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Environmental Economics & Sustainability

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Jennifer Dever

on 7 December 2017

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Transcript of Environmental Economics & Sustainability

Environmental Economics
Economics (production, distribution & consumption of goods and services)
Command economies
Central control of production of goods & services - government ownership of virtually all the means of production—farms, factories, scientific laboratories, shops, and so forth—and organization of those assets into firms managed by employees of the state.
Market economies
Monetary signals control the production and distribution of goods & services
Adam Smith –”possible to pursue private gain in ways that would further not just the interests of the individual but those of society as a whole.”
Smith said that the combination of self-interest, private property, and competition among sellers in markets will lead producers “
as by an invisible hand
” to an end that they did not intend, namely, the well-being of society.


Impacts of the market economy
Environmental Economics - A New World Order
BASIC TENETS of Environmental Economics:
Manufacture capitol ≠is not equal to natural capitol
Human economy is dependent upon the environment
Cannot decouple economic growth from environmental impacts; must increasingly make environmental constraints a more explicit consideration
Economic activity should be practiced on a
sustainable
scale

A new "green" economy!
Goals for a more realistic approach for long-term future economy:
Have a smaller economy which better matches the availability of resources; "structural transformation of the regulation of national and international financial systems", https://www.greennewdealgroup.org/ and major changes to taxation systems
Cap resource use and energy consumption
incentivize sustainable resource use; Green Stimulus
Aspire to “
development
”and focus on increasingly efficient use of stock (capital) and increasing the quality of stock itself
Limit wealth: People would enjoy the fruits of their savings once they had attained an acceptable standard of living
“A nation which desires true wealth, desires it moderately, and can therefore distribute it with kindness, and possess it with pleasure; but one which desires false wealth, desires it immoderately, and can neither dispense it with justice, nor enjoy it in peace.” -John Ruskin, 1883 (English economist)

Capitalism = economic system in which private individuals and business firms carry on the production and exchange of goods and services through a complex network of prices and markets.
Development & Growth
Economic Development:
improvements in efficiency & organization, but not necessarily increases in resource consumption

Economic Growth:
increase in the capacity for an economy to produce goods and services

Benefits of Development & Growth:
For environmental economics to work there must be:
Redefinition of “growth” and a differentiation among types of growth
Explicit determination & measurement of environmental constraints on economic growth
Definition of the functions of the environment & natural resources
Creation of markets for environmental goods + environmental valuation for natural capitol
Full cost pricing
Alternative measures of human well-being

How is the market economy working in the US?
Having the economy in equilibrium [SUSTAINABLE]
Limits for population size, consumption, and the gathering of personal wealth
ENVIRONMENTAL PROBLEMS w/ market economy:

Problem: early thinkers in economics started with a model of pure exchange of goods, without considering their production, the economy is based on environmental degradation

Problem: does not include boundaries that in any way indicate the physical requirements or effects of economic activities
SOCIAL PROBLEMS w/market economy:

Problem: assumes that private decisions will lead collectively to optimal social outcomes, yet decisions may impose costs to individuals not compensated, or benefits to those who don’t pay for the gains

Problem: Markets may fail to form or be incomplete, resulting in a failure to meet a need - such as the need for public goods, education, healthcare

Problem: monopolies

Problem: Inequality - Markets may also fail to limit the size of the gap between income earners, the so-called income gap. Market transactions reward consumers and producers with incomes and profits, but these rewards may be concentrated in the hands of a few

Economic growth is perpetually driven by consumer demand;
No incentive to make choices based on any entity but the individual

The Story of Stuff
https://theconversation.com/limits-to-growth-policies-to-steer-the-economy-away-from-disaster-57721
Full transcript