Download Introduction to environmental economics

Readings
Invasions
– Pimentel et al. 2000. Environmental and
economic costs of nonindigenous species in
the United States. BioScience 50:53-65.
Environmental Economics
– R. Costanza et al.1997. The Value of the
World's Ecosystem Services and Natural
Capital. Nature 387:253-260.
Resources
– Steve Hackett (HSU) links to economic and
environmental economic websites:
http://www.humboldt.edu/~envecon/resources.h
tml
– EPA’s national center for Environmental
Economics:
http://yosemite1.epa.gov/ee/epa/eed.nsf/pages/
homepage
Outline
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Introduction to environmental economics
“free market” economics
Valuing non-market commodities
Approaches to ameliorating market failure
Case study: guest speaker Becky Niell
– Simulation model of vegetation dynamics
linking costs, benefits, and vegetation
Environmental economics
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What is it?
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What does it include?
Environmental economics
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What is it?
– Expansion of traditional economics to include
non-market values
– Risk assessment and cost-benefit analyses
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What does it include?
– Includes non-market values (esthetic,
cultural, emotional), ecosystem services,
environmental health and safety concerns,
sustainable development, carbon accounting
etc.
“Free Market” economics
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Market provides mechanism to allocate
resources to best (highest valued) uses
Prices provide information about values
Ideally, resources are allocated in a way
that optimizes efficiency
However, does not always optomize for
environmental resources:
– Information is incomplete, some resources
have no market, future discounting devalues
conservation, “tragedy of the commons”
Valuing environmental
resources
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What are environmental (non-market)
values?
Valuing environmental
resources
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What are some environmental values?
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Health, wellbeing
Intrinsic values of wilderness and wildlife
“Ecosystem services”
“natural capital”
Future potential values (e.g. new discoveries)
How to place values on
resources?
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$ value on non-direct costs and benefits
– Estimate cost to use technology to perform
actions conducted by ecosystems (e.g. water or
air filtration)
– Estimate costs of amelioration (e.g. healthcare
costs VS prevention of environmental pollution)
– Surveys: ask people what things are worth
(“what would you pay to maintain ecosystem X”)
How to place values on
resources?
•
$ value on non-direct costs and benefits
– Estimate cost to use technology to perform
actions conducted by ecosystems (e.g. water or
air filtration)
– Estimate costs of amelioration (e.g. healthcare
costs VS prevention of environmental pollution)
– Surveys: ask people what things are worth
(“what would you pay to maintain ecosystem X”)
Non-market values in range
and forest ecosystems
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What are some values that might apply? How
would you account for them?
“Market Failure” caused by
non-market resources
– Market failure= non-optimal allocation of
resources.
– How can it be remedied? Account for nonmonetary values, or bypass market mechanism
and impose policy.
Can non-monetary values be
accounted for by traditional
economics?
Can non-monetary values be
accounted for by traditional
economics?
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Yes: we can
translate all values
into common metric
($) and can assess
using free-market
economics
Can non-monetary values be
accounted for by traditional
economics?
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Yes: we can
translate all values
into common metric
($) and can assess
using free-market
economics
No: some things
have no $ value.
Some decisions
(environmental and
social policy) must
be made outside the
realm of the market
Case study: modeling costs,
management, and vegetation
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Simulation model predicting outcomes of
various management strategies
non-market values (e.g. environment
values) must be considered external to
the model to make management
decisions