Environmental Economics, Politics, and Worldviewspeople.nnu.edu/jocossel/BIOL1040/BIOL1040 Online Delivery/Chpt17... · Politics, and Worldviews Chapter 17 . ... (2) the market prices

Environmental Economics, Politics, and Worldviews

Chapter 17

Three big ideas • A more sustainable economic system would include the

harmful environmental and health costs of producing and using goods and services in their market prices, subsidize environmentally beneficial goods and services, tax pollution and waste instead of wages and profits, and reduce poverty.

• Individuals can work together to become part of the political processes that influence how environmental policies are made and implemented.

• Living more sustainably means becoming environmentally literate, learning from nature, living more simply, and becoming active environmental citizens.

HOW ARE ECONOMIC SYSTEMS RELATED TO THE BIOSPHERE?

Section 17-1

Not all market systems are free-market systems

• Economics is a social science that deals with the production, distribution, and consumption of goods and services to satisfy people’s needs and wants.

• Market-based economic system—buyers and sellers interact in markets to make economic decisions about how goods and services are produced, distributed, and consumed. – In a free-market economic system, all economic

decisions are governed solely by the competitive interactions of supply, demand, and price.


– If the demand for goods or services is greater than the supply, the price rises, and when supply exceeds demand, the price falls.

– Ideally, (1) no company would control the prices of any goods or services; (2) the market prices would include direct and indirect costs; and (3) consumers would have full information about the beneficial and harmful environmental and health effects of goods and services.

– Many companies push for government support such as subsidies, tax breaks, trade barriers, or regulations that will give their products a market advantage over their competitors’ products.


• Three types of capital, or resources, are used to produce goods and services. – Natural capital includes resources and services

produced by the earth’s natural processes, which support all economies and all life.

– Human capital, or human resources, includes people’s physical and mental talents that provide labor, innovation, culture, and organization.

– Manufactured capital, or manufactured resources, are items such as machinery, equipment, and factories made from natural resources with the help of human resources.

Most economic systems use three types of resources to produce goods and services

Economists disagree over the importance of natural capital and the sustainability of economic growth

• Economic growth for a city, state, country, or company is an increase in its capacity to provide goods and services to people.

• Economic development is the improvement of human living standards made possible by economic growth.

• High-throughput economies attempt to boost economic growth by increasing the flow of natural matter and energy resources through their economic systems to produce more goods and services.

The high-throughput economies of most of the world’s more-developed countries rely on continually increasing the flow of

energy and matter resources to increase economic growth


• Neoclassical economists, following the ideas of Alfred Marshall (1842–1924) and Milton Friedman (1912–2006) view the earth’s natural capital as a subset, or part, of a human economic system and assume that the potential for economic growth is essentially unlimited and is necessary for providing businesses with profits and workers with jobs.


• Ecological economists believe that: – There are no substitutes for many vital natural

resources such as air, water, and biodiversity, or for nature’s free ecological services such as climate control, pest control, and nutrient recycling.

– Economic systems are subsystems of the biosphere that depend heavily on the earth’s irreplaceable natural resources and services.

– Conventional economic growth eventually will become unsustainable because it can deplete or degrade various irreplaceable forms of natural capital, and because it will exceed the capacity of the environment to handle the pollutants and wastes we produce.


• The models of ecological economists are built on three major assumptions. – Resources are limited and should not be wasted; there

are no substitutes for most types of natural capital. – We should encourage environmentally beneficial and

sustainable forms of economic development, and discourage environmentally harmful and unsustainable forms of economic growth.

– The harmful environmental and health effects of producing and using economic goods and services should be included in their market prices (full-cost pricing), so that consumers will have more accurate information about these effects.


• Many environmental economists argue that some forms of economic growth are not sustainable and should be discouraged through fine-tuning existing economic systems and tools.

Ecological economists see all human economies as subsystems of the biosphere that depend on natural

resources and services provided by the sun and earth

HOW CAN WE USE ECONOMIC TOOLS TO DEAL WITH ENVIRONMENTAL PROBLEMS?

Section 17-2

Most things cost more than we might think

• The market price, or direct price, that we pay for something does not include most of the indirect, or external, costs of harm to the environment and human health associated with its production and use.

• Hidden costs are the indirect or external costs that can have short- and long-term harmful effects on other people, on future generations, and on the earth’s life-support systems.


