Environmental Concerns

Environmental Concerns Dr. Gordon Rands Western Illinois University US-Brazil Partnership Sustainable Entrepreneurship Course

Topics Covered in This Module • What is the Triple Bottom Line? Sustainability • Why is sustainability important? Natural Capital & Ecosystem Services • What are the rules by which nature works? Ecology • How sustainable are our activities? Models of Growth • What are the specific problems? Environmental Issues • What are corporations’ social responsibilities regarding the environment? Business & the Environment • Can companies afford sustainability? The Business Case for Sustainability • How sustainable are businesses? Phases of Organizational Sustainability • What would a sustainable business be like? Ecologically Sustainable Organizations

Sustainability • Sustainable Development -development which meets the needs of the present without interfering with others’ abilities to meet their own needs (Brundtland Commission) • This contrasts with unsustainable economic activity, which can meet present needs and wants of some people, but harm others, now or in the future, either directly or by harming the environment they depend upon • Triple Bottom Line (TBL) – the idea that businesses must simultaneously meet three fundamental responsibilities: economic, environmental and social (profits, planet, and people) • The diagram on the next slide suggests that any activities, including business practices, can meet all three, two, one, or even none of these. The concept of sustainability implies that meeting all three of these responsibilities is not only better than meeting two or only one, but is (for reasons we will see later) essential. • As you view the next slide, think of possible examples of business activities that meet only one of the responsibilities, two of them (bearable, viable, or equitable), or all three (sustainable).

Triple Bottom Line Sustainability

Additional Sustainability Considerations • The Three Primary Components of Sustainable Activities • Economic – generate profits (or at least break even) • Environmental – maintain or enhance the ecological health of the planet • Social - promote social justice, equity & well-being (especially for the poor and disadvantaged) rather than making people worse off • Two Additional Requirements for Sustainable Activities • Cultural – be seen as acceptable/appropriate by local standards • Some activities, while sustainable according violate values that are strongly held in a culture; when this is the case they will likely be strongly opposed and will probably not be engaged in • Managerial – within individuals’ and organizations’ skills & capabilities • Other activities, while recognized as being sustainable and not viewed as unacceptable or inappropriate, may be considered to be so difficult to achieve that few people or organizations make an attempt to engage in them • What could be some examples of TBL sustainable practices that might be either culturally or managerially unsustainable in Brazil? In the US?

Treatment of Sustainability in This Module • In the remainder of this module we will use the term sustainability to refer only to environmental sustainability (unless otherwise stated) • This is not to say that social and economic sustainability are not critically important. They are. • Some observers have suggested, however, that there is a difference in relative priority of the three factors, based on their dependence on one another. • If you were to rank the priority or dependence of the economy, environment, and society, what would this be, and why?

The Relationship of Economy, Society and Environment This view is based on the work of economist Herman Daly. See works by Brown and Stead & Stead (pp. 9-11) for more details on this position.

Why is Sustainability Necessary? Natural Capital & Ecosystem Services • Ecosystems provide essential products & services • Natural capital - environmental elements that provide value to humans; this value can either be in the form of consumable products (e.g., wood, food, etc.) or in the form of ecosystem services. As with other forms of capital, preservation of capital assets in good condition will generate future benefits • Ecosystem services – services provided by nature; five types: • Provisioning (producing food and water) • Regulating (moderating climate, preventing disease) • Supporting (nutrient cycling & crop pollination) • Cultural (providing aesthetic & recreational benefits) • Preserving (maintaining biological diversity for the future) (Wikipedia)

Why is Sustainability Necessary? Natural Capital & Ecosystem Services - 2 • Consuming natural capital at unsustainable rates decreases future “income” • A sustainable annual rate of harvest is that rate that only removes the amount produced within one year • Harvesting at an unsustainable rate results in a lower production the following year than could have been achieved • Degrading ecosystem health decreases the quality of ecosystem services • A study done in the 1990s by economists and ecologists estimated that the value of 17 different ecosystem services to humans was roughly $33 trillion per year; this was greater than the total global economic product at the time (~$25 trillion) (Wikipedia) • Other species and future societies have intrinsic value • Harm to the environment that reduces the resources available to other species or future humans below those that they need is therefore irresponsible

