Summary Economics 348: Environmental Economics

Environmental economics

Environmental 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):
RPC
 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