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Chapter 23Economics, Environment, and Sustainability

Case Study: Making Microloans to the Poor (1)

• 1983: Muhammad Yunus – won the Nobel Peace Prize in 2006• Established Grameen (Village) Bank in Bangladesh• Provides microloans; mostly to women• Can borrow $50-$500 with very low interest rates to help

improve their life style – planting crops, starting a small business, etc.

• Half of borrowers eventually live above the poverty line within 5 years of receiving the loan.

• Microloans have spread to 58 countries and helped over 133 million people.

Muhammed Yunus with Nobel Prize

Fig. 23-1, p. 613

Economic Systems Are Supported by Three Types of Resources

• Economic systems are supported by• Natural capital – resources and services provided by

the earth• Human capital - human resources including physical

and mental talents that provide labor, organizational and management skills and innovation.

• Manufactured capital - manufactured resources such as machinery, equipment and factories.

Three Types of Resources Are Used to Produce Goods and Services

Fig. 23-2, p. 615

Market Economic Systems Depend on Interactions between Buyers and Sellers (1)• True free market system - • All economic decisions based on interactions between

supply, demand and price.• No company or group controls prices of a good or

service• Market prices include all direct and indirect costs (full-

cost pricing)• Consumers have full information about beneficial and

harmful environmental effects of goods and services• Real world - • Tax breaks, Subsidies, Trade barriers, Withholding of

negative information

Economic Growth and Economic Development

• Economic growth• Increased capacity to supply goods and services• Requires increased production and consumption• Requires more consumers

• Economic development• Improvement of living standards

• Can we have environmentally sustainable economic development?

Governments Intervene to Help Correct Market Failures

• An important example of a market failure is its inability to prevent degradation of open-access resources (clean air, open ocean).

• Public services• Environmental protection• National security• Police and fire protection• Safe food and water• Provided by government because private companies

can’t or won’t

Economists Disagree over Natural Capital, Sustainable Economic Growth (2)

• Ecological models’ three assumptions1. Resources are limited and shouldn’t be wasted2. Encourage environmentally beneficial and

sustainable forms of economic development3. Full-cost pricing needed to take into account

harmful environmental and health effects of some goods and services

• Environmental economists take middle ground between classical and ecological economists

Protecting Natural Capital

• Estimating the values of the earth’s natural capital

• Estimate nonuse values • Existence value• Aesthetic value• Bequest value, option value

Cost-Benefit Analysis Is a Useful but Crude Tool

• Cost-benefit analysis follows guidelines• State all assumptions used• Include estimates of the ecological services• Estimate short-and long-term benefits and costs• Compare the costs and benefits of alternative courses

of action

• Always uncertainties

Most Things Cost a Lot More Than We Might Think

• Market prices do not include most of the indirect or external costs

• Direct and indirect costs of a car – • We pay for the production, materials, labor and

shipping.• We pay to run it with gasoline, maintenance and

repair.• We do not account for the external costs extraction of

materials, production of wastes, disturbing land, polluting air and water, etc.

• Should indirect costs be part of the price of goods?

We Can Include Harmful Environmental Costs in the Prices of Goods, Services

• Environmentally honest market system – would include harmful environmental and health costs of goods and services in market prices.

• Why isn’t full-cost pricing more widely used?1. Many businesses would have to raise prices and

would go out of business2. Difficult to estimate environmental and health costs3. Businesses have strong influence on government –

preferential regulations, tax breaks, subsidies

Reward Environmentally Sustainable Businesses

• Phase out environmentally harmful subsidies and tax breaks

• Phase in environmentally beneficial subsidies and tax breaks for pollution prevention

• Political difficulties – Ex. Subsidies for fossil fuels and nuclear power companies totaled $56 billion in 2006. These powerful companies are able to lobby to continue their breaks and lobby against subsidies for more environmentally beneficial competitors.

Individuals Matter: Ray Anderson

• CEO of Interface, largest commercial manufacturer of carpet tiles. He was inspired to develop the nation’s first totally green corporation.