Sustainability and Ecology • To understand whether actions are sustainable or not, we must understand or at least appreciate the principles and concepts of ecology • Ecology is the scientific discipline that studies the relationships between the living and non-living components of the environment • Ecology can be thought of similarly to accounting, which explains the principles by which business finances work • We may not enjoy or care to understand the principles of accounting, but we wouldn’t want to invest in or work for an organization in which no one understood or paid attention to the principles of accounting; such an organization would go bankrupt, with much suffering resulting • Managing the planet without paying attention to the principles of ecology will result in a “bankrupt” planet, and huge suffering

Ecological Concepts - 1 • Environment - the external conditions and factors that affect an organism; an organism’s surroundings • Ecosystem - a community of organisms interacting with one another the chemical & physical factors in an area • Niche - role an organism plays in its natural community • Habitat - place where an organism or community of organism lives • Carrying Capacity -maximum population of a species that a given habitat can support over time • Limiting Factor - the factor that limits the growth, abundance or distribution of a species in an ecosystem

Ecological Concepts - 2 • Food Chain / Food Web - series or network or organisms that consume others; producers, consumers (1st, 2nd, 3rd order) & decomposers are different trophic levels • Biogeochemical Cycle -continuous, looplike movement of materials through living and non-living environmental components • Pollution - material that has been transformed and is unwanted, devalued or harmful in a particular place/time • Biological Magnification - the increase in concentration of a chemical as trophic level increases • Threshhold (or Tipping Point) - the point at which a phenomenon begins to be activated; the results may be quite dramatic • Irreversibility - the inability of human and nature to restore environmental conditions to a previous state within relevant timeframes

An Illustration of these concepts • In the 1970s the national symbol of the USA, the bald eagle, came close to extirpation (completely vanishing) within the 48 contiguous US states • While many factors were at work, the biggest problem was pollution with the pesticide DDT of areas where eagles fed • DDT was present in the water in only minute amounts, but because it became concentrated in the tissues of plants and animals, at every level of the food chain the amount of DDT became greater (e.g., from .003 parts per billion in water to 25 parts per million in eagles) • Although toxic, DDT did not usually kill adult eagles, but entered their bodies and affected the endocrine system, where they disrupted the process that directed calcium to be deposited in the eggshells while within the mother eagle’s body

An Illustration of these concepts (cont) • As DDT levels increased in a female eagle, each year her eggs became thinner; but as long as they were thick enough to hold an adult eagle’s weight during nesting, all the eggs could hatch; but once a threshhold was reached where the eggs were too thin, all the eggs started breaking and no eagles hatched; at this point eagle populations started falling rapidly despite adequate habitat and food; levels of DDT thus became the limiting factor for these eagle populations • When use of DDT was banned and no new pollution was occurring, levels of DDT in the water began to fall (although DDT released in the past continued to be present in the food chain for some time) • Once the levels of DDT in a mother eagle fell below the threshhold level and eggs were thick enough, chicks would start hatching again; however, this could take so many years that by that time the mother eagles could be dead; for these eagles the effect was irreversible • Fortunately for the species, enough eagles were unaffected in northern Canada and Alaska that they slowly returned to the US, filling the empty niches and habitat that the eagles who had died had once filled

How Sustainable are Current Types and Levels of human activities? Our ability to answer this question can be aided by understanding several concepts: • Models of growth • Three underlying factors that cause environmental harm • Ecological footprint • Living Planet Index

Are Current Levels of Human Activity Sustainable? Models of Growth • The Limits to Growth(1972) predicted that growth would result in catastrophic collapses in environmental conditions and material standards of living, due to resource overconsumption, overpopulation and pollution • A sequel, Beyond the Limits (1992), refined the calculations and considered alternative patterns and amounts of growth, determining that it might be possible to avoid these catastrophic collapses (the slides that follow are from that book) • The authors identified four possible behavior modes of their model of growth and carrying capacity, and the structural causes of each of these behavior modes

Models of Growth • How do economic activity and population growth interact with the physical limits of ecological carrying capacity? There are 4 possible models: • Continuous growth • Sigmoid growth • Overshoot and oscillation • Overshoot and collapse Which type of growth do you believe is most likely? Why? Where is humanity now on the growth curve? What do these answers suggest we should do?

