1. MILLER/SPOOLMAN
LIVING IN THE ENVIRONMENT 17TH
Chapter 23
Economics, Environment,
and Sustainability
2. Economic Systems Are Supported by Three
Types of Resources
• Economic systems are supported by
• Natural capital
• Human capital, human resources
• Manufactured capital, manufactured resources
3. Market Economic Systems Depend on
Interactions between Buyers and Sellers (1)
• True free market system
• No company or group controls prices of a good or service
• Market prices include all direct and indirect costs (full-cost
pricing)
• Consumers have full information about beneficial and
harmful environmental effects of goods and services
• Real world
• Tax breaks
• Subsidies
• Trade barriers
• Withholding of negative information
4. Economic Growth and Economic
Development
• Economic growth
• Increased capacity to supply goods and services
• Requires increased production and consumption
• Requires more consumers
• Economic development
• Improvement of living standards
• Environmentally sustainable economic
development
6. Governments Intervene to Help Correct
Market Failures
• Public services
• Environmental protection
• National security
• Police and fire protection
• Safe food and water
• Provided by government because private companies
can’t or won’t
7. Economists Disagree over Natural Capital,
Sustainable Economic Growth (1)
• High-throughput economies
• Resources flow through and end up in planetary sinks
where pollutant can be at harmful levels
8. What Is the Purpose of a Business?
• Make a profit for its owners and investors
• Sustainability is about staying in business
• Another definition – “Making a quality product and
earn a profit without harming the environment.”
9. Protecting Natural Capital
• Estimating the values of the earth’s natural capital
• Estimate nonuse values
• Existence value
• Aesthetic value
• Bequest value, option value-willingness of people to pay to
protect natural capital
10. Most Things Cost a Lot More
Than We Might Think
• Market price, direct price
• Indirect, external, or hidden costs not included in
direct price
• Direct and indirect costs of a car
• Should indirect costs be part of the price of goods?
• Economists differ in their opinions
11. We Can Include Harmful Environmental Costs in
the Prices of Goods, Services
• Environmentally honest market system
• Why isn’t full-cost pricing more widely used?
1. Many businesses would have to raise prices and
would go out of business
2. Difficult to estimate environmental and health costs
3. Businesses have strong influence on government –
preferential regulations, tax breaks, subsidies
12. Label Environmentally Beneficial Goods
and Services
• Product eco-labeling
• Certification programs
• Greenwashing-making people believe that harmful
products are green, clean, and environmentally
friendly – clean coal
13. Reward Environmentally Sustainable
Businesses
• Phase out environmentally harmful subsidies and tax
breaks
• Phase in environmentally beneficial subsidies and tax
breaks for pollution prevention
• Political difficulties
14. Tax Pollution and Wastes Instead of Wages
and Profits
• Green taxes, ecotaxes
• So that harmful products and services are at true cost
• Steps for successful implementation of green taxes
• Costa Rica put a 3.5% tax on the direct cost of fossil
fuels , which went toward forest protection and
replanting efforts
15. Environmental Laws and Regulations Can
Discourage or Encourage Innovation
• Environmental regulation
• Command and control approach
• Incentive-based environmental regulations
• Innovation-friendly regulations
16. We Can Use the Marketplace to Reduce
Pollution and Resource Waste
• Incentive-based regulation example
• Tradable pollution or resource-use permits
• Cap-and-trade approach used to reduce SO2
17. Reduce Pollution and Resource Waste by
Selling Services Instead of Things
• 1980s: Braungart and Stahl
• New economic model
• Service-flow economy, eco-lease (rent) services
• Xerox
• Carrier in Europe-lease high quality heaters and AC
units instead of selling
• Ray Anderson: lease carpets in the future
18. The Gap between the Rich and the
Poor Is Getting Wider
• Poverty
• 1.4 billion people live on less than $1.25 per day
• Trickle-down effect-money the rich spend ends up
with the poor
• Flooding up-what happens much more oftem, money
the poor spend ends up with the rich
• Wealth gap-growing-500 richest earn more than the
416 million poorest
20. We Can Reduce Poverty (1)
• South Korea and Singapore reduced poverty by
• Education
• Hard work
• Discipline
• Attracted investment capital
21. We Can Reduce Poverty (2)
• Important measures
• Combat malnutrition and infectious diseases
• Universal primary school education
• Stabilize population growth
• Reduce total and per-capita ecological footprints
• Large investments in small-scale infrastructure
22. Achieve the World’s Millennium
Development Goals
• 2000: Millennium Development Goals
• Sharply reduce hunger and poverty
• Improve health care
• Empower women
• Environmental sustainability by 2015
• Developed countries: spend 0.7% of national budget
toward these goals
• How is it working?
• Not really, very few counties are doing what they
agreed to do
24. We Are Living Unsustainably
• Depleting natural capital
• Environmental alarm bells going off
• Matter recycling and reuse economies
• Mimic nature
• Recycling and reusing
25. Use Lessons from Nature to Shift to More
Sustainable Economies
• Best long-term solution is a shift to
• Low-throughput low-waste, economy
26. Make Money and Create Jobs by Shifting to
an Eco-Economy
• Hawken, Brown, and other environmental business
leaders
• Transition to environmentally sustainable economies
• Some companies will disappear
• New jobs will be created
• Economic succession
• Green jobs
Figure 23.10: This mother and her child live in poverty on the edges of Mumbai (formerly Bombay), India, a thriving urban center.
Figure 23.12: What should our priorities be? Question: Which item on the right side of the figure would you do without or reduce to pay for solving some of the problems listed on the left side of the figure? (Data from United Nations, World Health Organization, U.S. Department of Commerce, U.S. Office of Management and Budget, World Bank, Earth Policy Institute, and Stockholm International Peace Research Institut e)
Figure 23.14: S olutions. We can use certain principles for shifting to more environmentally sustainable economies, or eco-economies , during this century. Question: Which five of these solutions do you think are the most important?
Figure 23.15: Solutions. These are some of the components of more environmentally sustainable economic development favored by ecological and environmental economists. The goal is to get economic systems to put more emphasis on conserving and sustaining the air, water, soil, biodiversity, and other natural resources that in turn sustain all life and all economies. Such a shift toward more efficient resource use, cleaner energy, cleaner production, ecocities, and natural capital preservation can stimulate economies, create jobs, and be profitable. Question: What are three new types of jobs that could be generated by such an economy?
Figure 23.16: Green careers. Some key environmental businesses and careers are expected to flourish during this century, while environmentally harmful, or sunset , businesses are expected to decline. See the website for this book for more information on various environmental careers. Question: How could some of these careers help you to apply the three principles of sustainability?
Figure 23.17: Selling and installing solar-cell systems is a rapidly growing business and a source of many new green jobs in the United States and in many other countries.
