Valuing Environmental Processes January 11, 2024

Question 1

Environment:

Answer 1

The sum of all surroundings, including living and non-living things, that interact with organisms.

Question 2

Ecological Footprint:

Answer 2

The cumulative land and water area needed to provide the resources a person or population consumes and to dispose of the waste.

Question 3

Biocapacity:

Answer 3

The capacity of an area to provide resources and absorb wastes. If a population’s ecological footprint exceeds the region’s biocapacity, it is not sustainable.

Question 4

Renewable Resource:

Answer 4

A resource that is replenished naturally and can be used indefinitely if managed properly.

Question 5

Nonrenewable Resource:

Answer 5

A resource available in limited quantities or that is not replenished as quickly as it is consumed.

Question 6

Sustainability:

Answer 6

Living in a way that maintains Earth’s systems and resources for future generations without compromising their ability to meet their own needs.

Question 7

Sustainable Development:

Answer 7

This is defined as development (typically economic) that satisfies our current needs without compromising the future availability of natural resources or the future quality of life. The concept is grounded in the principle of sustainability, which requires us to live in a way that maintains Earth’s systems and natural resources for the foreseeable future. An important aspect of this is considering the current ecological footprint of humans, which, if it exceeds Earth’s biocapacity, is not sustainable​​.

Question 8

Ecosystem Services:

Answer 8

These are essential services provided by ecosystems that support life and make economic activity possible. They include the provision of food and fuel, purification of air and water, recycling of nutrients, soil production, regulation of climate, pollination of plants, and providing recreational, aesthetic, scientific, educational, cultural, and spiritual values. The value of ecosystem services is immense, estimated at around $145 trillion per year, and the loss due to degradation is significant, ranging from $4.3 to $20.2 trillion per year. The economic benefits of preserving natural areas far outweigh the benefits of exploiting them, with a ratio of about 100 to 1​​.

Question 9

Externalities:

Answer 9

These are costs or benefits of a transaction that affect people other than the buyer or seller. Externalities can be positive or negative and may arise due to various factors such as pollution, damage to health, loss of other economic activities, or loss of ecosystem services. An example of a positive externality could be an increase in a neighbor’s property value due to environmental improvements. Addressing externalities involves either developing new models that incorporate other types of value or modifying the existing economic models to account for these externalities​​.

Question 10

Explain what goes into calculating Ecological Footprint.

Answer 10

Calculating the Ecological Footprint involves assessing the cumulative amount of land and water required to provide the raw materials a person or population consumes, and to dispose of or recycle the waste produced. This measure is expressed in global hectares (gha), which represent the world-average production for human use per hectare of biologically productive land and water in a given year. The concept of Ecological Footprint is closely linked to that of biocapacity, which refers to the ability of a terrestrial or aquatic system to be biologically productive and absorb waste, also measured in gha. If the ecological footprint exceeds the biocapacity of a system, it indicates that the system is at risk of permanent damage, highlighting the unsustainable use of resources

Question 11

Compare humanity’s ecological footprint to Earth’s biocapacity.

Answer 11

Comparing humanity’s ecological footprint to Earth’s biocapacity reveals a critical sustainability challenge. The current estimates of the human ecological footprint exceed the Earth’s biocapacity, indicating that we are using resources at a rate faster than the Earth can replenish them. This imbalance is not sustainable and calls for immediate action to identify and implement sustainable practices.

Question 12

Explain why resources exist on a renewable - non-renewable continuum.

Answer 12

Resources exist on a renewable-nonrenewable continuum because their availability and rate of replenishment vary widely. Nonrenewable resources are those in limited supply or replenished much more slowly than they are used. On the other hand, some resources can be renewable if they are used or managed properly so that they replenish faster than we use them. This continuum reflects the dynamic nature of resource availability and emphasizes the importance of sustainable management practices to ensure that resources are used at a rate at which they can be replenished.

Question 13

Describe how humanity’s Ecological Footprint has changed over time, and what that means for our sustainability.

Answer 13

Humanity’s Ecological Footprint has changed over time, primarily in terms of its increase, which has significant implications for our sustainability. As our ecological footprint exceeds Earth’s biocapacity, it indicates unsustainable resource usage. This means we are using the planet’s resources faster than they can be replenished, leading to the depletion of natural resources and environmental degradation. The ongoing challenge is to identify and shift towards sustainable practices that can support both current and future generations

Question 14

Describe the classical economic model and its assumptions. Differentiate the classical model from the environmental economists’ model.