Continuous growth results if • Physical limits are very far off, or • Physical limits are themselves Growing physically

Sigmoid growth results if • Signals from physical limits to a growing society are instant, accurate, and responded to immediately, or • The population or economy limits itself without needing signals from external limits.

Overshoot and oscillation results if • Signals or responses are delayed, and • Limits are unerodable or are able to recover quickly from erosion.

Overshoot and collapse results if • Signals or responses are delayed, and • Limits are erodable (irreversibly de-graded when exceeded)

The Three Underlying Causes of Environmental Harm Pollution f Population Per Capita Environmental Impact Size Consumption Unit of Production (or in simpler terms) Environmental f Population Affluence Technology Impact (which oversimplified yields) I = P x A x T • What are the trends in these areas? (See the next four slides) Source: Holdren, J. P. and Ehrlich, P.R. (1974). Human population and the global environment. American Scientist 62, 3: 282-292.

Figure 11.1 World population growth Please drop text art here

Population Source: Scientific American

Affluence

Technology

Thoughts on I=PAT Trends • When looking at projected trends in Population, Affluence and Technology, keep the following in mind • What are the assumptions on which projections are based? If the assumptions are wrong, the projections will be wrong. For example, will birth rates fall as income increases in Asia or Africa as much as it has in Europe? • Are the measures accurate? For example, is GDP a good indicator of individual economic well-being? • Are trends in related variables similar? For example, are trends in emissions of CFCs (ozone destroying chemicals) similar to those of GHGs (greenhouse gasses)? • Projections for Impact are very rough, as the relationship is much more complex than the multiplicative equation suggests

The Three Underlying Causes of Environmental Harm - Projections • Despite these problems, considering possible scenarios can be a useful exercise, even though the values are only estimates • Consider possible levels of these three factors 50 years from now • We’ll treat this in comparative terms, with 1 = current levels • The midrange estimate of population of ~9.5 billion = 1.5 x today • Remember that to help the poor, overall affluence will need to increase or the affluence of the “rich” should get distributed more evenly I = P x A x T • A (Today) 1 = 1 x 1 x 1 • B 3 = 1.5 x 2 x 1 • C 6 = 1.5 x 2 x 2 • D 6 = 1.5 x 4 x 1 • E 10 = 2 x 2.5 x 2 • F 16 = 2 x 4 x 2 Can we sustain ANY of these possible scenarios? • This depends on how much harm the earth can take.

Toll on the Environment

Resource Consumption:The Ecological Footprint • The ecological footprint attempts to measure how much land and water surface area a person uses. • Estimate your own ecological footprint by taking the ecological footprint quiz (for comparative purposes, please select metric rather than US measurements and answer questions based on living at your permanent home address) • More information about the ecological footprint can be found at the quiz site, as well as here and here

Questions About Your Footprint • What is your reaction to the size of your footprint? Does it seem believable? Why or why not? • What are the largest and smallest components of your footprint? Why? • How does your footprint compare to your national average? Why is it larger or smaller? • What could you do to lower your footprint? • How does it compare to those of your classmates from Brazil/USA? • How do national ecological footprints compare?

Relative National Footprints

Ecological “Debtors” & “Creditors” What are the meaning and the implications of this graphic?

Environmental Quality & Health: The Living Planet Index • The Living Planet Index is an attempt by scientists to estimate the health of the earth’s ecosystems, relative to their condition in 1970 (when they had already been significantly degraded from pre-industrial levels); 1970 is the year often cited as the beginning of the modern environmental movement, with the first “Earth Day” held in the USA • Another report, the Millenium Ecosystem Assessment, is more broadly based but has similar findings, indicating that 60% of ecosystem services have been degraded, and 15 of 24 ecosystems evaluated have been significantly damaged • What do estimates of these indices over time show?