• Analysts say that full-cost pricing would: – Reduce resource waste, pollution, and

environmental degradation. – Improve human health by encouraging

producers to invent more resource-efficient and less-polluting methods of production.

– Enable consumers to make more informed decisions about the goods and services they buy.


• Phase in shift to full-cost pricing so that environmentally harmful businesses would have time to transform themselves and consumers have time to adjust their buying habits.

• Resistance to full-cost pricing. – Opposition from producers of harmful and wasteful

products and services who would have to charge more for them and might go out of business.

– Difficulty estimating environmental and health costs and how they might change in the future.

Environmental economic indicators could help us reduce our environmental impact

• Gross domestic product (GDP) is the annual market value of all goods and services produced by all firms and organizations, foreign and domestic, operating within a country.

• The per capita GDP is the GDP divided by the country’s total population at midyear.

• GDP provides a standardized, useful method for measuring and comparing the economic outputs of nations, and does not distinguish between goods and services that are environmentally or socially beneficial and those that are harmful.

Environmental economic indicators could help us reduce our environmental impact

• Environmental and ecological economists and environmental scientists call for new indicators help monitor environmental quality and human well-being. – Genuine progress indicator (GPI) is the GDP plus the

estimated value of beneficial transactions that meet basic needs, but in which no money changes hands, minus the estimated harmful environmental, health, and social costs of all transactions.

– In the U.S., between 1950 and 2004 the per capita GDP rose sharply and the per capita GPI stayed nearly flat and even declined slightly, which shows that even if a nation’s economy is growing, its people are not necessarily better off.

Comparison of the per capita GDP and GPI in the US between 1950 and 2004

We can reward environmentally sustainable businesses

• Governments can use several strategies, including subsidies, to encourage or force producers to work toward full-cost pricing.

• Perverse subsidies and tax breaks enable businesses to operate in such a way that they do damage to the environment or to human health, such as: – Extracting minerals and oil. – Cutting timber on public lands. – Irrigating with low-cost water. – Overfishing commercially valuable aquatic species.

We can reward environmentally sustainable businesses

• Companies spend considerable money lobbying, or trying to influence governments to continue and even increase their subsidies.

• Some countries have begun reducing these subsidies. • Governments could phase in environmentally beneficial

subsidies and tax breaks for: – Pollution prevention. – Ecocity development. – Sustainable forestry, agriculture. – Sustainable water use. – Energy efficiency and renewable energy use. – Actions to slow projected climate change.

Tax pollution and wastes instead of wages and profits

• Use green taxes, or ecotaxes, to help include many of the harmful environmental and health costs of production and consumption in market prices.

• To many analysts, the tax system in most countries is backward because it discourages what we want more of—jobs, income, and profit-driven innovation—and encourages what we want less of—pollution, resource waste, and environmental degradation.


• Three requirements for successful implementation of green taxes. – Phased in over 10–20 years to allow

businesses to plan for the future. – Income, payroll, or other taxes would have to

be reduced or replaced so that there is no net increase in taxes.

– The poor and middle class would need a safety net to help provide them with essentials such as fuel and food.


• Polls indicate that once such tax shifting is explained to voters, 70% of European and U.S. voters support shifting toward a green tax.

• In some countries in Europe, green taxes have helped to create jobs, lower taxes on wages, and increased use of renewable energy resources.

Using green taxes to help reduce pollution and resource waste has advantages and disadvantages

Environmental laws and regulations can discourage or encourage innovation

• Environmental regulation is a form of government intervention in the marketplace that is widely used to help control or prevent pollution and to reduce resource waste and environmental degradation.

• Laws that: – Set pollution standards. – Regulate harmful activities such as the release of toxic

chemicals into the environment. – Protect certain irreplaceable or slowly replenished

resources such as public forests.

Environmental laws and regulations can discourage or encourage innovation

• Currently most environmental laws enforced through a command-and-control approach; often concentrating on cleanup instead of prevention.

• Incentive-based environmental regulations use the economic forces of the marketplace to encourage businesses to be innovative in reducing pollution and resource waste.

• Innovation-friendly environmental regulation sets goals and frees industries to meet them in any way that works, and allows enough time for innovation.