Answer 14

Regarding economic models, the classical economic model is based on several assumptions:

1.Resources are considered infinite and substitutable, and waste is assumed to be free.
2.Future effects of resource use should be discounted, making the future value of a resource worth less than its present-day value. This encourages quicker use and discourages conservation.
3.Costs and benefits are internal, involving only the buyer and seller, without accounting for externalities.
4.Economic growth is considered inherently good, even though some causes of growth can be detrimental (e.g., war, natural disaster recovery)​​​​.
In contrast, the environmental economists’ model significantly deviates from these assumptions by recognizing the finite nature of many resources and the importance of ecosystem services. This model incorporates the value of environmental contributions that are not included in the price of goods, such as food, fuel, air and water purification, nutrient recycling, and soil production. It also acknowledges externalities, which are the costs or benefits of economic transactions that affect third parties. This approach leads to a more holistic understanding of the economy’s dependence on the environment, urging for sustainable practices that balance economic development with environmental conservation. (EXAM)

Question 15

Identify classes of externalities.

Answer 15

Externalities in economic transactions are essentially costs or benefits that affect individuals or entities other than the direct buyer and seller. They can be categorized into different classes:

1.Environmental Externalities: These arise when the environment is affected by production or consumption activities, such as pollution, which can harm health or reduce the quality of life for people not involved in the transaction.

2.Social Externalities: These involve impacts on society, such as increased healthcare costs due to pollution-related diseases, or the degradation of public spaces.

3.Economic Externalities: These include impacts like changes in property values (either positive or negative) due to nearby developments or environmental changes.

4.Positive Externalities: These are benefits that spill over to third parties, such as the increase in a neighbor’s property value due to environmental improvements in the area.

5. Negative Externalities: These are the detrimental impacts on third parties, such as health issues arising from industrial pollution.

Addressing externalities involves developing new economic models that incorporate these costs and benefits, or modifying existing models to better account for them​

Question 16

Identify classes of ecosystem services.

Answer 16

As for ecosystem services, they are the benefits that ecosystems provide to humans and can be classified into several types:

1.Provisioning Services: These include the production of resources like food, fresh water, wood, fiber, and genetic resources.

2.Regulating Services: These services include the regulation of climate, floods, disease, wastes, and water quality.

3.Cultural Services: These encompass non-material benefits obtained from ecosystems such as spiritual and religious values, recreational and aesthetic experiences, and educational and cultural enrichment.

4.Supporting Services: These are necessary for the production of all other ecosystem services, including soil formation, photosynthesis, nutrient cycling, and water cycling.

Each of these services contributes significantly to human well-being, and their degradation can have profound implications for our health, economy, and environment.

Question 17

Identify ways of dealing with externalities.

Answer 17

Taxation: Imposing taxes on activities that generate negative externalities (e.g., carbon tax on emissions) to internalize the external costs.

Subsidies: Providing financial incentives for activities that create positive externalities (e.g., subsidies for renewable energy).

Regulation: Implementing laws and regulations to limit activities that cause negative externalities (e.g., pollution standards for industries).

Tradable Permits: Establishing systems like cap-and-trade for emissions, where companies can buy and sell the right to emit pollutants.

Property Rights: Assigning clear property rights can help in negotiating and resolving conflicts over resource use that cause externalities.

Public Provision: Government provision of goods and services that have significant positive externalities (e.g., public parks, education).

Internalizing Externalities: Incorporating the external costs and benefits into the price of goods and services (e.g., reflecting environmental costs in product pricing).

Question 18

Differentiate GDP from GPI.

Answer 18

For the differentiation between Gross Domestic Product (GDP) and Genuine Progress Indicator (GPI):

GDP is the total monetary value of all goods and services produced in a country. It is a traditional measure of economic activity and robustness but does not always reflect desirable activities or free benefits.

GPI, on the other hand, includes conventional economic activities measured by GDP and adds positive contributions to the economy, such as parenting and volunteering. It then subtracts negative impacts like crime or pollution. GPI differentiates economic activities that benefit or decrease societal well-being. For instance, GPI may be lower in scenarios of high fossil-fuel use due to the offset of economic activities with the effects of pollution and road congestion. GPI is considered a more accurate measure of overall well-being but is less commonly used due to the complexity and data requirements for its calculation​​.

In essence, GPI provides a more holistic and accurate representation of a nation’s economic and societal well-being compared to GDP, which primarily focuses on economic activities regardless of their positive or negative impacts on society and the environment.