Chapter 23 Economics, Environment, and Sustainability

Chapter 23 Economics, Environment, and Sustainability

Case Study: Making Microloans to the Poor (1) • 1983: Muhammad Yunus – won the Nobel Peace Prize in 2006 • Established Grameen (Village) Bank in Bangladesh • Provides microloans; mostly to women • Can borrow $50-$500 with very low interest rates to help improve their life style – planting crops, starting a small business, etc. • Half of borrowers eventually live above the poverty line within 5 years of receiving the loan. • Microloans have spread to 58 countries and helped over 133 million people.

Muhammed Yunus with Nobel Prize Fig. 23-1, p. 613

Economic Systems Are Supported by Three Types of Resources • Economic systems are supported by • Natural capital – resources and services provided by the earth • Human capital - human resources including physical and mental talents that provide labor, organizational and management skills and innovation. • Manufactured capital - manufactured resources such as machinery, equipment and factories.

Three Types of Resources Are Used to Produce Goods and Services Fig. 23-2, p. 615

Market Economic Systems Depend on Interactions between Buyers and Sellers (1) • True free market system - • All economic decisions based on interactions between supply, demand and price. • No company or group controls prices of a good or service • Market prices include all direct and indirect costs (full-cost pricing) • Consumers have full information about beneficial and harmful environmental effects of goods and services • Real world - • Tax breaks, Subsidies, Trade barriers, Withholding of negative information

Economic Growth and Economic Development • Economic growth • Increased capacity to supply goods and services • Requires increased production and consumption • Requires more consumers • Economic development • Improvement of living standards • Can we have environmentally sustainable economic development?

Governments Intervene to Help Correct Market Failures • An important example of a market failure is its inability to prevent degradation of open-access resources (clean air, open ocean). • Public services • Environmental protection • National security • Police and fire protection • Safe food and water • Provided by government because private companies can’t or won’t

Economists Disagree over Natural Capital, Sustainable Economic Growth (2) • Ecological models’ three assumptions • Resources are limited and shouldn’t be wasted • Encourage environmentally beneficial and sustainable forms of economic development • Full-cost pricing needed to take into account harmful environmental and health effects of some goods and services • Environmental economists take middle ground between classical and ecological economists

Protecting Natural Capital • Estimating the values of the earth’s natural capital • Estimate nonuse values • Existence value • Aesthetic value • Bequest value, option value

Cost-Benefit Analysis Is a Useful but Crude Tool • Cost-benefit analysis follows guidelines • State all assumptions used • Include estimates of the ecological services • Estimate short-and long-term benefits and costs • Compare the costs and benefits of alternative courses of action • Always uncertainties

Most Things Cost a Lot More Than We Might Think • Market prices do not include most of the indirect or external costs • Direct and indirect costs of a car – • We pay for the production, materials, labor and shipping. • We pay to run it with gasoline, maintenance and repair. • We do not account for the external costs extraction of materials, production of wastes, disturbing land, polluting air and water, etc. • Should indirect costs be part of the price of goods?

We Can Include Harmful Environmental Costs in the Prices of Goods, Services • Environmentally honest market system – would include harmful environmental and health costs of goods and services in market prices. • Why isn’t full-cost pricing more widely used? • Many businesses would have to raise prices and would go out of business • Difficult to estimate environmental and health costs • Businesses have strong influence on government – preferential regulations, tax breaks, subsidies

Reward Environmentally Sustainable Businesses • Phase out environmentally harmful subsidies and tax breaks • Phase in environmentally beneficial subsidies and tax breaks for pollution prevention • Political difficulties – Ex. Subsidies for fossil fuels and nuclear power companies totaled $56 billion in 2006. These powerful companies are able to lobby to continue their breaks and lobby against subsidies for more environmentally beneficial competitors.

Individuals Matter: Ray Anderson • CEO of Interface, largest commercial manufacturer of carpet tiles. He was inspired to develop the nation’s first totally green corporation. • Goals • Zero waste, Greatly reduce energy use, Reduce fossil fuel use, Rely on solar energy, Mimic nature • How’s it working? • Company has grown and profits have increased

Ray Anderson Fig. 23-A, p. 626

The Gap between the Rich and the Poor Is Getting Wider • Poverty • 1.4 billion people live on less than $1.25 per day • Can we reduce poverty? • South Korea and Singapore reduced poverty by: • Education, Hard work, Discipline, Attracted investment capital • Important measures include: • Combat malnutrition and infectious diseases, Universal primary school education, Stabilize population growth, Reduce total and per-capita ecological footprints, Large investments in small-scale infrastructure

