The Environment in Introductory Economics

• Three Global Development and Environment Institute textbooks:• Microeconomics in Context• Macroeconomics in Context• Principles of Economics in Context

• Contextual Economics: Economic activity takes place within a broader social and environmental context.

• Of 33 chapters in Principles text, 20 include some discussion of environmental quality and/or natural resources.

• Four chapters have detailed environmental focus:• The Economics of the Environment• Common Property Resources and Public Goods• Macroeconomic Measurement: Social and Environmental

Dimensions• Growth and Sustainability in the Twenty-first Century

The Environment in Introductory Economics

Source: Green, Tom. 2012. “Introductory Economics Textbooks,” Int Journal of Pluralism and Econ Education 3(2):189-223.

The Environment in Introductory Economics

Source: Green, Tom. 2012. “Introductory Economics Textbooks,” Int Journal of Pluralism and Econ Education 3(2):189-223.

Chapter 0: Economics and Well-Being

• Define economics as: the study of how people manage their resources to meet their needs and enhance their well-being

• 34 well-being concepts with graphs (gender inequality, subjective well-being, work hours, environmental impacts)

• Define concept, summarize results along with a simple graph

Chapter 1: Economic Activity in Context

Traditional Texts Economics in Context

Economic activities are: production, distribution, and consumption.

The primary goal of economics is efficiency.

Production possibilities frontier defines tradeoffs.

Circular flow model with households and businesses as main economic agents.

Add a fourth essential activity: resource maintenance.

Efficiency is an intermediate goal. Final goals include happiness, security, a sense of meaning, fairness, and ecological balance.

Resource maintenance is critical in balancing present versus future production.

Contextual model embeds economic activity within a broader social and environmental context.

Economic Activity in Context

Key Environmental Concepts

Chapter Environmental Topics

Consumption and the Consumer Society

Taxes and Tax Policy

Capital Stocks and Resource Maintenance

Introduction to Macroeconomics

The Structure of the U.S. Economy

Section on “Consumption in an Environmental Context”: ecological footprint, green consumerism, ecolabeling.

Discussion of environmental taxes, including carbon taxes

Section on “Natural Capital”: renewable vs. nonrenewable resources, sustainable socioeconomic system

Section on “Sustainability”: restorative development, precautionary principle, correlate CO2 growth to economic growthDiscussions of agriculture, water issues, the energy system

Figure 12.2: Internalizing a Negative Externality with a Pigovian Tax

The Economics of the Environment

Figure 12.8: Welfare Analysis of a Negative Externality, with a Pigovian TaxDetailed welfare analysis of externalitiesMore detailed welfare analysis of externalities

The Economics of the Environment

Section Title Topics

Valuing the Environment

Environmental Policies in Practice

• Difference between economic and intrinsic value• Importance of nonuse values• Discussion of environmental valuation techniques• Uses and limitations of cost-benefit analysis• Discussion of precautionary principle

• Discussion of four main environmental policies: standards, technology-based approaches, taxes, tradable permits

• Summary of major environmental regulations• Does environmental protection reduce economic

welfare and lead to job losses?

Common Property Resources and Public Goods

Detailed analysis of common property resources and public goods, including discussion “Tragedy of the Commons” and Elinor Ostrom’s work.

Figure 13.2: Common Property Model of a Fishery

Common Property Resources and Public Goods

Entire section on climate change – 6 pages!

• Summary of scientific consensus• Climate change data and projections• Overview of the Stern Review• Discussion of climate policies in practice

including carbon taxes in India and Canada, the EU emissions trading scheme, and the Kyoto Protocol

• Box on the Earth Atmospheric Trust

Macroeconomic Measurement: Environmental and Social Dimensions

• Presentation of alternative indicators with environmental component, including Genuine Progress Indicator, Better Life Index, and Happy Planet Index

• Section on “Accounting for the Environment”: adjusting GDP for natural capital depreciation, valuing natural capital, environmental accounting in China

Growth and Sustainability in the Twenty-First Century

Section on “Macroeconomics and Ecological Sustainability”• Overview of major environmental issues including population, resource

depletion, and waste• Discussion of the race between technology and resource depletion

Another climate change section! More material on science, economics and policies.

Section on “Economic Growth and the Environment”• Environmental Kuznets Curves • Policies for sustainable development: green taxes, eliminating fossil fuel

subsidies, and debt-for-nature swaps• Sustainable consumption and investment

Final section on “Are Stabilization and Sustainability in Conflict?”• Daly’s steady-state economy• Harris’ “Green Keynesian” policies• Victor’s no-growth scenario for the Canadian economy