Using the marketplace to reduce pollution and resource waste

• One incentive-based regulation system allows the government to set acceptable pollution/use limits or caps and gives or sells companies a certain number of tradable pollution or resource-use permits.

• The U.S. has used this cap-and-trade approach to reduce the emissions of sulfur dioxide and several other air pollutants.

• Effectiveness depends on how high or low the initial cap is set and on the rate at which the cap is reduced to encourage further innovation.

Using tradable permits to reduce pollution and resource waste has advantages and

disadvantages

Reducing pollution and resource waste by selling services instead of things

• A proposed new economic model would provide profits while greatly reducing resource use, pollution, and waste for a number of goods by shifting from the current material-flow economy to a service-flow one. – Customers rent/lease services that goods provide. – A manufacturer or service provider makes more money if its

product uses the minimum amount of materials, lasts as long as possible, is energy efficient, produces as little pollution as possible in its production and use, and is easy to maintain, repair, reuse, or recycle

– Since 1992, Xerox has been leasing most of its copy machines as part of its mission to provide document services instead of selling photocopiers.

Reducing poverty can help us deal with environmental problems

• Poverty is defined as the inability to meet one’s basic economic needs. – 1.4 billion people struggle to survive on an

income equivalent to less than $1.25 a day. – Poverty has numerous harmful health and

environmental effects. – Reducing poverty benefits individuals,

economies, and the environment and helps to slow population growth.

Reducing poverty can help us deal with environmental problems

• Ways to reduce poverty and its harmful effects: – Mount a massive global effort to combat malnutrition and

the infectious diseases that kill millions of people prematurely.

– Provide primary school education for all children and for the world’s nearly 800 million illiterate adults.

– Stabilize population growth. – Sharply reduce the total and per capita ecological

footprints. – Large investments in small-scale infrastructure and

sustainable agriculture projects. – Encourage lending agencies to make small loans to poor

people who want to increase their income.

The Millennium Development Goals present challenges

• Millennium Development Goals included sharply reducing hunger and poverty, improving health care, achieving universal primary education, empowering women, and moving toward environmental sustainability by 2015.

• More-developed countries agreed to devote 0.7% of their annual national income toward achieving the goals.

• By 2009, only five countries—Denmark, Luxembourg, Sweden, Norway, and the Netherlands—had donated what they had promised; the U.S.—the world’s richest country—gives only 0.16% of its national income to help poor countries.

What should our priorities be?

We can use lessons from nature to shift to more environmentally sustainable economies

• There is a sharp contrast between the beliefs of neoclassical economists and ecological economists.

• The best long-term solution to our environmental and resource problems is to shift from a high-throughput (high-waste) to a more sustainable low-throughput (low-waste) economy.

Learning and applying lessons from nature can help us to design and manage more sustainable low-throughput economies

Fig. 17-10, p. 445

Inputs (from environment)

Outputs (into environment)

System throughputs

High-quality energy

Energy conservation

Low-quality energy (heat) Low-waste

economy Waste and pollution

prevention Pollution control

Waste and pollution

High-quality matter

Recycle and reuse

Presenter

Presentation Notes

Active Figure 17-10 Solutions: Learning and applying lessons from nature can help us to design and manage more sustainable low-throughput economies. See an animation based on this figure at www.cengagebrain.com. Question: What are three ways in which your school could promote more sustainable economic and environmental practices?


• Make this transition by: – reusing and recycling most nonrenewable matter

resources – using renewable resources no faster than natural

processes can replenish them – reducing resource waste by using matter and energy

resources more efficiently – reducing environmentally harmful forms of

consumption – emphasizing pollution prevention and waste reduction – slowing population growth to keep the number of

matter and energy consumers growing slowly.


• Simple golden rule: “Leave the world better than you found it, take no more than you need, try not to harm life or the environment, and make amends if you do.”

• Large numbers of new green jobs, which are devoted to improving environmental quality, developing cleaner and low-carbon energy resources, and promoting environmental sustainability.

We can use these strategies for shifting to eco-economies during this century

Environmentally Sustainable Businesses and Careers

HOW CAN WE IMPLEMENT MORE SUSTAINABLE AND JUST ENVIRONMENTAL POLICIES?

Section 17-3

Dealing with environmental problems in democracies is not easy

• A government’s policies sets the laws and regulations it enforces and the programs it funds.

