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Environment & Economy

Econ Systems Economists: Conventional Ecological Indicators GDP vs. GPI. Environment & Economy. Human Manufactured Financial Natural Cultivated. Resources. Basic Economic Questions. What to produce? How? How many? Who gets To Purchase Products? The Revenues?. Pure Command.

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Environment & Economy

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  1. Econ Systems Economists: Conventional Ecological Indicators GDP vs. GPI Environment & Economy

  2. Human Manufactured Financial Natural Cultivated Resources

  3. Basic Economic Questions • What to produce? • How? • How many? • Who gets • To Purchase Products? • The Revenues?

  4. Pure Command No Markets All Decisions Top- Bottom Planning Centralization Legislation Pure Economic Systems?

  5. Free Market Supply and Demand Perfect Competition Perfect Information No Regulations Taxes Subsidies Barriers to Trade No Barriers to Investing Pure Economic Systems?

  6. Drive out competition Subsidies Tax Breaks Withhold Information Externalize Costs No Social Obligations Maximize Profits Actually Existing Capitalism

  7. Market Oriented United States Japan Europe Asian “Tigers” Latin America South Africa Command Oriented China North Korea Viet Nam Cuba Other African Countries No Pure Economies

  8. There are No Pure Economies • All Exhibit Environmental Problems • Brought to You By…. • Technologies • Inequality • Consumerism • Poverty • Others?

  9. Conventional vs. Ecological Economics

  10. Conventional Economics

  11. Conventional Economics • Economy is the Total System • Nature is a subsystem • Growth as Ultimate Goal • Poverty (who gets to purchase, who profits) is an individual choice • Technological Optimism provided that • We let markets work freely • Nature is Substitutable

  12. Ecological Economics • Economy is a Subsystem of Society • Society is a Subsystem of Nature • Growth has environmental limits • Goal is “Steady State” • Technological Skepticism • Markets ok but not always (Govt. needed) • Nature is not Substitutable

  13. 1st May 2002 Enterprises Homes p The economy from the point of view of ECOLOGICAL ECONOMICS Isolated system?: Universe Natural resources NATURAL ENVIRONMENT Natural sinks and material cycles Earth’s energy Closed system: Earth Institutional context (political & organisational system, etc.) SOCIETY Property rights distribution Non-market caring services Culture (traditions, ethical values, etc.) Technologies and know-how Open system: human societies Information and Knowledge ECONOMIC SYSTEM Open system: human production processes Natural Resources Goods and Services (human-made) Material Wastes and Emissions Money Direct Solar Energy Money Dissipated Heat Earth’s Energy Labour force and other production factors Information and Knowledge

  14. Growth

  15. Steady State

  16. Indicators • GDP vs. GPI • Gross Domestic Product • Value of all goods & services produced in the economy in one year • Business leaders, Experts, Governments use it as indicator of well being or progress • The higher the GDP the “better off we are”

  17. Problems with GDP • Not Good as Indicator of Well Being • Fails to Distinguish Between Goods & Bads • “Defensive” Expenditures add to GDP • Pollution control devices • Crime control devices (alarms, locks, surveillance) • Divorce Lawyer Services, Cholesterol Medicines • Resource Depletion and Degradation Adds

  18. Problems with GDP • Does not count • Food we grow ourselves • Unpaid Services we provide to our families • Volunteer & domestic work • Unpaid labor (family health/child care) • Says nothing about Income Distribution

  19. GPI • Genuine Progress Index • Developed by Redefining Progress • www.rprogress.com • Other Indicators • Human Development Index (UNDP) • Ecological Footprint • HANPP: Human Appropriation of Net Primary Production

  20. GPI Adjusts GDP • negative adjustments for • growing ECONOMIC inequality • Underemployment • loss of leisure time • Pollution • Resource depletion • Crime • family breakdown • longer commuting times (and traffic jams) • auto accidents

  21. GPI Adjusts GDP • Positive Adjustments for • Unpaid work at home • Child care, parenting • health care, maintenance, cleaning • “Do it ourselves” Work • Construction, lawn mowing, etc. • Services of consumer durables, highways etc.

  22. Ecological Indicators • Ecological Footprint (page 11, textbook) • Amount of land needed to produce resources consumed average person, in Hectares • India 1 ha (1 billion) • The Netherlands 5.9 (94 million) • US 10.9 (3 billion)

  23. Ecological Indicators • HANPP • Human Appropriation of Net Primary Production • Primary Producers support all other living things • Mainly Plants and Phytoplankton • (pages 85-87 textbook ) • World uses an estimated 40% of land base NPP • About 25 % of land and aquatic combined

  24. Ecological Indicators • Material and energy flow accounting (MEFA) • Tons of minerals extracted and wasted • Energy Produced, used and wasted • ALL relative to GDP

  25. Uncertainty: Which Indicator? • Many Ecological Indicators • Different Trends • Opposite Trends • How do we (should we) make decisions? • Averages do not consider inequality • Rich and Poor are affected Differently

  26. Ecological Indicators: transport issues

  27. Ecological Indicators: energy issues

  28. Ecological Indicators • Ambiguous Trends • Unclear Messages, Plus • Translating Indicators into $ not easy • Unexpected Things Happens • CFCs, Asbestos, Agrochemicals, GMOs? • Take Precautions: Technological Skepticism • How do we (should we) make decisions?

  29. How should we make decisions? • Ecological Economic Indicators Help but.. • Who decides among indicators? • We need Democracy • Citizen Participation • Integrate Multiple Opinions • Experts don’t Always Know Better • Indicators can’t do the job for us!!

  30. Inequality and Environment • Poverty • Environmental-poverty trap • Lack resources to restore / conserve nature • Too much Wealth • Nature as just One among many Resources • Cash Cows, Deplete and Invest Elsewhere • Consumerism • Power to Impose Costs on Others

  31. Ecological Debt • Rich owe the Poor ? • High Income Countries owe Low Income Countries? • Poor people bear the burden? • Environmental Justice • If you use more your logical, fair share of natural resources you run-up an ecological debt..

  32. Ecological Debt • Carbon Debt • Biopiracy • Medicinal • Agricultural (farmer’s rights) • Environmental Dumping • Prices do not internalize environmental costs • Not Paying for local externalities (e.g. Texaco) • Toxic Trade

  33. Ecological Debt • Bridge Poverty Gap • Between countries • Within Countries

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