition, for strong sustainability it is a problem, it is more about cooperation.

It is thus not about the market mechanism but the regulation in strong sustainability.

Economics & Sustainable Development (13 decks)

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