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

Resources Human Manufactured Financial Natural Cultivated

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

Pure Economic Systems? Pure CommandNo Markets All Decisions Top- Bottom Planning Centralization Legislation

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

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

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

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

Conventional vs. Ecological Economics

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

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

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

Growth

Steady State

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”

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

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

GPI Genuine Progress Index Developed by Redefining Progress Other IndicatorsOther Indicators –Human Development Index (UNDP) –Ecological Footprint –HANPP: Human Appropriation of Net Primary Production

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

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.

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)

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

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

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

Ecological Indicators: transport issues

Ecological Indicators: energy issues

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?

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!!

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

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..

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

Ecological Debt Bridge Poverty Gap –Between countries –Within Countries