Make Money and Create Jobs by Shifting to an Eco-Economy • Hawken, Brown, and other environmental business leaders • Transition to environmentally sustainable economies • Some companies will disappear • New jobs will be created • Economic succession • Green jobs increase

Solutions: Principles for Shifting to a More Environmentally Sustainable Economy Fig. 23-14, p. 631

Solutions: Environmentally Sustainable Development Fig. 23-15, p. 632

Green Careers Fig. 23-16, p. 633

Chapter 24 Politics, Environment, and Sustainability

Denis Hayes—A Practical Environmental Visionary • Taught people to pay attention to ecological principles in deciding what policies they support and taking political action. • Bullitt Foundation in Seattle • Focuses on urban ecological issues and restoring and protecting ecosystem services in the surrounding environment • Organized first Earth Day in 1970 • Involved teach-ins and demonstrations on pollution, toxic waste, nuclear power, etc. • More than 20 million people took part.

Democracy Does Not Always Allow for Quick Solutions • Politics have harmful and beneficial effects on the environment. • Special-interest groups pressure the government • Profit-making organizations • Nongovernmental organizations (NGOs) • Politicians focus on problems with short-term effects, not long-term • Three branches of government • Legislative • Executive • Judicial

The Policy Life Cycle Fig. 24-2, p. 639

Case Study: Managing Public Lands in the United States—Politics in Action (1) • 35% of the U.S., ¾ in Alaska, 1/5 in West • Federal public land • U.S. Forest Service: National Forest System • Bureau of Land Management • U.S. Fish and Wildlife: National Wildlife Refuges • National Park System • National Wilderness Preservation System • Different restrictions for each

What Can You Do? Influencing Environmental Policy Fig. 24-8, p. 647

Environmental Law Forms the Basis for Environmental Policy • Environmental law • Body of laws and treaties that broadly define what is acceptable environmental behavior • Most environmental lawsuits are civil suits • Plaintiff • Defendant • Injunction • Class action suit • Negligence

U.S. Environmental Laws and Regulations Have Been under Attack (1) • Who opposes U.S. environmental laws? • Some corporate leaders and other powerful people • Some citizens who see threats to private property rights • Some state and local officials who don’t like being forced to implement federal laws and regulations • Why the opposition? • Environmental issues not as easy to see now • Environmentalists as bearers of bad news

U.S. Environmental Laws and Regulations Have Been under Attack • Since 2000, environmental laws and regulations have been weakened • Prevent further weakening by • Repairing damage already done • Improve existing laws and regulations • Science-based environmental education • Organized bottom-up political pressure from concerned citizens

Individuals Matter: Butterfly in a Redwood Tree • Julia Hill: Nonviolent civil disobedience • 2 Years in a redwood tree, named Luna • Protested cutting down these ancient trees • Did not save the surrounding forest • Her message: protect biodiversity

Julia Butterfly Hill Fig. 24-B, p. 653

Chapter 25 Environmental Worldviews, Ethics, and Sustainability

Environmental Worldviews, Ethics, and Sustainability • Education is an important component of living sustainably. • Education includes understanding ecosystems, developing environmental literacy, and viewing the earth as a complex, interconnected system. • We can live sustainably through pollution prevention, waste prevention, species protection, and environmental restoration.

Test Study Guide • Terms: natural capital, market price equilibrium point, existence value, SLAPP lawsuit • What does the world bank say is the % of people living in poverty? • % of women receiving microloans from Grameen Bank • How do governments intervene in markets? • Examples of economic goods • From figure 23-5 – negative and positive output examples. • The yearly ecological services provided by the earth’s forests are estimated at $? • Costs associated with a car – direct and indirect. • What is full-cost pricing? Why is it not widely used? • Examples of regulations, drawbacks of environmental fees. • Subsidies and tax breaks for environmentally harmful businesses cost the taxpayers how much per year?

Test study guide • What is Ray Anderson known for? • What is the trickle-down effect?Gap between rich and poor has done what since 1980? • Who is Denis Hayes? • 4 stages for public policy • Why does the US have 3 branches of government? And what do each do? • What % of US land does government manage? Know the different regulations for each type. • Type of suits most environmental laws are considered. • Story of Diane Wilson • What was learned fomr the Biosphere 2 experiment? • Short Answer – Environmental implications of the gap between rich and poor getting larger, Biosphere 2 experiment, should the need for getting “more and more goods” be considered an addiction?

Chapter 23 Economics, Environment, and Sustainability