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CHAPTER 4 ENVIRONMENTAL ECONOMICS AND CONSUMPTION
WALL TO WALL, CRADLE TO
CRADLEA leading carpet company takes a chance on
going green
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WALL TO WALL, CRADLE TO CRADLE A leading carpet company takes a chance on going green4
At the end of this unit you will know:• How the ecological footprint
relates to the use of natural capital and interest
• How we can use factors influencing our actions to reduce environmental impact
• Differences between costs and benefits of conventional economics and environmentally based economics.Learning
Outcomes
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WALL TO WALL, CRADLE TO CRADLE A leading carpet company takes a chance on going green4
Consideration of our ecological footprint allows us to measure our impact on Earth based on resource use. More considerate consumption choices need to include aspects of economics and social costs as well as environmental costs.
Main Concept
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TERMS TO KNOW:SustainableEconomicsEcosystem services
WALL TO WALL, CRADLE TO CRADLE A leading carpet company takes a chance on going green4
Case Study: Interface CarpetWorld’s leading seller of replaceable carpet tiles
Problem: Carpet manufacturing from petroleum is toxic and releases large quantities of air and water pollutants. It is also a non-sustainable, resource intensive product.
Action: Looked to nature as an economic model and initiated new processes and material use. Initiated a “take back and recycle” program at the end of the product’s life.Established a “lease” program to enjoy the services of carpet without actually buying the carpet.
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WALL TO WALL, CRADLE TO CRADLE A leading carpet company takes a chance on going green4
Choices made by businesses and consumers impact the environment—energy, water, waste.Environmentally mindful businesses look to nature as a model.Ecosystems goods and services—timber and water are goods; air purification and nutrient cycling are services.Some services, such as oxygen production, cannot be replaced.
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WALL TO WALL, CRADLE TO CRADLE A leading carpet company takes a chance on going green4
Choices made by businesses and consumers impact the environment—energy, water, waste.Environmentally mindful businesses look to nature as a model.Ecosystems goods and services—timber and water are goods; air purification and nutrient cycling are services.Some services, such as oxygen production, cannot be replaced.
Value of ecosystem goods and services
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WALL TO WALL, CRADLE TO CRADLE A leading carpet company takes a chance on going green4
Choices made by businesses and consumers impact the environment - energy, water, waste…Environmentally mindful businesses look to nature as a modelEcosystems goods and services – timber and water are goods, air purification and nutrient cycling are servicesSome services, such as oxygen production, cannot be replaced
Value of ecosystem goods and services
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Businesses and individuals impact the environment with their economic decisions4
TERMS TO KNOW:Ecological footprint
Natural capitalNatural interest
Ecological footprint – Land needed to provide resources
and to assimilate waste
An intact ecosystem is naturally sustainable. Degradation of the
system prevents nature from providing goods and services–a
threat to our future economically, socially, and
environmentally.
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Businesses and individuals impact the environment with their economic decisions4
TERMS TO KNOW:Ecological footprint
Natural capitalNatural interest
Ecological footprint – Land needed to provide resources
and to assimilate waste
An intact ecosystem is naturally sustainable – degradation of the system prevents nature
from providing goods and services - threat to our future
economically, socially, and environmentally.
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Businesses and individuals impact the environment with their economic decisions4
TERMS TO KNOW:Ecological footprint
Natural capitalNatural interest
Ecological footprint – Land needed to provide resources
and to assimilate waste
An intact ecosystem is naturally sustainable. Degradation of the
system prevents nature from providing goods and services—
a threat to our future economically, socially, and
environmentally.
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Businesses and individuals impact the environment with their economic decisions4
TERMS TO KNOW:Ecological footprint
Natural capitalNatural interest
Ecological footprint – Land needed to provide resources
and to assimilate waste
An intact ecosystem is naturally sustainable – degradation of the system prevents nature
from providing goods and services - threat to our future
economically, socially, and environmentally.
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Businesses and individuals impact the environment with their economic decisions4
TERMS TO KNOW:Ecological footprintNatural capitalNatural interestNatural capital – Consumable resources like air, water, trees, fish, and the systems that produce them
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Businesses and individuals impact the environment with their economic decisions4
TERMS TO KNOW:Ecological footprintNatural capitalNatural interestNatural capital – Consumable resources like air, water, trees, fish, and the systems that produce them
Natural interest – What is produced by the capital over time—more trees, fish, and oxygen
How much of the interest could we “spend” without depleting capital?
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Businesses and individuals impact the environment with their economic decisions4
TERMS TO KNOW:Ecological footprintNatural capitalNatural interest
Financial Economic Example:Deposits or investments earn additional money.
Spending no more than the interest allows the capital to continue making money.
Spending the interest and any portion of the capital will deplete both the source and the benefits.
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Businesses and individuals impact the environment with their economic decisions4
TERMS TO KNOW:Ecological footprintNatural capitalNatural interest
Ecological Economic Example:Natural capital produces additional product (interest).
