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Summary Economics 348: Environmental Economics
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Environmental Economics. Compiled in 2018.
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Environmental economicsEnvironmental Degradation: Should we be worried?
Environment changes:
o Impact our health
o Impact our well-being
o May affect our futures
o Affects economy eg. soil erosion cant produce crops
spills over to water problems, affecting
industry
o Plastic: consumed by animals, affects biodiversity
economic cost
o Climate change affects:
Agriculture
Production
Labour health + productivity
o Energy sector type of energy we use effects env.
env changes affect our energy use
o Fishing sector
Very NB for jobs and income
Env change = increase in sea temp effects eco-systems
Poaching + over-harvesting affects industries
o Coal mining
Affects env eg. Fresh water Wetlands in Mpumulanga
Acid mine waters: permanent cost water in national rivers and dams
are polluted by sewage, acid mine drainage, uranium and drugs.
Local example:
Plankenburg river
reported in 1989
o Air pollution has health impacts
Economics, Ethics and the Environment
Humanists v Naturalists
o Humanist
, Humans have ‘moral standing’
Rights and duties are exclusive to human beings
But non-humans have no rights
will do what is good for humans
Supported by Kant
o Naturalist
Natural system has ‘moral standing’
Nature has rights which we cannot infringe
will do what is good for nature
Leopold’s land ethics: a thing is right when it tends to preserve the
integrity, stability and beauty of the biotic community. It is wrong when it
tends otherwise’.
Singer: strict adherence to a naturalist philosophy prohibit current and
future eco activity supports humanists
Motivist theory v Consequentialism
o Motivist theory:
The thing or action is right or wrong
ie. Is it the right thing to do?
Places value on the act
Kant an act based on a sense of duty and a valid ethical rule is moral
justice cannot be assessed on the outcome eg. respect for other
o Consequentialism (teological)
The outcome is right or wrong
Places value on the outcome
Sometimes the end may justify the means
This is the economic approach called utilitarianism
Utilitarianism
o Utility: the individual’s pleasure or happiness
o Welfare: the social good
welfare increases action is right
welfare decreases action is wrong
o Anthropocentric Utilitarianism (ie. Human utility)
Only humans are morally considerable: humanist
humanist + consequentialism combined
o Preference-satisfaction Utilitarianism (neo-classical economics)
Now we have decided that human consequences are most NB now we
must decide which consequences are good and bad
Utility enhancing v utility diminishing
, Answer: individual preferences count
People’s preferences are what decide what the social welfare it
Consumer sovereignty approach:
o individuals are the best judge about what is good for
themselves
o their preferences tell us about what is good for them
But there is no question about the origin of these preferences
they are taken as given
But do people know what is good for them? sometimes what is
good for them is to preserve the environment, despite this not
being their preference
BUT economic value of env. derived from individual preference
not derived from importance
3 stances of PSU:
Humanism (because anthropocentric)
Consequentialist
Individual preferences count
Economy-environment linkages
The economy as a linear system:
Production (P) Consumption (C) + Capital (K) Utility (U)
BUT the economy is circular: human economic system is a sub-system of the natural
environment
the economy functions within the ecological constraints of earth’s natural resources
Leaving out U and K (for convenience) we can add in natural resources (R):
RPC
Now, add in waste products (W)
o Env is ultimate receiver of waste
eg. Carbon dioxide into atmosphere, sewage into sea, solid waste into landfill
o Nature has its own waste
eg. leaves fall of trees
o BUT difference between natural and economic system:
the natural systems recycle their waste
eg. leaves decompose and turn into organic fertilizer
o NONETHELESS waste arises at each stage of production process
Resources: over-processing eg. Coal mines
Production: solid waste + air pollution
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