• Politics is the process by which individuals and groups try to influence or control the policies and actions of governments at local, state, national, and international levels.

• Representative democracy is government by the people through elected officials and representatives.


• In a constitutional democracy, a constitution provides the basis of government authority, and, in most cases, limits government power by mandating free elections and guaranteeing free speech.

• Political institutions in most constitutional democracies allow gradual change to ensure economic and political stability. – The U.S. has a system of checks and balances that

distributes power among three branches of government—legislative, executive, and judicial—and among federal, state, and local governments.


• The major function of government in democratic countries is to develop and implement policies for dealing with various issues. – Develop a policy and enact it into a law. – Get funds set aside by an elected legislative

body to implement and enforce the new law. – Draw up regulations or rules for implementing

a new law.


• Pressures from many competing special-interest groups may influence policy. – Corporations are profit-making organizations. – Many nongovernmental organizations (NGOs)

are nonprofits, such as labor unions and environmental organizations.

Certain principles can guide us in making environmental policy

• Several principles designed to minimize environmental harm: – The humility principle: Our understanding of nature

and how our actions affect nature is quite limited. – The reversibility principle: Try not to make a decision

that cannot be reversed later if ends up wrong. – The net energy principle: Do not encourage the

widespread use of energy alternatives or technologies with low net energy yields.

– The precautionary principle: When substantial evidence indicates that an activity threatens human health or the environment, take precautionary measures to prevent or reduce such harm.

Certain principles can guide us in making environmental policy

– The prevention principle: Whenever possible, make decisions that help to prevent a problem from occurring or becoming worse.

– The polluter-pays principle: Develop regulations and use economic tools such as green taxes to ensure that polluters bear the costs of dealing with the pollutants and wastes they produce (full-cost pricing).

– The environmental justice principle: Establish environmental policy so that no group of people bears an unfair share of the burden created by pollution, environmental degradation, or the execution of environmental laws.

Individuals can influence environmental policy

• History shows that significant change usually comes from the bottom up, when individuals join together to bring about change.

• Without grassroots political action by millions of individual citizens and organized citizen groups: – The air you breathe and the water you drink today

would be much more polluted. – Much more of the earth’s biodiversity would have

disappeared.


• At a fundamental level, all politics is local; what we do to improve environmental quality in our own neighborhoods, schools, and work places has national and global implications.

• “Think globally; act locally.” • Environmental leaders can make a big

difference. – Lead by example, using our own lifestyle and values

to show others that change is possible and can be beneficial.


– Campaign and vote for informed and eco-friendly candidates, and by communicating with elected officials.

– Vote with our wallets—not buying their products or services and letting them know why.

– Choose one of the many rapidly growing green careers.

– Run for some sort of local office. – Propose and work for better solutions to

environmental problem.

These are some ways in which you can influence environmental policy

U.S. environmental laws and regulations have been under attack • U.S. Congress enacted a number of important

federal environmental and resource protection laws, most of them in the 1970s.

• U.S. environmental laws have been highly effective but since 1980 a strong campaign to weaken or repeal them, such as: – Some corporate leaders and other powerful people who

see them as threats to their profits, wealth, and power. – Citizens who see them as threats to their private property

rights and jobs. – State and local government officials who resent having to

implement federal laws and regulations with little or no federal funding.

U.S. environmental laws and regulations have been under attack • Since 2000, efforts to weaken most major U.S.

environmental laws and regulations have escalated.

• Some concerned citizens have worked together to improve environmental quality in their local communities.

• More than 80% of the U.S. public strongly support environmental laws and regulations and do not want them weakened, but less than 10% of the U.S. considers the environment to be one of the nation’s most pressing problems.

Some major environmental laws and their amended versions enacted in the US, 1969-1983

Citizen environmental groups play important roles

• The spearheads of the global conservation, environmental, and environmental justice movements are the tens of thousands of nonprofit NGOs working at the international, national, state, and local levels. – Grassroots groups with just a few members. – Mainline organizations like the World Wildlife

Fund (WWF), a 5-million-member global conservation organization, which operates in 100 countries.


– Groups with large memberships include Greenpeace, the Nature Conservancy, Conservation International, and the Grameen Bank.

– More than 8 million U.S. citizens belong to more than 30,000 NGOs that deal with environmental issues.