• Goals• Zero waste, Greatly reduce energy use, Reduce fossil

fuel use, Rely on solar energy, Mimic nature• How’s it working? • Company has grown and profits have increased

Ray Anderson

Fig. 23-A, p. 626

The Gap between the Rich and the Poor Is Getting Wider

• Poverty• 1.4 billion people live on less than $1.25 per day

• Can we reduce poverty?• South Korea and Singapore reduced poverty by:• Education, Hard work, Discipline, Attracted investment

capital• Important measures include:• Combat malnutrition and infectious diseases, Universal

primary school education, Stabilize population growth, Reduce total and per-capita ecological footprints, Large investments in small-scale infrastructure

Make Money and Create Jobs by Shifting to an Eco-Economy

• Hawken, Brown, and other environmental business leaders• Transition to environmentally sustainable economies• Some companies will disappear• New jobs will be created• Economic succession• Green jobs increase

Solutions: Principles for Shifting to a More Environmentally Sustainable Economy

Fig. 23-14, p. 631

Solutions: Environmentally Sustainable Development

Fig. 23-15, p. 632

Green Careers

Fig. 23-16, p. 633

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Chapter 24Politics, Environment, and Sustainability

Denis Hayes—A Practical Environmental Visionary

• Taught people to pay attention to ecological principles in deciding what policies they support and taking political action.

• Bullitt Foundation in Seattle• Focuses on urban ecological issues and restoring and

protecting ecosystem services in the surrounding environment

• Organized first Earth Day in 1970• Involved teach-ins and demonstrations on pollution,

toxic waste, nuclear power, etc.• More than 20 million people took part.

Democracy Does Not Always Allow for Quick Solutions

• Politics have harmful and beneficial effects on the environment.

• Special-interest groups pressure the government• Profit-making organizations• Nongovernmental organizations (NGOs)

• Politicians focus on problems with short-term effects, not long-term

• Three branches of government• Legislative• Executive• Judicial

The Policy Life Cycle

Fig. 24-2, p. 639

Case Study: Managing Public Lands in the United States—Politics in Action (1)

• 35% of the U.S., ¾ in Alaska, 1/5 in West

• Federal public land • U.S. Forest Service: National Forest System• Bureau of Land Management• U.S. Fish and Wildlife: National Wildlife Refuges• National Park System• National Wilderness Preservation System• Different restrictions for each

What Can You Do? Influencing Environmental Policy

Fig. 24-8, p. 647

Environmental Law Forms the Basis for Environmental Policy

• Environmental law• Body of laws and treaties that broadly define what is acceptable

environmental behavior

• Most environmental lawsuits are civil suits• Plaintiff• Defendant• Injunction• Class action suit• Negligence

U.S. Environmental Laws and Regulations Have Been under Attack (1)

• Who opposes U.S. environmental laws?• Some corporate leaders and other powerful people• Some citizens who see threats to private property rights• Some state and local officials who don’t like being

forced to implement federal laws and regulations

• Why the opposition?• Environmental issues not as easy to see now• Environmentalists as bearers of bad news

U.S. Environmental Laws and Regulations Have Been under Attack

• Since 2000, environmental laws and regulations have been weakened

• Prevent further weakening by• Repairing damage already done• Improve existing laws and regulations• Science-based environmental education• Organized bottom-up political pressure from

concerned citizens

Individuals Matter: Butterfly in a Redwood Tree

• Julia Hill: Nonviolent civil disobedience• 2 Years in a redwood tree, named Luna• Protested cutting down these ancient trees• Did not save the surrounding forest• Her message: protect biodiversity

Julia Butterfly Hill

Fig. 24-B, p. 653

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Chapter 25Environmental Worldviews, Ethics, and Sustainability

Environmental Worldviews, Ethics, and Sustainability

• Education is an important component of living sustainably. • Education includes understanding ecosystems,

developing environmental literacy, and viewing the earth as a complex, interconnected system.

• We can live sustainably through pollution prevention, waste prevention, species protection, and environmental restoration.

Test Study Guide

• Terms: natural capital, market price equilibrium point, existence value, SLAPP lawsuit

• What does the world bank say is the % of people living in poverty?• % of women receiving microloans from Grameen Bank• How do governments intervene in markets?• Examples of economic goods• From figure 23-5 – negative and positive output examples.• The yearly ecological services provided by the earth’s forests are

estimated at $?• Costs associated with a car – direct and indirect.• What is full-cost pricing? Why is it not widely used?• Examples of regulations, drawbacks of environmental fees.• Subsidies and tax breaks for environmentally harmful businesses cost the

taxpayers how much per year?

Test study guide

• What is Ray Anderson known for?• What is the trickle-down effect? Gap between rich and poor has done

what since 1980?• Who is Denis Hayes?• 4 stages for public policy• Why does the US have 3 branches of government? And what do each do?• What % of US land does government manage? Know the different

regulations for each type.• Type of suits most environmental laws are considered.• Story of Diane Wilson• What was learned fomr the Biosphere 2 experiment?• Short Answer – Environmental implications of the gap between rich and

poor getting larger, Biosphere 2 experiment, should the need for getting “more and more goods” be considered an addiction?