© 2011 Pearson Education, Inc. Environmental Ethics and Economics: Values and Choices Economics: Approaches and Environmental Implications II AP Environmental Science Mr. Bugoni Lesson 7

© 2011 Pearson Education, Inc. Objectives: Define the terms Gross Domestic Product (GDP) and Genuine Progress Indicator (GPI). Explain aspects of environmental economics and ecological economics. Describe how individuals and businesses can help move our economic system in a sustainable direction. TED - At his carpet company, Ray Anderson has increased sales and doubled profits while turning the traditional "take / make / waste" industrial system on its head. In a gentle, understated way, he shares a powerful vision for sustainable commerce.

© 2011 Pearson Education, Inc. Define the terms Gross Domestic Product (GDP) and Genuine Progress Indicator (GPI). Gross Domestic Product (GDP) = total monetary value of goods and services a nation produces. -Sums all economic activity… whether good or bad. -Does not account for benefits such as volunteerism -Does not account for external costs such as environmental degradation and social upheaval. (i.e., pollution increases GDP). Genuine Progress Indicator (GPI) = An economic indicator introduced in 1995 that attempts to differentiate between desirable and undesirable economic activity. -Positive contributions (i.e. volunteer work) not paid for with money are added to economic activity -Negative impacts (crime, pollution) are subtracted

© 2011 Pearson Education, Inc. Define the terms Gross Domestic Product (GDP) and Genuine Progress Indicator (GPI).

© 2011 Pearson Education, Inc. Explain aspects of environmental economics and ecological economics. Environmental economists advocate reforming economic practices to promote sustainability. Key approaches are identify external costs, assign value to nonmonetary items and attempt to make market prices reflect real costs and benefits. -Valuing ecosystem goods and services Nonmarket values = values not included in the price of a good or service (e.g., ecological, cultural, spiritual)

© 2011 Pearson Education, Inc. Explain aspects of environmental economics and ecological economics. -Assigning value to ecosystem services Contingent valuation = uses surveys to determine how much people are willing to pay to protect or restore a resource Revealed preferences = revealed by actual behavior -The global value of all ecosystem services The global economic value of all ecosystem services equals $46 trillion

© 2011 Pearson Education, Inc. Explain aspects of environmental economics and ecological economics. Ecological economists support these efforts but advocate going further and pursuing a steady-state economy. -Government intervention counters market failure Laws and regulations Green taxes = penalize harmful activities Economic incentives to promote fairness, conservation, and sustainability (e.g., pollution permits)

© 2011 Pearson Education, Inc. Describe how individuals and businesses can help move our economic system in a sustainable direction. Consumer choice in the marketplace, facilitated by ecolabeling, can encourage businesses to pursue sustainability practices. Ecolabeling = tells consumers which brands use environmentally benign processes A powerful incentive for businesses to change Dolphin-safe tuna, organic food Socially responsible investing in sustainable companies $2.7 trillion in 2007

© 2011 Pearson Education, Inc. Describe how individuals and businesses can help move our economic system in a sustainable direction. Many corporations are modifying their operations to become more sustainable, and this often is financially profitable. Corporations are responding to concerns

© 2011 Pearson Education, Inc. Describe how individuals and businesses can help move our economic system in a sustainable direction. Many corporations are modifying their operations to become more sustainable, and this often is financially profitable. Industries, businesses, and corporations make money by “greening” their operations -Ben & Jerry’s (ice cream), Patagonia (clothing) Industries donate to environmental groups, preserve land, etc. Manufacturers use recycled materials, cut energy use, etc. Local sustainable businesses

© 2011 Pearson Education, Inc. Describe how individuals and businesses can help move our economic system in a sustainable direction. Many corporations are modifying their operations to become more sustainable, and this often is financially profitable. A “green wave” of consumer preferences Greenwashing: consumers are misled into thinking companies are acting more sustainably than they are -“Pure” bottled water may not be safer or better

Copyright © 2008 Pearson Education, Inc., publishing as Benjamin Cummings TED Video Ray Anderson on the business logic of sustainability (15:52) Ray Anderson's company makes Flor, the line that made modular carpet tile sexy. But behind the fresh design is a decades-deep commitment to sustainable ways of doing business -- culminating in the Mission Zero plan. “For nearly 11 years, now, we have been on this mission; we call it, “climbing Mt. Sustainability”, a mountain higher than Everest, to meet at that point at the top that symbolizes zero footprint—zero environmental impact. Sustainable: taking nothing, doing no harm.”