if it's good for the environment, is it bad for the economy? if it's good for the...
TRANSCRIPT
If it's Good for the Environment,is it Bad for the Economy?
If it's Good for the Environment,is it Bad for the Economy?
The Environmental
Problem
The Environmental
Problem
The environmental problemThe environmental problem
The environmental problem Use of the environment as:
an amenity a source of primary products a dump for waste
The environmental problem Use of the environment as:
an amenity a source of primary products a dump for waste
(Clipart for the environment: e.g. countryside scene)
Goods and services
Labour
Waste
The economy and the environmentThe economy and the environment
Resources Amenity value
The environmental problem Use of the environment as:
an amenity a source of primary products a dump for waste
The environmental problem Use of the environment as:
an amenity a source of primary products a dump for waste
The environmental problemThe environmental problem
The environmental problem Use of the environment as:
an amenity a source of primary products a dump for waste
Conflicts between these uses
The environmental problem Use of the environment as:
an amenity a source of primary products a dump for waste
Conflicts between these uses
The environmental problemThe environmental problem
The environmental problem Use of the environment as:
an amenity a source of primary products a dump for waste
Conflicts between these uses productive resource v. amenity value
The environmental problem Use of the environment as:
an amenity a source of primary products a dump for waste
Conflicts between these uses productive resource v. amenity value
The environmental problemThe environmental problem
The environmental problem Use of the environment as:
an amenity a source of primary products a dump for waste
Conflicts between these uses productive resource v. amenity value dump for waste v. amenity value
The environmental problem Use of the environment as:
an amenity a source of primary products a dump for waste
Conflicts between these uses productive resource v. amenity value dump for waste v. amenity value
The environmental problemThe environmental problem
The environmental problem Use of the environment as:
an amenity a source of primary products a dump for waste
Conflicts between these uses productive resource v. amenity value dump for waste v. amenity value dump for waste v. productive resource
The environmental problem Use of the environment as:
an amenity a source of primary products a dump for waste
Conflicts between these uses productive resource v. amenity value dump for waste v. amenity value dump for waste v. productive resource
The environmental problemThe environmental problem
Population pressure / limited resources Problem of diminishing returns Absorptive capacity of
environment Accelerated degradation
Population pressure / limited resources Problem of diminishing returns Absorptive capacity of
environment Accelerated degradation
The environmental problemThe environmental problem
O W1
Env
ironm
enta
l dam
age
Waste
Accelerating environmental damage
Accelerating environmental damage
O W1
Env
ironm
enta
l dam
age
Waste
Totaldamage
Population pressure / limited resources Problem of diminishing returns Absorptive capacity of environment Accelerated degradation
Cause for optimism?
Population pressure / limited resources Problem of diminishing returns Absorptive capacity of environment Accelerated degradation
Cause for optimism?
The environmental problemThe environmental problem
Population pressure / limited resources Problem of diminishing returns Absorptive capacity of environment Accelerated degradation
Cause for optimism? Increased price of non-renewables
Population pressure / limited resources Problem of diminishing returns Absorptive capacity of environment Accelerated degradation
Cause for optimism? Increased price of non-renewables
The environmental problemThe environmental problem
Population pressure / limited resources Problem of diminishing returns Absorptive capacity of environment Accelerated degradation
Cause for optimism? Increased price of non-renewables Technological developments
Population pressure / limited resources Problem of diminishing returns Absorptive capacity of environment Accelerated degradation
Cause for optimism? Increased price of non-renewables Technological developments
The environmental problemThe environmental problem
Population pressure / limited resources Problem of diminishing returns Absorptive capacity of environment Accelerated degradation
Cause for optimism? Increased price of non-renewables Technological developments Public opinion
Population pressure / limited resources Problem of diminishing returns Absorptive capacity of environment Accelerated degradation
Cause for optimism? Increased price of non-renewables Technological developments Public opinion
The environmental problemThe environmental problem
Population pressure / limited resources Problem of diminishing returns Absorptive capacity of environment Accelerated degradation
Cause for optimism? Increased price of non-renewables Technological developments Public opinion Green business
Population pressure / limited resources Problem of diminishing returns Absorptive capacity of environment Accelerated degradation
Cause for optimism? Increased price of non-renewables Technological developments Public opinion Green business
The environmental problemThe environmental problem
Population pressure / limited resources Problem of diminishing returns Absorptive capacity of environment Accelerated degradation
Cause for optimism? Increased price of non-renewables Technological developments Public opinion Green business Government action
Population pressure / limited resources Problem of diminishing returns Absorptive capacity of environment Accelerated degradation
Cause for optimism? Increased price of non-renewables Technological developments Public opinion Green business Government action
