Environmental Economics

Economics – the system by which goods and services are produced, distributed and consumed.
Three types of capital (resources):
Natural resources and biodiversity services.
Human resources providing physical and mental labor.
Manufactured resources such as machinery, equipment and factories

Markets and the Environment

Market-based economies:
Buyers and sellers interact competitively to make economic decisions about how good and services are produced, distributed and consumed.
Markets cannot be relied upon to provided adequate levels of public service.
Public Service: That which is provided by government to people living within its jurisdiction, such as:

Environmental Economic Models

Neoclassical Economists
View natural resources as important but not indispensable.
Depleted natural resources can be replaced with substitutes.
Continuing economic growth is necessary for providing business with profits and workers with jobs.

Ecological Economists
Contend there are no substitutes for vital natural resources: air, water, soil, biodiversity.
No substitutes for ecological services: climate control, air and water purification, pest control and nutrient recycling.
Contend conventional economic growth is ultimately unsustainable: irreplaceable natural capital can be depleted and degraded.
Warn that many are getting rich in the short term by depleting and degrading natural capital that is necessary to sustain all life and economy in the long term.

Ecological Economist Model
1. Resources are limited.
     Should not be wasted.
     No substitutes for vital resources.
2. Encourage environmentally beneficial and sustainable economic development.
     Discourage environmentally harmful and unsustainable economic growth.
3. Use of Full-Cost Pricing
     Market pricing should account for the harmful environmental and health effects of producing goods and services.

What Is Being Done?

Wal-Mart Initiatives
Wal-Mart Initiatives follow-up article

Wal-Mart: A Closer Look

Project Gigaton: Walmart initiative to avoid one billion metric tons of greenhouse gases from the global value chain by 2030.

Why Be Environmentally Economic?

Bottom Line:
     Environmentally sound business policy is good for the environment.
     Increases profits.
2017 Power Forward 3.0 report by CDP (Carbon Disclosure Project), Calvert Research and Management, Ceres (a sustainability nonprofit organization), WWF (World Wildlife Fund):
“...businesses are reaping…cost savings from energy efficiency projects…, with 190 companies collectively reporting $3.7 billion in annual savings.”

Poverty and the Environment

Poverty occurs when peoples needs for food, water, shelter, health and education are unfulfilled.
1 in 5 people in the world live in extreme poverty.
Poverty causes harmful environmental effects.
Daily struggle for food and water means the poor degrade ecosystems by over-exploitation, without regard for sustainability.
Exacerbated by large, growing populations.
Most of the world’s population growth occurs in underdeveloped nations

Micro-Loans

Small amount/low interest rate loans.
First created by Bangladeshi economist Muhammad Yunus, in 1983. (Co-Winner of 2006 Nobel Peace Prize)
Decreases poverty by helping the poor build better lives by working their way out of poverty.
Approx. half of microborrowers move above the poverty line within 5 years of receiving a loan.
What can you do to help?

---