lecture e ecological & environmental economics
DESCRIPTION
Lecture E Ecological & Environmental Economics. Overview. Terminology Conflicting views of the economy’s relationship to nature No-Limits versus Limits to the economy views Problems with current economic theory & reality Changing signals to the economy and internalization - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/1.jpg)
Lecture EEcological & Environmental
Economics
![Page 2: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/2.jpg)
Overview• Terminology• Conflicting views of the economy’s relationship to nature• No-Limits versus Limits to the economy views• Problems with current economic theory & reality• Changing signals to the economy and internalization• Economy behaving like an ecosystem• Alternatives to measuring welfare by GDP• Globalization• Dow Jones Sustainability Index• Summary and Conclusions
![Page 3: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/3.jpg)
Economics Terminology• Economics: the study of the allocation of scarce means among
competing ends. (Daly)• Capital: wealth of property that is used or invested to produce more
wealth; the money with which an enterprise is started. Set of all physical things capable of satisfying human wants and subject to ownership. Fisher (1906)– natural, human, manmade, critical natural
• Wealth: Riches, possession of these.• Riches: a great quantity of money or property or valuable
possessions.• Money: portable pieces that can be used as a medium of exchange.
Banknotes or coins.
![Page 4: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/4.jpg)
More...• Technology: mechanical arts and applied
sciences.• Growth: increasing in size by accretion or
assimilation of material. A quantitative increase in physical dimensions or size.
• Economic Growth: rising aggregate consumption (C) or output (Q).
• Development: bring to a fuller, greater, or better state.
![Page 5: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/5.jpg)
![Page 6: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/6.jpg)
![Page 7: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/7.jpg)
![Page 8: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/8.jpg)
Empty World View – Herman Daly
![Page 9: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/9.jpg)
Full World View
![Page 10: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/10.jpg)
Physical Limits to Economy
• Malthus: absolute limits or scarcity• Ricardo: relative limits• Marx: limits due to social and political
unrest
![Page 11: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/11.jpg)
Malthus Diagram
![Page 12: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/12.jpg)
Closed Economic System
Capital TechnologyStock Stock
Production Labor
OutputConsumption Households
Capital Investment
Technology Investment
Source: Pezzey
![Page 13: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/13.jpg)
Economy with Environmental Considerations Environmental
Productivity Natural Resource StocksRenewable Non- Pollution
Capital Technology Resources Renewable StockStock Stock Resources
Production Labor
Output Waste FlowsHouseholds
Capital Investment ConsumptionUtility Environmental Amenity
Technology Investment
Clean Up Expenditure
Environmental Quality
Source: Pezzey
![Page 14: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/14.jpg)
Prevailing Economic System
• Private ownership of material resources• Public ownership of “sinks”• Perfect functioning of the market• Infinite subsitutability of resources• Subsidized disposal, energy, water
![Page 15: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/15.jpg)
Mainstream economics FALLACIES
• Marie Antoinette Economicslet agriculture fall, consume other 97% of GNP
• Technological cavalry will save uswe can substitute for soil, air, water, forests...
• “Not Beating the Wife As Much As Before” false complacency for partial success
Source: Davidson, E.A., You can’t eat GNP, Perseus, Cambridge MA 2000.
![Page 16: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/16.jpg)
Main problems with current economic theory
Externalities- costs not borne by those who create them
Badly defined property rights- environmental goods perceived as commons
The environment is not subject of rights- the environment’s interests are not legally represented in the economic system
![Page 17: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/17.jpg)
Externalities- Are equal to expenses on the elimination of a
problem. - Distort the economic rationality by influencing
decisions on the allocation of means. - Are reflected in the revenues of the whole social or
consumer groups (e.g. by making other economic actors pay for the pollution caused by them, some companies are ‘subsidized by those who incur those costs)
- May lead to exploitation of some geographical regions by others when regional distribution of labor is taken into account (e.g. migration of polluting industries)
![Page 18: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/18.jpg)
Problems with Current Economic Theory
• Assumes market prices reflect consumer willingness to pay. • Assumes that consumers are the best judge of value and that
community considerations are irrelevant.• Assumes consumers understand the value of ecological resources
provided by many biological resources. Assumes consumer, aided by the market place, knows which species are unnecessary for ecosystem maintenance.
• Assessment of economic value ignores many equity and moral considerations.
• General failure to recognize that market prices are highly distorted.
