Global Economic Challenges Chapter 20

Goals & Objectives 1. Malthus’s views on population growth. 2. Importance of nonrenewable resources. 3. Renewable energy resources. 4. Resources endangered by population growth. 5. Price system & conservation. 6. Government regulation of pollution. 7. Future of market economy’s.

The Global Population Issue Thomas Malthus: 1798, Essay on the Principles of Population Subsistence: population produces only enough to support itself. Resources & Population Growth. Malthus Viewpoints: population would outgrow resources or create scarcity

Malthus & Population Growth

Was Malthus Wrong? 1. Advancements in technology. 2. Advancements in productivity. 3. Smaller families. 4. Illegal immigration and resources.

U.S. Agriculture Productivity

World Population Trends 1. World annual growth: 1.4% 1. Predictions: : 8 Billion :12 Billion

Growth in Population

Nonrenewable Energy Sources Oil: 1973 OPEC place an embargo: on the United States; Iran embargo ended 2014 Largest: Natural gas: 2 nd ; 25% of energy consumption Coal: 3 rd ; 2/3 of world’s reserves in the U.S., Russia & China. Largest natural resource in the world. Nuclear Energy: 4 th ; 8% of all energy used in the U.S.

America’s Oil Boom

America’s Natural Gas Boom

America’s Coal Boom Continued

Nuclear Power Plants

Renewable Energy Resources 1. Hydroelectric Power: Hoover Dam, TVA, cheap oil closed down power plants in 1950’s. Most important renewable today. 2.Biomass: gasohol, wood waste, Human “poop”, 40% of renewables % government mandate (corn). 3.Solar Energy: 3 rd ; inefficient to harness 4. Wind Power: 4 th ; wind farms

Hydro-Dams

U.S. Wind Farms

Other Resources 1.Water: 80% used in agriculture. 1.Aquifers: 40% of water used to irrigate crops. 1.Ogallala Aquifer: Largest in U.S.; Texas to Nebraska. 2.Land: fixed supply 1.Urban sprawl: farmers moving further out of suburbs as population increases.

U.S. Aquifers

The Price System  Scarcity: Too little.  Glut: Too much.  Environmental Damages: pollution  Subsistence:  Iron Triangles & Subsidies:  Economic Growth: taxes, subsidies, regulations.

Pollution and Economic Incentives The Incentive to Pollute: profit motive & irresponsibility of industry. The Incentive to Pollute: profit motive & irresponsibility of industry. Acid rain: water and sulfur dioxide Acid rain: water and sulfur dioxide Controlling Pollution: Congress and environmental standards for: air, water, auto emissions. Controlling Pollution: Congress and environmental standards for: air, water, auto emissions. Pollution Permits: Tax amount of toxic substances; Carbon Taxes. (EPA). Pollution Permits: Tax amount of toxic substances; Carbon Taxes. (EPA).

Pollution Permits 1993: Chicago Board of Trade. 1993: Chicago Board of Trade. One-ton permits: $ per ton. One-ton permits: $ per ton. Environmental Groups purchased permits driving up the costs for Utility companies. Environmental Groups purchased permits driving up the costs for Utility companies. Additional pollution costs handed down to consumers in the form of inflated energy prices. Additional pollution costs handed down to consumers in the form of inflated energy prices.

Pollution Permits & Prices

Economics & Future 1. Cost-benefit analysis: costs vs. benefits. 2. Modified Free Enterprise: Taxes, regulations imposed by government to encourage or discourage business activity.