– A loosely connected worldwide network of grassroots NGOs working for bottom-up political, social, economic, and environmental change can be viewed as an emerging citizen-based global sustainability movement.


– Some grassroots environmental groups use: • Nonviolent and nondestructive tactics of protest

marches, tree sitting and lawsuits that generate bad publicity for practices and businesses that threaten or degrade the environment.

• Militant environmental groups use violent means such as destroying bulldozers and SUVs, and breaking into some types of research laboratories.

Students and educational institutions can play important environmental roles • Since the mid-1980s, there has been a boom in

environmental awareness on U.S. college campuses and in public and private schools across the U.S..

• Students, faculty, and administration work together to make environmental improvements. – Environmental audits of campuses or schools gather

data on practices affecting the environment and are used it to propose changes.

– Environmentally sustainable practices usually save money in the process.

Environmental security is as important as military and economic security

• Ecologists and many economists point out that all economies are supported by the earth’s natural capital.

• Serious new threats to global and national military and economic security are the potential for rapid climate change, increasing hunger and malnutrition, spreading water shortages, and environmental degradation.

• There is an increase in the number of failing states where governments can no longer provide security and basic services such as education, health care, and safe supplies of water for their citizens.


• The United Nations houses a large family of influential organizations including: – the U.N. Environment Programme (UNEP). – the World Health Organization (WHO). – the U.N. Development Programme (UNDP). – the Food and Agriculture Organization (FAO).


• The United Nations houses a large family of influential organizations including: – the U.N. Environment Programme (UNEP). – the World Health Organization (WHO). – the U.N. Development Programme (UNDP). – the Food and Agriculture Organization (FAO).

• Other organizations that make or influence environmental decisions include the World Bank, the Global Environment Facility (GEF) and the World Conservation Union (IUCN).


• These and other international organizations have played important roles in: – Expanding global understanding of environmental

issues; – Gathering and evaluating environmental data. – Developing and monitoring international

environmental treaties. – Providing grants and loans for sustainable economic

development and reducing poverty. – Helping more than 100 nations to develop

environmental laws and institutions.

WHAT ARE SOME MAJOR ENVIRONMENTAL WORLDVIEWS?

Section 17-4

There are a variety of environmental worldviews

• People disagree on how serious various environmental problems are as well as on what we should do about them. – Environmental worldviews are how people

think the world works and what they believe their role in the world should be.

– Widespread lack of understanding of how the earth works, keeps us alive, and supports our economies.

A comparison of three major environmental worldviews

There are a variety of environmental worldviews

• Environmental ethics—what one believes about what is right and what is wrong in our behavior toward the environment.

• People with widely differing environmental worldviews can take the same data, be logically consistent, and arrive at quite different conclusions.

Most people have human-centered environmental worldviews

• The planetary management worldview sees humans as the planet’s most important and dominant species, and we can and should manage the earth mostly for our own benefit. – The values of other species and parts of nature are

based primarily on how useful they are to us. – Human well-being depends on the degree of control

that we have over natural processes. – We can also redesign parts of the planet and its life-

support systems to support us and our ever-growing economies.

Most people have human-centered environmental worldviews

• The stewardship worldview assumes that we have an ethical responsibility to be caring and responsible managers, or stewards, of the earth. – Using the earth’s natural capital is borrowing

from the earth and from future generations. • Human-centered worldviews assume that

we have enough knowledge to be effective managers or stewards of the earth.

Some environmental worldviews are life-centered and others are earth-centered

• Recognize the inherent or intrinsic value of all forms of life, regardless of their potential or actual use to humans.

• Life-centered worldview states that we have an ethical responsibility to avoid hastening the extinction of any species through our activities. – Each species is a unique storehouse of genetic

information that should be respected and protected simply because it exists.

– Every species has the potential for providing economic benefits.


• The earth-centered environmental worldview is devoted to preserving the earth’s biodiversity and the functioning of its life-support systems for the benefit of humans and other forms of life, now and in the future. – Earth-centered worldviews believe that

humans are not in charge of the world and that human economies and other systems are subsystems of the biosphere.


• The environmental wisdom worldview sees us as part of—not apart from—the community of life and the ecological processes that sustain all life. – We should work with the earth to promote

environmental sustainability instead of trying to conquer and manage it mostly for our own benefit.

