GEOG 352: Day 3

1. GEOG 352: Day 3 Natural capital Cultural capital Chapter 2 Social capital Financial capital Human capital Manufactured capital

2. Housekeeping Items • A few people may not have signed in last time; I marked in the people I recognized. • A reminder that the welcome back Geography muffin and coffee event is tomorrow at 10:30 next door. • See folder for items of possible interest. • Anyone need a course outline? • If you weren’t here last week, we watched most of “The Inside Job” about the 2007-08 financial meltdown, and I gave a brief presentation about how Iceland responded to the crisis. • Did anyone turn up anything on what kind of regulatory regime has been put in place in the crisis’ aftermath? The liability of individuals for the actions of corporations? Or the revocability of corporate charters?

3. Housekeeping Items • The assignment instructions are on the web site (http://web.viu.ca/alexander2) and will be up on the Moodle site soon. A reminder that the deadline for the outline/ proposal is September 27th. • I also asked for a few volunteers to help lead discussions this week on various topics. There are three we will deal with today: • How does the economy impact ecological and cultural phenomena as they manifest spatially? • What ends does (and should) an economy serve? • What is the relationship between ecology and economy?

4. Chapter 2 of Daly and Farley • The authors offer this definition of opportunity cost: “the best alternative given up when a choice is made.” • They note that there are three types of systems: open (taking and giving out matter and energy), closed (taking in and giving out energy, but not matter), and isolated systems (giving and receiving neither). The Earth approximates a closed system. • As we discussed on Tuesday, conventional economists see nature – in providing inputs – as a subsystem of the macro-economy, whereas ecological economists see the economy as a subsystem of the total Earthsystem.

5. Chapter 2 of Daly and Farley • The macroeconomy is encroaching, transforming an empty world into a full world. • This leads to a situation where new growth becomes uneconomic – when the costs exceed the benefits, with a negative impact on human welfare. Can you think of examples? (There may also be a generational dimension to this.) “Full world” economy leads to drawdown and overshoot.

6. Chapter 2 of Daly and Farley • This leads into the notion of an optimal scale for an economy or an activity, when the marginal costs = marginal benefits. This is related to the law of diminishing marginal utility. Can you think of more prosaic examples of this concept (it ties in with opportunity cost)? • This also relates to the law of increasing marginal cost, whereby it takes more effort to get the same amount of product. Can you think of examples from agriculture and the energy sectors? • This sense of optimal scale and uneconomic growth is lacking in conventional economics.

7. Chapter 2 of Daly and Farley • Daly and Farley define natural capital as “a stock that yields a flow of natural services and tangible natural resources.” Analogy between natural capital and financial capital. • What are some different aspects of natural capital? (We will go into this in greater depth later in the course.) • A point of contention between conventional economists and ecological economists relates to the ability of technology and human ingenuity to substitute for natural capital. What are some areas where this might play itself out?

8. Chapter 2 of Daly and Farley • Constanza, et al. (1997) estimate that the ‘free’ services provided by nature equal $33 trillion, more than the entire GNP of the globe at that time, and yet none of this has a price attached to it, and hence its value is largely ignored until it is no longer available.

9. Chapter 2 of Daly and Farley • Ultimately, ecological economists want to make us aware that the economy is not only circular, but also linear. production and sale of goods and services wages, salaries, and profits investment re-investment THROUGHPUT extraction/ depletion of raw materials production & consumption waste & pollution

10. LAWS OF THERMODYNAMICS • The linear economy is governed by the 1st and 2nd law of thermodynamics. • First law concerns the conservation of energy and matter (examples?). • Second law states that, through physical processes/ the process of transformation, all matter and energy are degraded (examples?). This is also known as the law of entropy. • It applies especially to non-renewable resources, but less so to renewable resources because of our receipt of energy from an external source – the sun. However, we can use renewable resources in a non-sustainable way.

11. Chapter 3: Ends-Means Spectrum • Ultimate end(s) – about which theologians and philosophers debate, but are impossible to finally resolve. Has growth and materialism become a substitute final end? • Intermediate ends: health, safety, comfort, and security – ideally for all. • Intermediate means: technological artifacts, production processes, trade and commerce. • Ultimate means: the ecological processes and natural capital on which we (and the economy) ultimately depend.