M.D. Young, Sustainable Investment and Resource Use, Parthenon Publishing Group, 1992, 24-25.
![Page 19: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/19.jpg)
Socialism collapsed because it did not allow prices to tell the economic truth. Capitalism may collapse because it does not allow prices to tell the ecological truth.
Source: Dahle, 2001.
![Page 20: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/20.jpg)
Worth of Ecosystem
• Costanza et al 1997, “The value of the world’s ecosytem goods and services,” Nature, 387:253-260.– Pollination, Raw Materials Production, Water Supply,
Waste Recycling & Pollution Control, Recreation & Education, Climate and Atmosphere Regulation, Soil Formation and Erosion Control, Control of Pests & Diseases
• Value of services: US$16 to $US54 trillion• World GNP: US$18 trillion• Ecosystem-to-GNP ratio 1.8
![Page 21: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/21.jpg)
Changing the Signals to the Economy• Currently taxes are applied to positive aspects of
behavior: wages, productivity, profit• It would be better to tax aspects that are negative:
waste, inefficiency, pollution• Possible mechanisms:
– Pollution taxes– Tradable pollution permits– Deposit fees
• Shifting impacts of production to producers is called “internalization”
![Page 22: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/22.jpg)
Internalization• Benefits of Internalization Processes
• Transparency• Across All Sectors• Flexibility• Stimulates Innovation• Polluter Pays
• Caveat: must be transnational• Cooperation between sectors• Another example of interconnectedness
![Page 23: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/23.jpg)
Government Use of Internalization Processes
Regulations Performance Standards Manufacturer Responsibility Subsidies Permits Taxes : “Tax pollution, not production” -Pollution,
excise, severance, tax credits Alternative National Accounting Systems Government as Purchaser and Facilitator (Recycled
Content Products/EPA Green Lights
![Page 24: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/24.jpg)
Tax Base Examples Effects How CommonProductiveActivities
Taxes on sales,income,payroll,corporateprofits
Distortionary: Discourageswhat it taxes, reducingemployment and earnings
Very common - thesource of most revenuein industrial countries
Excess Profitsfrom NaturalResource Use
Taxes onlogging invirgin forests,fishing
Neutral: Shares with society theexcess profits that are generatedby rising prices from naturalresources, which are caused byglobal demand and dwindlingsupplies. Neither encourages ordiscourages what it taxes, sinceresource users still earn a fairprofit.
Rare
EnvironmentalDestruction
Taxes onwater and airpollutantssuch asfertilizer run-off and lead
Corrective: Makes pollutersexperience the full costs of whatthey do, encouraging them toreduce the economic toll on thisand future generations.
Becoming morecommon, but exceptfor energy taxes notmajor revenue sources.
Table 2 Global taxing priorities (Roodman 1995)
![Page 25: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/25.jpg)
Tax shifts from work & investment to environmental damageCountry, year initiated Taxes Cut On Taxes Raised On
Revenue Shifted (%)
Sweden, 1991 Personal Income Carbon and Sulfur Emissions
1.9
Denmark, 1994 Personal Income Motor fuel, coal, electricity, water sales
2.5
Spain, 1995 Wages Motor fuel sales 0.2
Denmark, 1996 Wages,agricultrual property
Carbon emissions; pesticide, chlorinated solvents, battery sales
0.5
Netherlands, 1996 Personal income & wages
Natural gas and electricity sales
0.8
United Kingdom, 1996-7
Wages Landfilling 0.2
Finland, 1996-7 Personal income & wages
Energy sales; landfilling 0.5
![Page 26: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/26.jpg)
![Page 27: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/27.jpg)
![Page 28: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/28.jpg)
Sustainable Economic System
• Understands primary role of natural systems in the economy
• Integrates functions of industrial and natural “ecologies”
• Accounts for true costs of waste and disposal• Cradle-to-Grave responsibility for products• Penalizes waste, rewards efficiency• Provides for fair, just, meaningful, and
fulfilling employment of human resources
![Page 29: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/29.jpg)
Ecological Economics• A new transdisciplinary field addressing the
relationship between ecosystems and economic systems in the broadest sense.
• Uses the tools of conventional economics and ecology as appropriate.
• Need to establish institutions that take the long term view, a la biology.
• Economics as an ecological system.
R. Costanza, Ed. Ecological Economics, The Science and Management of Sustainability,
Columbia University Press, 1991, 3-7.
