Economics Environment, and Sustainability Chapter 26 Economics Environment, and Sustainability

Resource Types in an Economic System Natural resources/capital Human resources/capital Physical/manufactured resources

Pure Free Market No government interference with market. Buyers and sellers determine pricing How do you think buyers determine pricing

Supply and Demand

What is a Government? 2-3 sentences/bullet points about what you think.

Why Does Government Intervene in Economic Systems? Markets GOOD for: Private services Markets UNRELIABLE for: Public services National security Education Enforcement of civil rights

The Civil Rights movement was more related to Pure Free-Market Economic System Government Intervened Market Economic System

Optimum Levels of Resource Use Or Pollution Reduction

Value of Future Resources Discount Rate An estimate of a resource’s future economic value compared to its present value. Value of having THING today, is better than having THING in the future. Why? Thus, the value of anything current will fall in the future, so we must sell and use it now. Coal Computers Wood …human lives?

How do we Price Goods? Indirect/external costs Hidden costs Gallon of gas actually cost $1.75/gal in 2003. When accounting for the tax dollars required to wage war for fuel, clean the environment, and regulate fuel consumption/efficiency, we actually paid closer to ~$5.50/gal

Full Cost Pricing Includes all external/indirect costs in original price. Informs consumer of true cost of resource Why does this not happen? Competition demands low pricing Government can’t/won’t demand full cost pricing

Green Taxes and Fees Lowers taxes on labor, income and wealth Raises taxes on environmentally harmful practices What are the pros and cons of this system? Pros: brings full cost pricing into effect, change behavior of consumers and businesses Cons: punishes low-income groups (unless safety net in place), taxes must constantly change as society changes, government may take this as a way to make money, not create positive change

Which method of internalizing the cost of pollution is MOST economically inefficient? Impact fee Pollution tax Emission tax Tradable pollution permit Direct pollution limits

Which of the following will likely have the highest external cost? Grazing on private lands Erecting fences on private lands Farming on private lands Mining on public lands Logging on private lands

Try it! List all the economic goods you use, and then identify those that meet your basic needs and those that satisfy your wants. Identify any economic wants you would be Willing to give up Believe you should give up Hope to give up in the future Relate your results to your personal impact on the environment.