1.1 The emergence of resource and environmental economics Flashcards
(23 cards)
Adam Smith (1776)
The wealth of Nations
The invisible hand theory
- own self interest (individuals in a free markt) will lead to overall economic well being.
- the allocation of resources follows the self regulating market space
Malthus (1789)
The principle of population
An increase in population will lead to a depletion of the resources (stock of land,…)
- less output per capita
- towards steady state, population will decrease again
David Ricardo (1817)
Principles of political economy and taxation
- land is not fixed
- increass in intensive or extensive margin of land are possible; still convergence to steady state
John stuart Mill (1857)
Principles of political economy
Technological advances will lead to economic growth
Classical economics (CE)
Value arises from labour embodied in output
- absolute scarcity
- focus on aggregate level of the economy
- dependence economic activity on natural environment
Adam Smith, Malthus, David Ricardo, John Stuart Mill
Neo-classical economics (NCE)
value determined by exchange, reflecting preferences and cost of production
- relative scarcity and relative prices
- focus on structure of the economy, and efficient allocation of resources
Alfred Marshall, John Keynes
Alfred Marshall (1890)
Partial equilibrium analysis of price determination based on supply and demand
(dependency of economic activity on the natural environment lost it’s role)
John Keynes (1883-1946)
theory of input and output determination
Explaining the persistent levels of unemployment and recession
Again aggregate demand and supply
Aggregate demand < aggregate supply => unemployment and recession
- In times of low aggregate demand the government should intervene (theory developed in times of war)
resource economics
Objective
understanding the role of natural resources in the economy in order to develop more sustainable methods in managing these resources
- environmental processes taken as background
environmental economics
Objective
Analyse environmental policy regulation, analyse problems of environmental pollution and degradation
ex. economic studies of global warming, pollution, …
ecological economics
Interdisciplinary approach (ecology & economics)
- economic system as part of the earth system
- economic and environmental systems are interdependent
concern
scale of human impact is threathening the viability of the natural system for future generations
SUSTAINABILITY!!
the natural environment
short: the environment
economic activity takes place WITHIN and is PART OF, the system which is the earth and it’s atmosphere
system itself has an environment (the universe)
- Thermodynamically closed, only exchanging energy (not matter) with the universe
flow resources
no link between current use and future availability
ex. solar radiation, wave and wind power
stock resources
level of current use does affect future availability
- renewable and non-renewable resources
renewable resources
biotic populations (flora and fauna)
- potential to grow by natural reproductions
non-renewable resources
minerals ( + fossil fuels)
- no natural reproductions, except on geological time scales
fossil fuels
pervasive
essential distinguishing characteristic of industrial economies
irriversible
No way in (partially) recovering the inputs after combustions
<-> minerals after use as input can be recycled
waste emissions
major source of emissions into the atmosphere
pollution
stock of material resident in the natural environment
waste discharges that give rise to problems for humans or the natural environment
residual flows > assimilative capacity
- harm to living organisms, affect resources availibility, life support services, amenity services
amenity services
Flows direct from the environment to individuals
biosphere that provides humans with recreational facilities and other sources of pleasure and stimulation
appreciation by imagining the absence
no direct consumptive material flow BUT can physically impact the environment
basic life support functions
breathable air, range of temperatures, minimum water requirements
=> environmental functions in a way that humans can exist in it
recycling
substitute for environmental functions
- reduces demands made upon the waste sink function (less to wastes)
- reduces demands upon the resource base function (less extraction of resources)
natural capital
environment in terms of assets that provide flows of goods and services
collective of environmental assets
human capital
The basis for technical change
- Great importance in regard to environmental problems
- knowledge that can reduce the demands made upon the environmental functions
collective of human assets
