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Ecological Economics &
Nature Conservation
Image from: http://ksjtracker.mit.edu
Interconnectedness of World Problems
Extinction
Crisis
War &
Environmental
Political Conservation and Environmental Concerns
Degradation
are embedded in and inter-connected
Unrest
Human
Population
with other
World Problems
Growth
Famine
Social
Inequality
Poverty
Photo from Greg Dimijian
Economics strongly influences
policy considerations for the
entire constellation of interconnected world problems
Economics
Adam Smith – “father of modern economics”
Adam Smith
(1723 – 1790)
An Inquiry into the Nature & Causes
of the Wealth of Nations
(1776)
Image from Wikipedia
Economics
Adam Smith – The Wealth of Nations (1776)
Human motives are often driven by self-interest, but competition in the
free market would tend to keep prices low, yet create incentives
for a wide variety of goods and services
“It is not from the benevolence of the butcher, the brewer, or the baker that we
expect our dinner, but from their regard to their own [selfish] interest”
The free market appears chaotic and unrestrained, but selfish interests may
help guide it by their collective “invisible hand” to supply the right amount and
variety of goods and services to meet demand
Definition of economics from Levitt & Dubner’s (2005) Freakonomics:
“explaining how people get what they want”
Environmental Economics
Garrett Hardin – The Tragedy of the Commons,
article in Science (1968)
Even so, multiple individuals acting in their own self-interest can
destroy a shared resource (e.g., a “commons”)
Photo from www.mapofsaltspring.com
Environmental Economics
Garrett Hardin – The Tragedy of the Commons,
article in Science (1968)
The “commons” was used
as a metaphor for the
Earth and its growing
human population
Elinor Ostrom (first woman to win
Nobel Prize in Economics – 2009)
has shown that on the small-scale,
the tragedy is often avoided by
cooperation among the commons’
users, who impose sanctions, etc. on
those who cheat
Journal cover from the 12 December 2003 issue of Science; www.sciencemag.org
Ecological / Environmental Footprints
Individual herders (or people) collectively place more “footprints” on the
commons (or Earth) than can be supported
“The average single-family house completed [in 2006] had
2,469 square feet, 769 more square feet than in 1976…”
House size statistics from U. S. Census Bureau: http://www.census.gov/const/www/highanncharac2006.html
Photo of house construction from: http://blog.gogrid.com
Ecological / Environmental Footprints
J. Diamond – New York Times Op-Ed (January 2, 2008)
“What’s Your Consumption Factor?”
“The average rates at which people consume resources like oil and metals, and
produce wastes like plastics and greenhouse gases, are about 32 times higher
in North America, Western Europe, Japan and Australia than they are in the
developing world.”
Quote from: http://www.nytimes.com/2008/01/02/opinion/02diamond.html
Map from Wikipedia; data to produce map from Global Footprint Network – http://www.footprintnetwork.org
Ecological / Environmental Footprints
Pets can have large ecological “pawprints”
Calculated ecological “pawprint” of
medium-sized dog in the U.S.;
it was more than twice the
ecological “treadprint” of
an SUV (4.6-liter Toyota
Land Cruiser driven 10,000 km/yr)
“The estimated number of household cats and dogs exceeds 100 million each,
a global population size that easily outdistances that of any wild carnivore”
(Van Valkenburgh & Wayne, 2010, Current Biology 20:915-919)
Robert & Brenda Vale (2009) Time to Eat the Dog: The Real Guide to Sustainable Living
See: New Scientist article – http://www.newscientist.com/article/mg20427311.600-how-green-is-your-pet.html
Environmental Economics
Steady-State
Economics Model
With respect to matter, the
economy is an open
subsystem of a closed, finite
total system – the biosphere
Matter cycles within and
energy flows through the
global ecosystem
Environmental Economics
Steady-State
Economics Model
With respect to matter, the
economy is an open
subsystem of a closed, finite
total system – the biosphere
Matter cycles within and
energy flows through the
global ecosystem
Figure from Jackson et al. (2001) Ecological Applications
E.g., water cycle
Environmental Economics
Steady-State
Economics Model
No escape from
the Laws of
Thermodynamics
E.g., 1st Law of
Thermodynamics =
Conservation of Energy
Environmental Economics
Steady-State
Economics Model
Modern humanity arose
~10,000 yr ago “with the
invention of villages and
political hierarchies… The
economic history that
followed can be
summarized very succinctly
as follows: people used
every means they could
devise to convert the
resources of Earth into
wealth.”
