ENVIRONMENTAL ECONOMICS What is it all about?

INTRODUCTION Natural Resources : includes all the ‘original’ elements that comprises the Earth’s natural endowments or the life- support systems: air, water, the Earth’s crust and radiation from the sun.

Continue…. Some representative examples of natural resources are: – arable land, –watersheds and wilderness areas, –mineral fuels and nonfuel minerals, – the ability of the natural environment to degrade waste and absorb ultraviolet light from the sun.

Natural Resources Traditional Classification of Natural Resources: Renewable Non-renewable Biological Flow Recyclable Non-recyclable

The Nature and Scope of Environmental Economics The key issues addressed in this course are: –the causes of environmental degradation –the need to re-establish the disciplinary ties between ecology and economics –the difficulties associated with assigning ownership rights to environmental resources

Continue... –the trade-off between environmental degradation and economic goods and services –the ineffectiveness of the market, if left alone, in allocating environmental resources –assessing the monetary value of environmental damages –public policy instruments that can be used to slow, halt and reverse the deterioration of environmental resources

Continue... –the macroeconomic effects of environmental regulations and other resource conservation policies –the extent to which technology can be used as a means of ameliorating environmental degradation or resource scarcity –environmental problems that transcend national boundaries, and thus require international cooperation for their resolution

Continue…. –the limits to economic growth –the extent to which past experience can be used to predict future events that are characterized by considerable economic, technological and ecological uncertainty –ethical and moral imperatives for environmental resource conservation--concern for the welfare of future generations

Continue…. –The interrelationships among population, poverty and environmental degradation in the developing countries of the world –the necessity and viability of sustainable development

The Unique Features of Environmental Economics First, the ultimate limits to environmental resource availability are imposed by nature. That is, their origin, interactions and reproductive capacity are largely governed by nature. Second, most of these resources have no readily available markets: for example, clean air, ozone, the genetic pool of a species, etc.

Continue Third, no serious environmental economic study can be entirely descriptive. Normative issues such as intergenerational fairness and distribution of resources between the poor and the rich nations are very important.

Continue…. Fourth, uncertainties are unavoidable considerations in any serious study of environmental and natural resource issues. These uncertainties may take several forms, such as prices, irreversible environmental damage, or unexpected and sudden species extinction.

Human Perspectives of Long Term Global Problems Human perspective over space and time: –“In general, the larger the space and the longer the time associated with a problem, the smaller the number of people who are actually concerned with its solutions.”

Continue…. Possible factors influencing the human perspectives are: Social, cultural and moral values Economic conditions Belief (faith) in human wisdom and farsightedness ignorance