The environmental problemThe environmental problem
Population pressure / limited resources Problem of diminishing returns Absorptive capacity of environment Accelerated degradation
Cause for optimism? Increased price of non-renewables Technological developments Public opinion Green business Government action BUT growing damage
Population pressure / limited resources Problem of diminishing returns Absorptive capacity of environment Accelerated degradation
Cause for optimism? Increased price of non-renewables Technological developments Public opinion Green business Government action BUT growing damage
The environmental problemThe environmental problem
The OECD environmental 'traffic lights'The OECD environmental 'traffic lights'
USAGermany
BelgiumSweden
UK Spain
Car
s pe
r th
ousa
nd p
opul
atio
n
W Germany
Energy and Transport in Figures (EC, 2002); Federal Highway Administration: http://www.fhwa.dot.gov/ohim/qfvehicles.htm
Increase in car ownershipIncrease in car ownership
An Optimum Use of the
Environment
An Optimum Use of the
Environment
An optimum use of the environmentAn optimum use of the environment
Different approaches to sustainability
The free-market approach Prices reflect scarcity of resources
The social efficiency approach Market failures: can be corrected
The conservationist approach Care for environment for its own sake: importance of
sustainable development
The Gaia approach Deep green approach:
environment has rights
Different approaches to sustainability
The free-market approach Prices reflect scarcity of resources
The social efficiency approach Market failures: can be corrected
The conservationist approach Care for environment for its own sake: importance of
sustainable development
The Gaia approach Deep green approach:
environment has rights
O
D = MSB
Q2
Output of good
Cos
ts a
nd b
enef
its (
£)Optimum level of an activity that involves pollutionOptimum level of an activity that involves pollution
Q1Q3 Free-marketoutcome
Conservationist approach
MSC
S = MPC
MSC1
MPC1
Marginalpollution
externality
Sociallyefficient output
Gaiamaximum
output
Q4
Market FailuresMarket
Failures
Market failuresMarket failuresEnvironment as a public good
The global ‘commons’ Features of a public good
Non-excludability BUT rivalry
Over use at a zero price
Externalities External costs from pollution External benefits from ‘green’ activities Problems of identifying and measuring
IgnoranceInter-generational problems
Environment as a public good The global ‘commons’ Features of a public good
Non-excludability BUT rivalry
Over use at a zero price
Externalities External costs from pollution External benefits from ‘green’ activities Problems of identifying and measuring
IgnoranceInter-generational problems
Government Policy towards
the Environment
Government Policy towards
the Environment
Environmental (‘green’) taxes, chargesand subsidies Taxes on goods and services The optimum tax rate
Environmental (‘green’) taxes, chargesand subsidies Taxes on goods and services The optimum tax rate
Government Environment PolicyGovernment Environment Policy
O
D = MSB
Q2
Output of good
Cos
ts a
nd b
enef
its (
£)
Q1
MSC
S = MPC
Optimumgreen tax
An socially efficient green tax
P
P – t
Environmental (‘green’) taxes, chargesand subsidies Taxes on goods and services The optimum tax rate Problems with green taxes and subsidies
Environmental (‘green’) taxes, chargesand subsidies Taxes on goods and services The optimum tax rate Problems with green taxes and subsidies
Government Environment PolicyGovernment Environment Policy
Environmental (‘green’) taxes, chargesand subsidies Taxes on goods and services The optimum tax rate Problems with green taxes and subsidies Effects on business
Environmental (‘green’) taxes, chargesand subsidies Taxes on goods and services The optimum tax rate Problems with green taxes and subsidies Effects on business
Government Environment PolicyGovernment Environment Policy
Green tax revenues as a % of GDPGreen tax revenues as a % of GDP
Green tax revenues as a % of GDPGreen tax revenues as a % of GDP
Non-market-based policies Command-and-control systems Alternative standards
Technology-based standards Ambient-based standards Social impact standards
Effects on business Advantages Disadvantages
Voluntary agreements
Education
Non-market-based policies Command-and-control systems Alternative standards
Technology-based standards Ambient-based standards Social impact standards
Effects on business Advantages Disadvantages
Voluntary agreements
Education
Government Environment PolicyGovernment Environment Policy
Tradable permits Permit to emit
Credits can be traded
Market price for permits Efficient solution?
Use in USA
Use in the EU (Kyoto)
Effects on business
Basis for international agreements? Quotas for emissions or use of resources
Tradable permits Permit to emit
Credits can be traded
Market price for permits Efficient solution?
Use in USA
Use in the EU (Kyoto)
Effects on business
Basis for international agreements? Quotas for emissions or use of resources
Government Environment PolicyGovernment Environment Policy
Can we rely on governments?
Short-termism
The free-rider problem
The weakness of international agreements
Can we rely on governments?
Short-termism
The free-rider problem
The weakness of international agreements
Government Environment PolicyGovernment Environment Policy
If it’s good for the environment, is it bad for the economy?
If it’s good for the environment, is it bad for the economy?
Possibly, but not necessarily.
Environmental challenges offer challenges to business and the government.
Some will gain; some will lose.
Is it another case of survival of the fittest?
Or is it survival of the greenest?
Possibly, but not necessarily.
Environmental challenges offer challenges to business and the government.
Some will gain; some will lose.
Is it another case of survival of the fittest?
Or is it survival of the greenest?
To access these slides, go to:
www.economicsnetwork.ac.uk/archive/A-level_Dec04.ppt