Environmental Economics
Economic decision-making and the natural environment
1. Economics, ethics and environment
2. Economy and the environment interaction
3. From “The Limits to Growth” to sustainable growth and development: economic
growth vs (?) the environment
4. Poverty and the environment
5. Towards sustainability
a. A policy framework for ‘green’ growth
b. Measurability of greening the economy and of well-being
Environmental degradation – ‘should we be worried?’
Impacts our well-being in a very direct sense.
Environmental sustainability – resources for future generations. Efficiency, require
that your prices reflect full costs (and typically environmental degradation is
considered an external cost – which is not taken into account for the full costs).
Which is where policy comes in to allow us to reach a more efficient and sustainable
point of production.
Agriculture – i.e soil erosion, can’t plant crops (this economic sector is more closely
linked to the environmental state).
Plastic consumption by animals, this can have economic costs (i.e harvesting those
resources). “People don’t like it” – Non-economic arguments, sense of fairness / well-
being is affected by the pictures of animals being strangled by plastic. We focus more
on the economic arguments.
Climate change – overall issue, which affects the economy in various ways i.e can
affect agriculture. There is a lot of modelling being done about this. Effects on
agriculture and tourism if areas become too hot. More intense periods of rain – lead
to the possibility of flooding, and countries are not likely to have that sort of
infrastructure to deal with floods and the damage they cause.
Fishery sector – small sector of the economy. West Coast of the Cape, and Cape
Peninsula – it is an important industry in terms of providing jobs. Questions of who is
allowed access to resources. Climate change – impacted on the amount of fish
available, and the productiveness of the sector as a whole.
“proposed opencast coal mining within the catchments of the Mpumalanga Lake
District would threaten many unique and largely pristine wetlands. . .”
Http://www.groundup.org.za/media/features/ Mpumalanga/Mpumalanga_0002.html
Acid mine water – a permanent cost, will always need to be managed in the future.
“…water we have in our national rivers and dams – the resource on which our entire
national economy is based – is now polluted by sewage, acid mine drainage,
uranium, partially metabolized Oestrogen, and a cocktail of drugs – including
antibiotics, antiretrovirals, anti-depressants and an exotic concoction of recreational
drugs like cocaine and Tik.
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, Local pollution – i.e Plankenburg river (already reported in 1989). Farmers irrigate
crops from this river, but because the river is so polluted, there is concern about
using the water for irrigation.
Soil degradation: “. . . in SA, about 35% of the country’s net agricultural income is
overstated because the environmental costs are not currently included in the
accounts. Soil degradation alone costs SA an average of nearly R2 billion annually in
dam sedimentation and increased water treatment costs…while the loss of soil
nutrients through degradation costs R1.5 billion per year.
Wildlife poaching – fish, rhino horn, elephant tusks.
The 2011 National Biodiversity Assessment reveals that 65% of our wetland types
are under threat (48% critically endangered, 12% endangered and 5% vulnerable).
Only 11% of wetland ecosystem types are well protected, with 71% not protected at
all. Consequences of wetland loss include: diminished water security, reduced food
security, reduction in biodiversity, lost livelihoods and increased vulnerability to
natural disasters, especially floods and droughts – real issues, because they are
critically NB in providing us with clean and fresh water. This has economic
implications.
Air Pollution – table 10 health impacts associated with human exposures to all fuel
burning emissions predicted for the base year 2002:
o Respiratory hospital admissions
o Premature mortality
o Chronic bronchitis
o Restricted activity days
o Minor restricted activity days
Restricted activity days – people aren’t working, therefore there is a loss in
productivity, which has economic implications.
Table 1 – NB subsectors within sector of fisheries. Illustrate issue of poaching. Look at
abalone. Lobster is also becoming a problem. Problem with data like this – problem may be
worse than what this indicates.
Issue about poaching has to do with sustainability of the animal.
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, Ethics, economics and the environment: a few
comments (R1-4)
Humanist – humans have ‘moral standing’
Naturalist – natural system has ‘moral standing’
These approaches drive decision making. Naturalist approach – decisions which are
good for the natural environment (intrinsic rights), and we as humans have no right to
destroy nature (strong naturalist view)
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.”
However, if such a strong naturalist view is taken then economic activity might not
take place at all.
Weaker approach – perhaps protect some areas (national parks / nature
conservation areas).
Motivist / Deontological theory – ‘is the right thing to do’ / ‘value in act’
o Kant – act based on a sense of duty and a valid ethical rule (i.e respect for
‘others’), detail in readings is not so important. Others – can include natural /
sentient beings.
Consequentialism – judge the outcome of the action (teleological). End justifies the
mean, value in the outcome of the act
Anthropocentric utilitarianism – Human’s utility. Is something of benefit to humans?
Humans count in assessing the outcomes of actions.
Preference satisfying utilitarianism (neo-classical economics):
o Idea that the market system can provide goods and services that humans
want.
o This is a humanist approach
o A consequentialist – the ‘social good’, as a result of market outcomes
o Individual preferences count.
Consumer sovereignty – taking preferences as given. They determine what goods
and services must be produced by the market.
‘people know what is good for them’ – is this true?
NB: Economic value of the environment is derived from individual preferences.
Footnote comments
Is consumption the problem and the source of the environment problems?
Ropke: ‘…it is increasingly acknowledged that growing consumption in the North
contributes substantially to environmental problems, and considerations about the
need to change lifestyles are popping up in official publications’. (North generally
speaks of the richer countries).
Relates back to consumer preferences and consumer sovereignty. Independent
preferences – are these preferences really independent (what determines these
preferences)
‘… consumer behaviour is ‘embedded’ in a social environment – it is social
phenomenon. Consumer behaviour (decisions) reflects relationships with others in
society (Ropke 1999). Values are important. Klamer (2003) talks about decision-
making being an evaluation in terms of different values; economic values are a ‘small
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