Decline in Environmental Quality What do the ecological footprint and living planet index show?

How Sustainable Are Human Activities? Interpreting the Ecological Footprint and Living Planet Index • If these estimates are correct, it would suggest that we are creating approximately 25% more environmental harm than the earth can withstand • A more recent study has suggested that the global ecological footprint may be exceeding available carrying capacity by as much as 40%, and other estimates are even higher • In any case, the concept of the ecological footprint indicates fairly clearly that, with respect to the four models of growth examined earlier, we are in a phase of ecological overshoot • The question this poses for us is whether we are headed for overshoot and oscillation or for overshoot and collapse • The answer to this depends on the actions we take in the future

The Three Underlying Causes of Environmental Harm – Projections-2 • What would the I=PAT calculations look like if our goal is to restore the Living Planet Index to 1970 levels? To an even better condition? I = P x A x T • G .75 = 1.5 x 1 x .5 • H .75 = 1 x 2 x .375 • I .75 = 1.5 x 2 x .25 • J .75 = 1.5 x 4 x .125 • K .75 = 2 x 4 x .0938 • L .75 = .5 x 4 x .375 • M .5 = 1.5 x 4 x .083 • What sorts of actions are implied by these different scenarios for businesses, governments, and individuals? • Which one do you favor, and why?

Natural Environment Issues • Various critical environmental issues exist • solid waste • ocean degradation (overfishing, coastal development, oil spills) • freshwater pollution and overuse • deforestation • land degradation (erosion, desertification, sprawl) • air pollution, acid rain & indoor air pollution • energy inefficiency • production of toxic substances • endangerment of biological diversity • ozone depletion • global warming • An underlying cause of all of these is lack of understanding of, and failure to act in accordance with, ecological principles

Three Key Environmental Issues for Brazil and the United States • Of the issues noted on the previous page, three of them are especially important for Brazil and the United States, because of the degree to which the two countries contribute to the harm associated with them: • Global warming • Deforestation • Biodiversity • First, we will briefly examine one other issue that has been addressed by international policy makers and is of decreasing concern: • Ozone depletion

Ozone Depletion • Chlorofluorocarbons react with and destroy the ozone layer, which limits ultraviolet radiation that would otherwise reach the earth and increase sunburn, skin cancer, and reduce crop yields. • In 1985, scientists discovered a thin spot, or hole, in the ozone layer over Antarctica. • In 1987, a group of nations negotiated the Montreal Protocol, agreeing to cut CFC production. The agreement was later amended to phase-out and eventually ban CFCs and other ozone-depleting chemicals. • As of 2003, 184 countries had signed the protocol. • If the regulations continue to be effective, the protective layer will gradually recover.

Why were policymakers able to successfully address this issue? • Scientific evidence was extremely clear about the cause and the magnitude of the potential impacts • Impacts were caused by just a few chemicals, predominantly CFCs • CFCs were used for a relatively limited number of purposes: refrigeration, air conditioning, blowing agents, electronics cleaning agents • CFCs were used overwhelmingly by industry, not by individual consumers, and were produced by only a few chemical companies • The market leader (DuPont) had been conducting research and identified somewhat less effective but significantly less harmful substitutes, and had a R&D advantage over their competitors • CFCs were not a primary source of company revenue, and the patents on them would soon be expiring, bringing about decreased profits and increased competition • Self-interest and public good therefore aligned; DuPont dropped its opposition to regulation of CFCs and supported the Montreal Protocol and its gradual phase-out of CFCs

Biodiversity • Refers to the number and variety of species and the range of their genetic makeup. • Scientists estimate that species extinction is occurring at 100 to 1,000 times the normal, background rate due to pollution and habitat destruction by humans. • Genetic diversity is vital to each species’ ability to adapt and survive. • A major reason for the decline in the earth’s biodiversity is the destruction of rain forests. • Only half of the original tropical rain forests still stand. • The pharmaceutical industry develops new medicines based on newly discovered plants from tropical areas.

