Week #4 Flashcards
What is a resource?
anything we get from living or non-living environment to meet wants and needs
half of natural capital
what is natural capital?
Resources on the top
Services on the bottom
what are the three aspects of resources?
Renewable, non renewable, perpetual
what is a non-renewable (exhaustive) resource?
- On a geological time span they are renewable, but not on a human timespan
Eg. fossil fuels (coal, oil, natural gas), minerals (inorganic substances) - Most economic growth has been fueled by non-renewable energy
what is a perpetual resource?
Anything used from the sun
Will use energy as long as the sun is shining, renewable
Indirect energy uses sun indirectly
Tides, gravitational presence needs sun, creates tides
Wind is as well, as long as sun is shining, wind will move
what is a potentially renewable resource?
- Renewed fairly rapidly by sun in human time span (direct or indirect)
- Can be depleted if used faster than they are renewed (environmental degradation)
I.e. Used above sustainable yield
E.g. Forest, fresh water, fresh air, fertile soil, grasslands, wild animals
What is neoclassical economics?
Dominating economic system
About the production of goods and services, what humans create as a result of resource exctraction or use
what does it mean that neoclassical economics believes in a linear relationship?
Goods and services; supply and demand
Based on the concept that resources are unlimited
You can only have a linear system as long as the resource end of the system is there or isn’t unlimited
what is another term for neoclassical economics?
Cowboy economy
Compared to when the US was settled and they used all the resources
what is neoclassical economics in relation to the reductionist perspective?
Everything is the sum of it’s parts
If you know all of the individual parts of this duck, then you know how it acts when you put it in its environment
Assumption that 1+1=2
Simplification of natural systems, ignoring complexity evolved billions of years in nature
what does neoclassical economics say about a self-correcting market?
We don’t have to worry about our finite resources disappearing, because we have a self-correcting market
When something becomes so expensive ppl can’t afford it so they go to another resource and the cost of the resource goes down
Firewood, coal, natural gas
Idea that market will always drive itself
EQUALIBRIUM
what population trend has occured under neoclassical economics?
logistic growth
what is k in logistic growth
carrying capacity
Maximum population size that specific environment can handle (“carry”
explain logistic growth
k is Dependent on how resources are used
Decrease resource quality/quantity reduces K
what is exponential growth in relation to logistic growth?
Can only continue to infinity if all resources are unlimited
A population can only grow exponentially under those conditions
But under conditions of resource limitation, those limitations are going to limit the population (k)
But at some point of that exponential growth phase, it will be limited by resources, so it will turn into S curve
what happens if there is an overshoot of the carrying capacity?
We don’t just sort of level out
competition of recourses and environmental degradation, there is a population die off
How does neoclassical economics view economic growth?
Economic growth viewed as good for different reasons
Developing vs developed countries view differs
GDP = market value of all goods and services produced within a nations borders/yr
explain costs and benefits of growth in neoclassical economics?
Based on assumption that growth is good
But what is that growth based on?
We use our resources, so in a resource based economy, we will continue to consume those resources
Result in significant environmental degradation
what is environmental economics?
Introduction of concept of “sustainable growth”
From “cowboy economy” to “circular economy”
what is the circular economy in environmental economics based on?
First law of thermodynamics
Neither matter nor energy can be created or destroyed; it can only be changed from one form to another
We lower resources, then we recycle and reuse
We still have waste but some more input into the system
what similarities are there between neoclassical economics and environmental economics?
Reductionist perspective like neoclassical economics
Economy and humans are still central; metrics are quantitative (GDP = humans)
what are the 3 aspects environmental economics focuses on?
- Minimizing waste; return “waste” to economy by recycling
- Reduce degradation (eg. resource depletion and pollution)
- Reduce negative environmental impact
what does environmental economics aim to do in relation to efficiency?
Increase resource efficiency at lowest cost to economy
what are the 3 aspects of increasing resource efficeny at a low cost?
- Commodify the environment
- Define optimal level of environmental protection
- Create policies the help achieve #2
What does it mean to commodify the environment?
Putting a monetary value on services such as forests in terms of the oxygen it provides, the water it filters, the CO2 it produces
Because you can’t have the resources without the services
what it mean to Define optimal level of environmental protection ?
How much can we save and protect and conserve and still have economic growth
If we have a 50 hector forest, we still want economic growth, but we want to have the services the forest provides
What policies can help us define an optimal level of environmental protection?
- environmental taxes
2. tradable permits
what are environmental taxes?
Environmental tax is to deal with negative implications of the creation or disposable of that product
We pay environmental tax to commodify the environment
Counter argument– cost is so low you didn’t realize extra amount on laptop
Easier to just pay it than change the behaviour
what is a tradable permit?
Pollution permits
Total allowable emissions set at target level
Excess permits sold for profit; needed permits purchased
Argument against: gives right to pollute
What is ecological economics?
Interrelationship between ecological, social and economic sustainability
what are the 5 aspects of ecological economics?
- Coevolution (instead of Reductionism)
- Questions possibility of the sustainability of a circular economy?
- Natural capital can’t be replaced by human capital
- Quantitative growth vs. qualitative development
- Valuing environmental resources beyond utility
explain 1. coevolution
instead of reductionist perspective,
Recognizing species with each other and environment have evolved, and those relationships make it difficult to tease apart where one thing begins and ends
1+1 doesn’t usually = 2
We can’t remove that organism from that environment and understand what’s going to happen in that system
Flower above is only pollinated by the very unique moth, representation of coevolution
In opposition to the reductionist perspective of neoclassical economics
RECOGNIZING COMPLEXITY
explain #2. questioning sustainability of circular economy?
Second law of thermodynamics - law of increased entropy talks about energy quality
When we convert energy from one form to another something is always lost
What is usually lost is heat
Even if we recycle, we don’t get exactly what we get in
We lose energy quality
Because of that focus needs to be on reduction
explain #3 - natural capital can’t be replaced by human capital?
Recognizes that:
1. Ecological systems are complex and unpredictable
2. Precautionary principle better approach than cost benefit analysis
When we set the limits we need precautionary principle
Say we are going to need 25 hectors out of the 50 hectors, we actually leave like 34 hectors
explain #4 - quantitative growth vs. qualitative development
talking about incorporating qualitative measurements
Maybe economic growth isn’t the most important metric we should have
Other things determine value, such as social components
Ex. Happiness, living standards, education, life expectancy
New metrics like human development index
- Happy Planet Index
what is the happy planet index?
Ecological footprint, life expectancy, life satisfaction
explain #5 - Valuing environmental resources beyond utility
Intrinsic value of environment, value just because they exist
Valuing things even without getting something directly from it monetarily