Quote from E. O. Wilson’s foreword to Jeffrey D. Sachs’ (2008) Common Wealth
Environmental Economics
Steady-State
Economics Model
Distinction between growth
and development
Can there be development
without growth?
Can there be growth
without development?
Environmental Economics
Steady-State
Economics Model
Sustainability – amount of
consumption that can be
sustained indefinitely
without degrading
capital stocks
(including natural capital)
Environmental Economics
Sustainability – amount of consumption that can be
sustained indefinitely without degrading capital stocks
Short-term
consumption
rate
Trade-off
Capital stocks
Environmental Economics
Sustainability – amount of consumption that can be
sustained indefinitely without degrading capital stocks
Unsustainable
Short-term
consumption
rate
?
Sustainable
Capital stocks
Environmental Economics
Interesting parallel with organismal life-history evolution;
“a jack of all trades is master of none”
E.g., King (chinook) salmon
(many thousands of offspring;
single reproductive bout)
Life-history trait A,
e.g., current reproductive
output
E.g., Blue whale
(one offspring
every 2-3 yr;
80 yr life-span)
Life-history trait B,
e.g., future survival
Photos from Wikipedia
Environmental Economics
Sustainability – amount of consumption that can be
sustained indefinitely without degrading capital stocks
Unsustainable
Short-term
consumption
rate
?
Sustainable
Capital stocks
Photo from Wikipedia
Environmental Economics
Sustainability – amount of consumption that can be
sustained indefinitely without degrading capital stocks
Short-term
consumption
rate
Unsustainable
?
Capital stocks
Photo from Wikipedia
Sustainable
Economics Strongly Influence Policy
Cost-Benefit Analysis
At first blush it appears simple…
Costs > Benefits  project should not proceed
Costs < Benefits  project should proceedxxx
Economics Strongly Influence Policy
Cost-Benefit Analysis
However, it must convert all costs and benefits to the same currency, and it
must consider all of the trade-offs, both instrumental and intrinsic value
(which is especially hard to monetize), hidden costs, and externalities
Externality
A true cost (usually in terms of environmental degradation)
resulting from an economic transaction that is not
included as a debit against economic returns
Economics Strongly Influence Policy
Willingness to Pay
How much would you be willing to pay
to protect Blue Whales?
Photo from www.whale.net
Economics Strongly Influence Policy
Travel Cost Method
How much do people pay
to see Blue Whales?
Photo from newportbeachchristmasparade.wordpress.com
Economics Strongly Influence Policy
Present Value and Discounting
How many of you would rather receive
$100 today vs. the equivalent of $100 in a year’s time?
Costs and benefits often change value over time
The general preference to receive good things now (and put
bad things off until later) is called time preference
Many economists advocate converting all future
costs and benefits to present value; future sums of money
are discounted by a rate that reflects time preference
Economics Strongly Influence Policy
Environmental Impact Assessment
The process of identifying the potential impacts of
a project or policy before it goes into effect
Required of certain federal projects in the U.S. since the
National Environmental Policy Act (NEPA)
was enacted in 1970
Economics Strongly Influence Policy
Risk Assessment and Management
Risk = the probability of a given potential hazard causing a given
consequence, multiplied by the magnitude (severity)
of that consequence
Economics Strongly Influence Policy
Precautionary Principle
Since not all possible negative consequences of a project can be known
ahead of time, this ethical principle states that if the consequences
are judged by some informed persons to have a
high likelihood of being negative, it is better to
abandon the project
Limits to Natural Resource Use…
“How Much is Left?”
Web resource available through Scientific American,
to accompany their September 2010 issue
http://www.scientificamerican.com/article.cfm?id=interactive-how-much-is-left