Deforestation • Deforestation refers to the cutting down of native trees without replanting them • Deforestation has several causes: cutting of valuable trees for timber, cutting of trees for charcoal or firewood, and clearing of land for pasture, cropland, other tree plantations (esp. palm for oil) and human settlements • Deforestation contributes to loss of local biodiversity, extinction, desertification, local and global climate change, and displacement of native peoples • Tremendous temperate deforestation occurred in the centuries prior to World War II; some conversion to plantations is still occurring but temperate forest cover is actually increasing • Estimates on rates of deforestation vary, but it is generally believed that roughly half of the world’s tropical forest has been lost in the last 60-100 years

Deforestation in the Amazon The Amazonian basin, predominantly located in Brazil, is the world’s largest and most ecologically important tropical forest. It has been the subject of major attention and controversy regarding deforestation. Development in the Amazon has been seen as a way to increase national wealth, and reduce poverty and migration to cities • The Amazon region is diverse in landscape, resources and people, with tremendous significance for both Brazil and the world • Brazil has passed several laws intended to stop deforestation in the Amazon • While these laws may have helped slow the rate of deforestation, they have not stopped it • At the same time, deforestation and use of mineral resources have not reduced poverty in the region • Imported models of development have failed in Amazon • How, if at all, can the Amazon be developed in a sustainable way?

Global Warming • Greenhouse effect occurs when carbon dioxide and other gases in the atmosphere prevent heat from escaping into space. • Since the Industrial Revolution, the amount of greenhouse gases in the atmosphere has increased by as much as 25%. • Caused mainly by the burning of fossil fuels such as oil and natural gas. • The Intergovernmental Panel on Climate Change reported that the earth has already warmed by between 0.3 and 0.6 degrees Celsius over the past century. • If societal emissions of these gases continue to grow unchecked, the earth could warm by as much as 6 degrees Celsius in the next century.

Causes of global warming Burning of fossil fuels This releases carbon dioxide into the atmosphere and is the leading contributor of global warming. Deforestation Trees and plants absorb carbon dioxide and remove it from the atmosphere. Thus, cutting down trees contributes to global warming. Beef production Methane is produced as a by-product of the digestion of some animals. Population growth Humans produce carbon dioxide every time they breathe. More people leads to more greenhouse gases. CFCs These gases destroy the ozone and are considered greenhouse gases as well.

Information on Global Warming • Wikipedia • BBC News • Yahoo! Green • Intergovernmental Panel on Climate Change • Business Roundtable Position on Climate Change • US Climate Action Partnership • The controversy over global warming (Wikipedia)

What would a Sustainable Society be like? • Two Types of Security(T. Gladwin, U. of Michigan) • Eco-resource Security • prevent costly & irreversible ecosystem damage • restore degraded ecosystems • minimize non-renewable resource consumption • shift to renewable resource substitutes • minimize renewable resource consumption • Socio-economic Security • increase economic opportunities for the poor • increase labor intensivity of economic activity • orient products/services more to basic needs • participative involvement in decisions & policies

Other Visions of Sustainability • Shape of a Sustainable Society • What would the implications be for business? • How & why would these be sustainable? • The Conserver Society: Five Future Societal Alternatives • Status Quo – do more with more [resource use and waste] • Growth with conservation – do more with less • Steady state society – do the same with less • Voluntary simplicity – do less with less and do something else • Squander society – do less with more • Which of these alternatives is most descriptive of our present society? Why? • Which of these societies would you most like to live in? Which would you least like to live in? • Which of these alternatives is compatible with sustainability? Can this be achieved? Why or why not?

Business & the Environment • The production and use of goods and services have, in the past and continuing today, caused tremendous amounts of environmental harm • Societies have responded by regulating business activities in various ways, both nationally and internationally, including banning products and practices, specifying technologies to be used, and setting limits on amounts of pollution emitted • These regulations have helped, but haven’t been sufficient; new types of regulations, treaties, and voluntary actions by businesses are needed • Ultimately, in order to have sustainable societies, we must have sustainable organizations, especially sustainable businesses

Environmental Concerns