Environmental Economics, Politics, and Worldviews

Core Case Study: Rescuing a River  Nashua River – the filthiest river  Marion Stoddart developed a restoration plan and won over state officials  Successes Ban dumping Treatment plant Beautification Community involvement

Individuals Matter: Marion Stoddart Fig. 17-1, p. 401

Resources Supporting Economic Systems  Economics  Market-based systems interact through sellers and buyers  Supply and demand determines prices  Three types: Natural resources Human resources Manufactured resources

Three Types of Resources

Economic Importance of Natural Resources  Neoclassical economists  Ecological economists  Environmental economics takes middle ground Some forms of economic growth discouraged Environmentally sustainable economy – eco-economy

Strategies to Transition to Eco-economy (1)  Indicators that monitor economic and environmental health  Full-cost pricing -Full cost pricing is a practice where the price of a product is calculated by a firm on the basis of its direct costs per unit of output plus a markup to cover overhead costs and profits  Eco-labeling - Labels indicating whether or not they are energy efficient compared to similar products.  Phase out of harmful government subsidies and tax breaks

Strategies to Transition to Eco-economy (2)  Decrease income and wealth taxes  Increase taxes on pollution, resource waste, and environmentally harmful actions  Innovation-friendly regulations  Tradable permits  Selling of services instead of things

Ecological Economics

Components of Environmentally Sustainable Economic Development

External Costs  Market price leaves out environmental and health costs associated with its production  Goods and services include external costs  Excluding external costs Hinders development of green goods and services Promotes pollution Fosters waste and environmental degradation

Use of Environmental Economic Indicators  Gross domestic product (GDP) does not measure environmental degradation  Estimating the value of natural capital  Genuine progress indicator (GPI) monitors environmental well-being

GDP vs GNP  Gross National Product (GNP) is the market value of all products and services produced in one year by labor and property supplied by the residents of a country  Gross domestic product (GDP) refers to the market value of all officially recognized final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of livingper capitastandard of living

Genuine Progress Indicator = + - Genuine progress indicator Benefits not included in market transactions Harmful environmental & social costs GDP

Comparison of GDP and GPI Fig. 17-5, p. 406

Include Harmful Environmental Costs in Prices of Goods and Services  Environmentally honest market system makes sense  Not widely used Wasteful and harmful producers would go out of business Difficult to estimate environmental costs Most consumers do not connect environmental costs with purchases  Government action needed

Eco-labeling  Encourages companies and consumers to go green  Programs in Europe, Japan, Canada, and U.S.  Used to identify fish caught by sustainable methods

Reward Environmentally Sustainable Businesses  Encourage shifts Phase out harmful subsidies and tax breaks Phase in environmentally beneficial subsidies  Unknowingly, Americans pay: $2,500 per year in harmful subsidies Another $1,000 in environmental degradation Additional health costs

Environmental Taxes and Fees Fig. 17-6, p. 408

Tax Pollution and Waste  Green taxes discourage pollution and waste  Current tax system Discourages jobs and profit-driven innovation Encourages pollution, resource waste, degradation  Tax shift towards green taxes needed

Encouraging Innovations  Regulation  Laws – command and control  Incentive-based regulations  European experience positive for innovation- friendly regulations

Use of the Marketplace  Incentive-based model  Government place caps on total pollution levels Tradable pollution Resource-use permits  Shown to reduce pollution

Trade-offs: Tradable Environmental Permits Fig. 17-7, p. 409

Individuals Matter: Ray Anderson  Inspired by Hawken’s The Ecology of Commerce  First totally sustainable green corporation Reduced solid waste 63% Reduced gas emission 46% Lowered energy consumption 28% Saved >$100 million

Selling Services Instead of Things  Shift from material-flow economy to service-flow economy  Make more money by eco-leasing  Eco-leasing examples Xerox Carrier

Widening Gap Between Rich and Poor  Poverty – harmful health and environmental effects  Reducing poverty benefits individuals, economies, and the environment  Trickle-down/flow-up model unsustainable

Global Distribution of Income

Reducing Poverty  Some countries reduced poverty rapidly  Developing countries must change policies, emphasizing education  Debt forgiveness for developing countries  Condition – debt money devoted to basic needs

Additional Measures to Combat Poverty  Increase nonmilitary government and private aid  Combat global malnutrition and infectious diseases  Invest in small-scale infrastructure  Encourage microloans to poor

Case Study: Microloans to the Poor  Poor lack credit record and assets for loans  Microcredit  Grameen Bank, Bangladesh Repayment rate of 99% Reduces poverty, domestic violence, divorce and birth rate

