1. Sustainability, Economics and Equity
Chapter 20
Sustainability, Economics and Equity

2. Objectives
Discuss sustainability in a variety of environmental contexts including human well being
Give example of economic tools to solve environmental problems.
Define GDP and evaluate ways in which the use of economic analysis can do a better job of including the costs of activities on the environment (internal and external costs)
Understand the role global and US agencies, laws and regulations in protecting natural and human capital.

3. Case Study
Assembly Plants, Free Trade and Sustainable Systems: Maquiladoras in Mexico
? What is a Maquiladora
? Why are they located in Mexico
?What are problems that arise from the location of the Maquiladora
? What is the goal of environmental regulation

4. I. Sustainability the goal of sound environmental science and policy
Economics: examines how humans either as individuals or companies allocate resources in production, distribution and consumption of goods and services.
Supply, Demand and the Market
A market occurs wherever people engage in trade. In a market economy, the cost of the good is determined by supply and demand.

5. Capital: Natural, Manufactured, Human
Business has no obligation other than to make a profit for owners or investors; economic decisions are driven by supply and price.
Markets typically do not take cost of production into account:
Internal costs: costs that a business bases its price on; include costs like materials, energy, labor, plant, equipment and overhead.
Externalities/external costs: External costs are costs that are NOT included in what the business bases its price on.
the cost of disposing of the product at the end of its useful life
the environmental degradation caused by the emissions, pollutants and wastes that production creates
the cost of health problems caused by toxic ingredients

6. Figure 24.3
This graph shows supply and demand curves and market equilibrium for a good such as oil in a market economic system. If all factors except supply, demand, and price are held fixed, market equilibrium occurs at the point where the supply and demand curves intersect. This represents the price at which sellers are willing to sell and buyers are willing to pay for the good or service provided. Question: How would a decrease in the available supply of oil shift the market equilibrium point on this diagram?
A manufacturer will supply a certain number of units of an item based on the revenue that will be created. A consumer will demand a certain number of units of that item based on the price paid. The intersection determines the market equilibrium
Fig. 24-3, p. 571

7. Supply and Demand with Externalities
When the cost of emitting pollutants is included in the price of a good the price increases, causing a shift in the supply curve and a new equilibrium.

8. Optimum resource use: The cost of extracting coal (blue line) from a particular mine rises with each additional unit removed. Mining a certain amount of coal is profitable, but at some point the marginal cost of further removal exceeds the monetary benefits (red line) unless some factor such as scarcity raises the value of the coal remaining in the mine. Where the two curves meet at current prices is theoretically the optimum level of resource use. Question: How would the location of the optimum level of resource use shift if the price of coal doubled?

9. II. Sustainable Economic Systems: Economic Tools to Deal with Environmental Problems
GDP and Social Progress Indicator
GDP: Gross Domestic Product. Gauge economic wealth of a country in terms of productivity and consumption.
SPI (Social Progress Indicator) a value that assesses personal rights, health and ecosystem stability
Full Cost Pricing: Internalizing the External Costs
Human Health Effects of Climate Change-NPR
GNP-total value of all goods and services produced inside and outside a country
Hide negative effects-does not measure quality of life: pollution ,crime, sickness,
GPI: includes wealth distribution, level of eduation, resource depletion, personal comsumption.
Eco Label: Fair trade coffee; fish caught with sustainable methods.
Regulation: require oil tankers to have double hull-prevent an oil spill
Green Taxes: pay per unit to get rid of Green Economy I want to buy new computer equipment. I tell vernier to take stuff back and I will buy new. They disassemple and reuse/recycle. They may need a broker to do something with Materials they recycle.
Subsidies-logging industry, mineral resources and oil
Full cost-include worker health and pollution costs
Subsidy shift-renewable resources
Tradable rights-get pollution credits that can be saved or sold. Pros are that it is better than our current regulatory system/cons-big gets bigger and pollution is concentrated.
Pollution Bond-mining operations post a sum of money to ensure they clean up.o Bankruptcy-We have a high GNP but are depleting our resources and polluting our air and water.

10. Eco-Labeling: Fair trade coffee; fish caught with sustainable methods
Chipotle Starts Labeling GMO Ingredients
Ben and Jerry’s

11. Green Taxes-Effluent Fees: tax pollution and waste instead of wages and profits
Subsidy Shift/remove subsidies that encourage excessive use of fossil fuels, water etc
Provide tax deductions/rebates implementation or use of renewables/conservation measures (electric car, low flow toilet, thermal-pane window)
Tradable Pollution Rights: Cap and Trade
Post a Pollution Bond
Provide Research grants to develop technologies that foster sustainable resource use.
Microlending

14. III. The Role of Government in Environmental Management
Environmental Worldviews: how you think the world works, how you view your role in it and what your believe to be proper environmental behavior.
Anthropocentric: human-centered, considers that human beings have intrinsic value and nature should provide for our needs.
Biocentric: life-centered, says humans are just one of many species on Earth, all of which have equal value.
Ecocentric: Earth-centered, places equal value on all living organisms and the ecosystems in which they live, and it demands that we consider nature free of any associations with our own existence.
Anthropocentric: human centered; nature should provide for our needs
Stewardship: careful and responsible management and care for earth and resources
Biocentric: humans are just one of many species all of which have equal intrinsic value
Ecocentric: earth centered-equal value on all living organisms

15. How is Environmental Policy Made?
Function of a democratic government is to develop and implement policies for dealing with issues. Policy is composed of laws, regulations and funding.
Lobbying: Individuals or groups try to persuade legislators to vote or act in their favor
Corporations are the source of billions of dollars used to finance election campaigns.
Many failing states become training grounds for terrorists and drug producers and create environmental refugees. Environmental security should be a major focus of diplomacy, policy and aid. Create a World Environmental Organization.

16. Role of Citizen Environmental Groups
World Agencies: UN, UNEP, World Bank, WHO
NGOs-nonprofit/nongovernmental organizations: WWF, The Nature Conservancy, Sierra Club, Greenpeace, Natural Resources Defense Council, Conservation International, International Rivers
United States Agencies: EPA, OSHA, DOE
Global Environmental Security: research shows a strong correlation between growing scarcities of resources such as cropland, water, forests and the spread of civil unrest.
Many failing states become training grounds for terrorists and drug producers and create environmental refugees. Environmental security should be a major focus of diplomacy, policy and aid. Create a World Environmental Organization.