![Page 30: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/30.jpg)
Relationships of Economic Schools
![Page 31: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/31.jpg)
Some Ecological & Environmental EconomicsTerms
• Hicksian Income: income that does not forego future opportunities for others; living off nature’s interest not its capital
• Pigou’s Externalities a Pigouvian Tax is on paid by polluters equal to the marginal external cost borne by the pollutees. The polluter is thus informed about the full social costs of his operations and the victims can be fairly reimbursed (1920).
• Solow Criterion: Solow stated that substitutability would allow man to get along without natural resources (1974).
• The Hartwick-Solow Rule: Manufactured capital can substitute for natural capital
![Page 32: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/32.jpg)
Hicksian Income...income that can be consumed without reducing future consumption possiblities
![Page 33: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/33.jpg)
Hartwick-Solow Rule
Value of savings >= Value of Manufactured Capital
Deterioration + Value of natural Capital
Depletion/Degradation
The amount a society must save and reinvest to maintaincapital intact. The total capital stock (natural plus manufactured must be nondeclining.
D. Pearce et al. The Economics of Sustainable Development, Ann. Rev. of Energy Environ. 1994. 19: 457-474.
![Page 34: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/34.jpg)
The Ecological Economists
• Kenneth Boulding (1910-1992): The Economics of the Coming Spaceship Earth (1966)
• Nicholas Georgescu-Roegen (1906-1994): The Entropy Law and Economic Progress- the economy is not a reversible mechanical systems but subject to the 2nd Law
• Herman Daly: student of N. G-R., steady state economy
Gowdy, J. and Sabine O’Hara, Economic Theory for Environmentalists, St Lucie Press, 1995, 129-132.
![Page 35: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/35.jpg)
Biological Basis for the Economy
• A.J. Lotka: “The Earth Machine” or the “Mill Wheel of Life” • J.A. Hobson : organic test as the test of welfare• N. Georgescu-Roegen: thermodynamic limits,
biophysical foundations of the economy• M.K. Hubbert: biophysical constraints to economic
growth• H.T. Odum: economy as an ecosystem• G. Hardin: institutional conditions for overexploitation• M. Rothschild: Bionomics - genetic material of the
economy is technology
![Page 36: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/36.jpg)
Economy like ecosystem?• Eugene Odum:
– young ecosystems: production, growth, quantity– mature ecosystems: protection, stability, quality
• Today’s economy is like a young ecosystem• How do we create an economy that is like a
mature ecosystem?
![Page 37: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/37.jpg)
The metabolic analogy
Useful matter
Useful Energy
Useful matter
Useful Energy
Metabolism
Economics
Time
Distribution
Distribution
Degraded matter
Degradedenergy
Totallydegraded matter
Totallydegradedenergy
Anabolism Catabolism
Anabolism Catabolism
![Page 38: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/38.jpg)
Bionomics• The economy behaves like a biological
system• Behavior of biological systems applied
to economics• Excellent forecasting tool (e.g. AT&T
demand for telephone service)
![Page 39: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/39.jpg)
Alternative Measures of Welfare
(Examples)• Index of Sustainable Economic Welfare
(ISEW)• Genuine Progress Indicator (GPI)• Human Development Index (HDI)
![Page 40: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/40.jpg)
Human Development Index
• Created by the United Nations Development Program (UNDP)
• A composite of three indicators– Longevity: life expectancy– Knowledge: literacy, years of schooling– Standard of Living: purchasing power
based on GDP/capita
![Page 41: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/41.jpg)
![Page 42: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/42.jpg)
Genuine Progress Indicator• Developed by non-profit: Redefining Progress• Starts with real personal consumption, adjusts for income distribution• Subtracts:
– Crime & Divorce– Resource depletion– Environmental Damage– Income Distribution– Pollution– Lifespan of durable goods & public infrastructure– Dependence on foreign assets
• Adds:– Value of household work and parenting– Value of volunteer work
![Page 43: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/43.jpg)
![Page 44: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/44.jpg)
![Page 45: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/45.jpg)
INDEX OF SUSTAINABLE ECONOMIC WELFARE – U.S., 1990 (Constant billion $ of 1972
Personal income adjusted for income distribution
$1,164
+services for household labor +520
+services of consumer durable goods +225
+services of highways and streets +18