– The earth has been around for billions of years and doesn’t need saving.

– We need to save our own species and cultures, well as other species that may become extinct because of our activities

HOW CAN WE LIVE MORE SUSTAINABLY?

Section 17-5

We can become more environmentally literate

• Increase literacy by understanding three important ideas: – Natural capital matters because it supports

the earth’s life and our economies. – Our ecological footprints are immense and

are expanding rapidly. – Ecological and climate change tipping points

are irreversible and should never be crossed.

Achieving environmental literacy

We can learn from the earth • Appreciation for ecological, aesthetic, and spiritual value

of nature. • Not simply a lack of environmental literacy but also many

people lack intimate contact with nature and have a limited understanding of how it sustains us.

• Humans have more power than ever before to disrupt nature.

• Direct experiences with nature reveal parts of the complex web of life that cannot be built with technology or in a chemical lab, bought with money, or reproduced with genetic engineering.

• The healing of the earth and the healing of the human spirit are one and the same.

We can live more simply and lightly on the earth

• Sustainability is about sustaining the entire web of life.

• Ethical guidelines for achieving more sustainable and compassionate societies by converting environmental concerns, literacy, and wisdom into environmentally responsible actions: – Use the three principles of sustainability to

mimic the ways in which nature sustains itself.


– Do not deplete or degrade the earth’s natural capital.

– Do not waste matter and energy resources. – Protect biodiversity. – Repair ecological damage that we have

caused. – Leave the earth in as good a condition as we

found it, or better.


• People who have a habit of consuming excessively should to learn how to live more simply and sustainably. – Seeking happiness through the pursuit of material

things is considered folly by almost every major religion and philosophy.

– Modern advertising persistently encourages people to buy more and more things to fill a growing list of wants as a way to achieve happiness.

– Mark Twain put it: “Civilization is the limitless multiplication of unnecessary necessities.”


• Research shows that what a growing number of people really want is more community, greater and more fulfilling interactions with family, friends, and neighbors, and a greater opportunity to express their creativity and to have more fun.

• Some affluent people are adopting a lifestyle of voluntary simplicity, in which they seek to learn how to live with much less than they are accustomed to having. – A life based mostly on what one owns is not fulfilling.


– Living with fewer material possessions and using products and services that have a smaller environmental impact

– Instead of working longer to pay for bigger vehicles and houses, they are spending more time with their loved ones, friends, and neighbors.

– Shifting from a culture of “faster, bigger, and more” to one of “slower, smaller, and less.”


• Practicing voluntary simplicity is a way to apply Mahatma Gandhi’s principle of enoughness: “The earth provides enough to satisfy every person’s need but not every person’s greed. . . . When we take more than we need, we are simply taking from each other, borrowing from the future, or destroying the environment and other species.”

The sustainability eight: ways in which people can live more lightly on the earth

We can bring about a sustainability revolution during your lifetime

• Time for an environmental or sustainability revolution. • Three social science principles of sustainability:

– Full-cost pricing (from economics): in working toward this goal, we would find ways to include in market prices the harmful environmental and health costs of producing and using goods and services.

– Win-win solutions (from political science): by focusing on solutions that will benefit the largest possible number of people, as well as the environment, we might learn to work together consistently in dealing with environmental problems.

– A responsibility to future generations (from ethics): through this principle, we would accept our responsibility to leave the planet’s life-support systems in at least as good a shape as what we now enjoy, for all future generations.

Cultural shifts in emphasis that will be necessary to bring about the environmental

or sustainability revolution.

The three social science principles of sustainability

Change can occur very rapidly

Three big ideas • A more sustainable economic system would include the

harmful environmental and health costs of producing and using goods and services in their market prices, subsidize environmentally beneficial goods and services, tax pollution and waste instead of wages and profits, and reduce poverty.

• Individuals can work together to become part of the political processes that influence how environmental policies are made and implemented.

• Living more sustainably means becoming environmentally literate, learning from nature, living more simply, and becoming active environmental citizens.

Environmental Economics, Politics, and Worldviewspeople.nnu.edu/jocossel/BIOL1040/BIOL1040 Online Delivery/Chpt17... · Politics, and Worldviews Chapter 17 . ... (2) the market prices

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