Millennium Development Goals  Reduce poverty, hunger, and improve health care  Developed countries agreed to devote 0.7% of national income  Average has only been 0.25%

What Should Our Priorities Be? (1)

What Should Our Priorities Be? (2)

Transition to an Eco-economy and Making Money  Hawken’s rule  Industries and businesses disappear or remake themselves  Greatest investment opportunity of the century

Shifting to More Environmentally Sustainable Economies Fig , p. 414

Democratic Government and Environmental Problems  Complex problems – biodiversity, climate change  Long-term problems need integrated solutions  Lack of environmental knowledge of political leaders

Principles for Environmental Policies (1)  Humility principle  Reversibility principle  Precautionary principle  Prevention principle  Polluter-pays principle

Principles for Environmental Policies (2)  Public access and participation principle  Human rights principle  Environmental justice principle

Individuals Matter  People create change together – grassroots  Politics local at a fundamental level  Be an environmental leader Lead by example Work within existing systems – vote with your wallet Run for local office Propose and work for better solutions

What Can You Do? Fig , p. 416

Developing Environmental Policy  Law making  Fund and implement regulations  Staff environmental regulatory agencies Political pressure Industry gets their people appointed  Industry offers regulators high-paying jobs

Case Study: Managing Public Lands in the United States (1)  Federal government manages 35% of the country’s land  National Forest System – U.S. Forest Service  National Resource Lands – Bureau of Land Management  National Wildlife Refuges – U.S. Fish and Wildlife Service

Case Study: Managing Public Lands in the United States (2)  The National Park system  National Wilderness Preservation System  Contain valuable natural resources  Use of lands controversial

Four Principles of Public Land Use  Protect biodiversity, wildlife habitat and ecosystems  No subsidies or tax breaks to extract natural resources  Fair compensation for use of property  Users of resource extractions responsible for environmental damage

Lands Managed by the Federal Government Fig , p. 417

United States Environmental Laws Under Attack  Opposition Corporate leaders Individuals who feel threatened by environmental laws State and local government officials resent implementation of federal laws  Recently most federal environmental laws and regulatory agencies weakened

Major United States Environmental Laws Fig , p. 419

Nongovernmental Organizations (NGOs)  Range from grassroots to global organizations  Bottom-up changes  Citizen-based global sustainability movement  Some industries and environmental groups working together

Students and Corporations Can Play Important Environmental Roles  Student environmental awareness increasing  Environmental audits – change on campuses  Capitalism thrives on change and innovation to drive technology and profits  CEOs and investors see profits by selling green products and services

Importance of Environmental Security  As important as military and economic security  Depletion of the natural capital leads to instability  Terrorism and violence bred and fueled by poverty, injustice, and inequality

Stronger International Environmental Policies  United Nations and other international organizations influential  International Organizations Expand understanding of environmental issues Gather and evaluate environmental data Develop and monitor international treaties Provide grants and loans to reduce poverty Helped >100 nations develop environmental laws and institutions

Trade-offs: Global Efforts to Solve Environmental Problems Fig , p. 422

Shift toward Environmentally Sustainable Societies  Foster cooperate to make transition  Guidelines: Emphasize prevention Use well-deigned and carefully monitored marketplace solutions Cooperate and innovate Stop exaggerating – happens on both sides

Human-centered Environmental Worldviews  Differing worldviews affect beliefs, behaviors, and lifestyles  Planetary management worldview Other species have only instrumental value  Stewardship worldview

Life-centered and Earth-centered Worldviews  Environmental wisdom worldview  Part of life community  Earth does not need saving – we need to save our own species

Comparison of Three Major Environmental Worldviews Fig , p. 424

Environmental Literacy (1)  Develop respect for all life  Understand how life sustains itself  See the big picture – connections  Think critically to gain environmental wisdom  Understand and evaluate environmental worldviews  Learn to evaluate consequences  Foster a desire to make the world a better place

Avoid the Mental Traps  Gloom-and-doom pessimism  Blind technological optimism  Paralysis by analysis  Faith in simple, easy answers

Major Components of Environmental Literacy Fig , p. 426

We Can Learn from Nature  Kindle a sense of awe, wonder, mystery, and humility  Develop a sense of place  Choose to live more simply and sustainably  Gandhi’s principle of enoughness  Reduce environmental footprint

Interrelated Components of Sustainability Revolution (1)  Biodiversity protection  Commitment to efficiency  Energy transformation  Pollution prevention  Emphasis on sufficiency  Demographic equilibrium  Economic, political transformation

The Sustainability Dozen