+consumption public spending on health/education
+45
-consumer spending on durable goods -225
-defensive private spending on health and education
-63
-cost of commuting and auto accidents -67
-cost of personal pollution control -5
-cost of air, water, and noise pollution -39
-lost of wetlands and farmland -58
-depletion of natural resources -313
-long term damage from nuclear wastes, ozone depletion, and greenhouse gases
-371
+net capital growth +29
+/- net international investment position -34
INDEX OF SUSTAINABLE ECONOMIC WELFARE
$818
![Page 46: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/46.jpg)
![Page 47: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/47.jpg)
Globalization• The World Trade Organization (WTO) (1995)• Established by final act of Uruguay Round of Multilateral Trade Negotiations in
Marrakech in April 1994– Goal is to remove all obstacles to trade
• How a product is made• By whom• What happens when it is made
– Result: Countries and regions cannot set standards, express values, or determine what they do or do not support
– Outcomes: Child labor, prison labor, forced labor, substandard working conditions and wages, environmental destruction, habitat loss, toxic waste production, synthetic hormones, genetically engineered materials
• Membership: 135 countries (but no plebiscite was held!)• Violates Agenda 21 and the Universal Declaration of Human Rights
![Page 48: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/48.jpg)
Case Study: Chiquita Brands International• Chiquita Brands International is a $2 billion company• Main product is bananas from Central America• History of labor abuses, heavy pesticide use
(dichloropropane), resulting in birth defects and infertility
• European countries biased import policy for bananas to small family farmers using fewer chemicals
• U.S. sued and in WTO arbitrated case and won, forcing European countries to eliminate their bias
• Other cases: Countries must allow McDonald’s, Blockbuster, Pizza Hut, etc. to operate within their borders
![Page 49: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/49.jpg)
Dow Jones Sustainability Index
![Page 50: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/50.jpg)
Dow Jones Trend
![Page 51: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/51.jpg)
Dow Jones Sustainability Index vs S&P 500
![Page 52: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/52.jpg)
Leading DJ Sustainability Firms
• Consumer– BMW AG, Germany– Fuji Photo, Japan– Unilever Plc., Netherlands– Bristol-Myers Squibb, US
• Energy– Suncor Energy, Canada– Enbridge Inc., Canada
• Utilities– Deutsche Telekom AG,
Germany– TransAlta Corp., Canada
• Financial– Credit Suisse Group, CH– Skandia Forsakrings
AB, SW• Industrial
– Honeywell Inc., US– Tomra Systems ASA,
Norway• Technology
– Fugitsu Ltd., Japan– ST Microelectronics,
France
![Page 53: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/53.jpg)
BP: Sustainable profits? World’s largest supplier
of solar modules $200 million/yr $1 billion/yr by 2007 Solar-powered H2O
electrolysis: hydrogen buses
![Page 54: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/54.jpg)
WBCSD, US Members• 3M Company• Alcoa• AT&T• Arthur D. Little• The Boston Consulting Group• Cargill Incorporated• CEMEX• CH2M Hill• Conoco• Dow Chemical Company• DuPont• Eastman Kodak Company• Ford Motor Company• General Motors Corporation• Interface• International Paper
Monsanto CompanyJohnson & JohnsonPhelps DodgeProcter & Gamble
CompanyRohm and HaasS.C. Johnson & SonSuncor Energy IncTexacoTime WarnerUnocalWestvaco CorporationWeyerhaeuser CompanyXerox Corporation
![Page 55: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/55.jpg)
Main Points• Everything is connected• The result is there are feedback loops between all elements of the
system• Maldistribution of wealth is prevalent but not sustainable • GDP and GNP do not really represent ‘welfare’ just economic
throughput• The economy responds to signals it is sent
– Cheap waste disposal– Low costs for emissions (air, water, land)– Low cost for environmental impacts– Cheap and subsidized resources– Tax benefits for resource depletion
• How do you change the signals to the economy?
![Page 56: Lecture E Ecological & Environmental Economics](https://reader034.vdocuments.net/reader034/viewer/2022051117/56815db4550346895dcbe271/html5/thumbnails/56.jpg)
Summary and Conclusions• The current economic system is not sustainable
– Depends on the scale of material/energy throughput– Subsidizes resource extraction and pollution– Taxes productive activities– Does not measure ‘welfare’
• A system based on Ecological Economics would:– Shift taxes to waste, inefficiency, and pollution, away from wages,
profits, productivity, and investment– Focus on dematerialization, deenergization, decarbonization, and
detoxification– Measure welfare instead of absolute monetary transactions– Support an EcoIndustrial revolution