Consuming no more than the interest allows the natural capital to continue making more product.
Consuming the interest and any portion of the capital will deplete both the source and the benefits.
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Businesses and individuals impact the environment with their economic decisions4Case Study: Interface CarpetUsing the financial and ecological examples, Interface set a goal to put back more resources than consumed.
“Restorative enterprise”
Reduced energy usage from fossil fuels by 55%
Reduced total energy usage by 43%
Maximized energy efficiency with skylights, solar tubes, energy trackers, better heating and air systems
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Businesses and individuals impact the environment with their economic decisions4
TERMS TO KNOW:IPAT modelThe IPAT model used to estimate an ecological footprint for a population.
It is based on size of the population, level of affluence, and impact of technology.
Affluent and technology-dependent populations use more resources and generate more waste.
Note that technology can also have a beneficial effect when it increases efficiency.
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Businesses and individuals impact the environment with their economic decisions4
TERMS TO KNOW:IPAT modelThe IPAT model used to estimate an ecological footprint for a population.Case Study: Interface CarpetUsing technology in a beneficial way, Interface developed new adhesives from recycled soda bottles.
No VOCs, easier replacement of damaged tiles
Reduced health risks, waste, and footprint
I = (P x A)/T
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Businesses and individuals impact the environment with their economic decisions4
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Mainstream economics supports some actions that are not sustainable4
TERMS TO KNOW:Internal costExternal costTriple-bottom lineTrue cost
Mainstream economics does not account for all potential costs—costs associated with environmental stress during resource extraction, clean-up costs for waste from production, healthcare costs from toxic exposure, etc
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Mainstream economics supports some actions that are not sustainable4
TERMS TO KNOW:Internal costExternal costTriple-bottom lineTrue cost
Mainstream economics does not account for all potential costs – Costs associated with environmental stress during resource extraction, clean-up costs for waste from production, healthcare costs from toxic exposure, etc.
Internal costs are included when the product is priced.
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Mainstream economics supports some actions that are not sustainable4
TERMS TO KNOW:Internal costExternal costTriple-bottom lineTrue cost
Mainstream economics does not account for all potential costs—costs associated with environmental stress during resource extraction, clean-up costs for waste from production, healthcare costs from toxic exposure, etc.
External costs are paid by the public at large from degraded health, ecosystems, or opportunities.
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Mainstream economics supports some actions that are not sustainable4
TERMS TO KNOW:Internal costExternal costTriple-bottom lineTrue cost
Linear production models assume that natural and human resources are infinite. We can either always get more or substitute for something else.
Closed-loop systems consider the life of a product, including its disposal throughout the production process.
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Mainstream economics supports some actions that are not sustainable4
Linear production models assume that natural and
human resources are infinite. We can either always get
more or substitute for something else.
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Mainstream economics supports some actions that are not sustainable4
Closed-loop systems consider the life of a
product, including its disposal throughout the
production process.
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Businesses can learn a great deal about how to be sustainable from nature4
TERMS TO KNOW:Closed-loop systemCradle to cradleDiscount future valueEnvironmental/ecological economicsSustainable development
Example of new ideas in business
A Japanese company, “U Corporation,” collects used
cooking oil from over 5000 Tokyo restaurants for conversion into
biodiesel to fuel city buses.
Yumi Someya – Head of U Corporation in Tokyo
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Businesses can learn a great deal about how to be sustainable from nature4
TERMS TO KNOW:Closed-loop systemCradle to cradleDiscount future valueEnvironmental/ecological economicsSustainable development
A service economy that focuses on providing the consumer the
service desired, rather than product, decreases resource
drain and lessens waste while still potentially providing a profit
for the seller.
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TERMS TO KNOW:Closed-loop systemCradle to cradleDiscount future valueEnvironmental/ecological economicsSustainable development
Businesses can learn a great deal about how to be sustainable from nature4
Linear, product-based economy – generally unsustainable
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Businesses can learn a great deal about how to be sustainable from nature4
Cyclical service economy – low waste and high sustainability
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There are tactics for achieving sustainability4
TERMS TO KNOW:Ecolabeling
Moving toward sustainability can present some real challenges for businesses.
Upgrade costsLack of funding for improvementsCompetitive disadvantage based on cost recovery
Consumers will have to put their buying power behind their environmental ideals.
Governments can shift incentive dollars to encourage sustainability.
Topics for continued discussion:
Life-cycle analysisFair tradeShare programsLEED certificationBeware of “greenwashing”!
Ecoscraps
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PERSONAL CHOICES THAT HELP4
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UNDERSTANDING THE ISSUE4
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UNDERSTANDING THE ISSUE4
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ANALYZING THE SCIENCE4
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MAKING CONNECTIONS4
“To promote the transition to sustainable ways of living and a global society founded on a shared ethical framework that includes respect and care for the community of life, ecological integrity, universal human rights, respect for diversity, economic justice, democracy, and a culture of peace.”
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