Download Define the terms Gross Domestic Product (GDP) - science-b

AP Environmental
Science
Mr. Grant
Lesson 12
Environmental Ethics
and Economics:
Values and Choices
Economics:
Approaches and
Environmental
Implications II
© 2011 Pearson Education, Inc.
Objectives:
• Define the terms Gross Domestic Product (GDP) and Genuine
Progress Indicator (GPI).
• Illustrate aspects of environmental economics and ecological
economics.
• Describe how individuals and businesses can help move our
economic system in a sustainable direction.
• Explain the pursuit of sustainable development.
• TED - At his carpet company, Ray Anderson has increased sales
and doubled profits while turning the traditional "take / make /
waste" industrial system on its head. In a gentle, understated way,
he shares a powerful vision for sustainable commerce.
© 2011 Pearson Education, Inc.
Define the terms Gross Domestic Product
(GDP) and Genuine Progress Indicator (GPI).
Gross Domestic Product (GDP) = total monetary value of goods
and services a nation produces.
- Sums all economic activity… whether good or bad.
- Does not account for benefits such as volunteerism
- Does not account for external costs such as environmental
degradation and social upheaval. (i.e., pollution increases GDP).
Genuine Progress Indicator (GPI) = An economic indicator
introduced in 1995 that attempts to differentiate between desirable
and undesirable economic activity.
- Positive contributions (i.e. volunteer work) not paid for with
money are added to economic activity
- Negative impacts (crime, pollution) are subtracted
© 2011 Pearson Education, Inc.
Define the terms Gross Domestic Product
(GDP) and Genuine Progress Indicator (GPI).
© 2011 Pearson Education, Inc.
Illustrate aspects of environmental
economics and ecological economics.
Environmental economists devise strategies for
sustainability
Calls for reform
of neoclassical
economics
Addresses
external costs
and discounting
Environmental economics = field that maintains we must
reduce our demand for resources and make their use more
efficient to achieve sustainable growth
© 2011 Pearson Education, Inc.
Environmental economists devise strategies for
sustainability, con’t
Ecological economics =
field that maintains that
civilizations cannot
surpass environmental
limitations; endless
growth is not possible
• Natural systems
operate in self
renewing cycles
• Calls for revolution—
abandon neoclassical
economics
Steady-state economies =
economies that mirror natural
ecological systems—they neither
grow nor shrink
© 2011 Pearson Education, Inc.
We can assign monetary value to ecosystem goods and
services
Nonmarket
values = values
not included in
the price of a
good or service
(e.g.,
ecological,
cultural,
spiritual)
© 2011 Pearson Education, Inc.
Contingent valuation = technique that uses surveys to
determine how much people are willing to pay to protect
or restore a resource
Researchers can find a value for a service revealed by
Measures
actual behavior
expressed
preferences
• Includes time, money, effort people spend to travel
to a location
But since
people
do not
• Measures
actual costs of restoration, cleanup, etc.
really pay,
to restore lost functions
they may
overinflate
values
© 2011 Pearson Education, Inc.
Researchers calculated the global value of 17 major
ecosystem services
The global economic
value of all ecosystem
services equals $48
trillion
• More than the
GDP of all nations
combined
Protecting certain
areas gives 100 times
more value than
converting them to
some extractive use
© 2011 Pearson Education, Inc.
We can measure progress with full cost accounting
Does not express only desirable
economic activity
Does not account for
nonmarket values
© 2011 Pearson Education, Inc.
Gross Domestic
Pollution, oil spills,
Product (GDP) = the
disasters, etc. increase
total monetary value
GDP
of goods and services
a nation produces
We can measure progress with full cost accounting
Genuine Progress Indicator
In the=United
(GPI)
GDP alternative that
States, GDPbetween desirable
differentiates
risen economic
andhas
undesirable
greatly, but
activity
GPI only
• Positive
slightly
contributions (e.g.,
volunteer work)
not paid for with
money are added
to economic
activity
•
Negative impacts
(crime, pollution)
are subtracted
© 2011 Pearson Education, Inc.
GDP vs GPI…
© 2011 Pearson Education, Inc.
We can measure progress with full cost accounting
Full cost accounting = attempts to monetize all costs and
benefits (GPI is one example)
Happy Planet Index divides number of happy years of
life by ecological footprint
•
Measures happiness per amount of resource input
These indicators give a more accurate indication of a
nation’s welfare
•
Critics claim the valuation is too subjective
© 2011 Pearson Education, Inc.
Happy Planet Index
© 2011 Pearson Education, Inc.
Describe how individuals and businesses
can help move our economic system in a
sustainable direction.
Markets
can fail…
Government
intervention counters market failure
• Laws
Occurs
whenand regulations
markets ignore the
• Tax harmful activities
environment’s
positive impacts or
• Economic incentives to promote fairness,
the negative effects
conservation, and sustainability (e.g., pollution
of activities on the
permits, pay landowners for ecosystem services)
environment or
people (external
costs)
© 2011 Pearson Education, Inc.
Ecolabeling helps address market failure
tells consumers which brands
use environmentally benign
processes
WWF calls on the seafood ecolabelling community to develop
internationally agreed criteria for these priority issues and
A powerful
incentive
for
establish
evaluation
mechanisms.
Dolphin-safe tuna, organic food
businesses to change
© 2011 Pearson Education, Inc.
Businesses are responding to sustainability concerns
Socially responsible investing
Industries, businesses, and
= investing in companies that
corporations make money by
have met criteria for
“greening” their operations
environmental or social
sustainability
• Many find that reducing
waste and conserving energy
• $3.7 trillion in 2012, 11% of
reduce costs and increase
all investments
profits
Industries donate to
environmental groups, preserve
land, etc.
© 2011 Pearson Education, Inc.
Businesses are responding to sustainability concerns
Any changes made by large companies will have farreaching impacts
•
Some of the world’s largest corporations have
joined in: McDonald’s, Starbucks, Intel, Ford
Motor Company, Toyota, IKEA, Dow, DuPont,
BASF, IBM, Hewlett Packard, Nike, Wal-Mart
Manufacturers recycle, use
recycled materials, cut energy
use, reduce the use of toxic
substances, etc.
Thousands of local sustainable
businesses have been started
around the world
© 2011 Pearson Education, Inc.
Businesses are responding to sustainability concerns
Greenwashing
consumers can be misled
into thinking companies
are acting more
sustainably than they are
© 2011 Pearson Education, Inc.
Explain the pursuit of sustainable
development
Sustainable
development
the
Development
= the use of=natural
resources for economic
use
of resources to satisfy
advancement
current needs without
compromising
future availability
• Making purposeful
changes to enhance the quality of
of resources
human life
•
Some have viewed protecting the environment as being
incompatible with development
•
The poor suffer the most from environmental
degradation
© 2011 Pearson Education, Inc.
Sustainable development involves environmental
protection, economic well-being, and social equity
Triple bottom line
© 2011 Pearson Education, Inc.
Sustainable development is a global movement
Millennium Development Goals
© 2011 Pearson Education, Inc.
TED Video
Ray Anderson's company makes
Flor, the line that made modular
carpet tile sexy. But behind the
fresh design is a decades-deep
commitment to sustainable ways of
doing business -- culminating in the
Mission Zero plan.
“For nearly 11 years, now, we have been on this mission; we
call it, “climbing Mt. Sustainability”, a mountain higher than
Everest, to meet at that point at the top that symbolizes zero
footprint—zero environmental impact. Sustainable: taking
nothing, doing no harm.”
Ray Anderson on the business logic of sustainability (15:52)
Copyright © 2008 Pearson Education, Inc., publishing as Benjamin Cummings