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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