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Chapter 23
By: Christian Kearns
Capital and Resources are
fundamental Ideas
• Capital- Is any form of wealth available for
use in the production of more wealth.
– Natural Capital (Goods, and services provided
by nature)
– Manufactured or built Capital ( Tools,
Infrastructure, and technology)
– Human or cultural Capital (knowledge,
experience, and human enterprise)
Resources
• Natural Resources can be either renewable
or nonrenewable, as well as tangible or
intangible.
• Nonrenewable Resources are the earth’s
geological endowment. ( minerals, fossil
fuels, and other materials present in the
environment)
• Renewable Resources are things that can
be replenished or replaced and example
would be sunlight.
Supply and Demand
• Supply – the Quantity of a product being
offered for sale as various prices.
• Demand - The amount of a product or
service that consumers are willing and
able to buy at various possible prices.
• These two create the supply and demand
market which keeps our economy flowing
to a certain degree
Classic Supply and Demand
Curves
Classical Economics
• A moral philosophy concerned with how
individual interest and values intersect with
larger society goals.
This was the original view of most people
Economics
The end of the
19th Century
Political Economy
Neoclassical
economics
economics concerned with modes
of production, distribution of benefits,
social institutions, and class relationship
economics that attempt to apply the principals
of modern science to economic analysis
in a mathematically rigorous, noncontextual,
abstract, predictive manner.
.
Political Economy
• Concerned with modes of production, distribution of
benefits, social institutions, and class relationship
• Included Karl Marx and Although ignored by scholars in
his own lifetime, his social, economic and political ideas
gained rapid acceptance in the socialist movement after
his death in 1883.
• E. F Schumacher who served as Chief Economic
Advisor to the UK National Coal Board for two decades
along with many socialist, anarchists, and utopians
Neoclassical economics
• Continued economic growth is considered to be
both necessary and desirable.
• Growth is seen as the one way to maintain full
employment and avoid class conflict arising from
inequitable distribution of wealth.
• Natural resources are viewed as merely a factor
of production rather than critical supply of
materials, services, and waste sinks.
Ecological Economics
• Ecological Economics focuses on the
value of natural services and tries to
include those services into price
calculations ecological economics
assumes that natural resources are limited
and valuable, while manufactured capital
is abundant
– Unlike natural resources economics, ecological economics
assumes that natural resources are limited and valuable
Steady-State
• This type of economy relies and is
characterized by low human birth rates
and death rates
• The use of renewable energy sources,
materials recycling, and an emphasis on
durability, efficiency, and stability.
The Tragedy of the Commons
• The tragedy of the commons –
An
inexorable process of degradation of communal
resources due to selfish self-interest of free riders who
use or destroy more than their fair share of common
property
– There are many common example of the tragedy of the
commons for example
• A public grazing area for farmers to let their cows
graze, and each farmer gets greedy and adds
another cow, and this happens until the land is
over grazed and so they all suffer, where if they
has just been less selfish the grazing grounds
would have maintained a sustainable cycle.
½ Prediction for the future
Crash and burn
2/2 Prediction for the future
Adapt and change
Sacristy sparks efficiency
• Examples
– When forests were flush and green, Loggers came through and
took down everything in their way because it was easier that
way. Now since forests are become less available for logging
they are becoming more efficient and practical.
– Another example is natural gas. Recently the U.S has been able
to tripe their natural gas supply by becoming more efficient at
extracting it.
– Connection
• What if itunes songs only cost 1 cent, and you could download as
many as you wanted, and u had unlimited space on your ipod. but
you would only listen to a select few. Now imagine if you had a
limited amount of space on your ipod. You would only purchase and
keep the songs u wanted or needed.
Spending money to Make money
• Many large corporations and many people
complain about the cost of saving our
environment. But what they don’t realize is
that our environment Saves us around 4
Trillion dollars in services.
• Controlling CO2, Water regulation and
water cycle, habitat, food. The
environment does us many services we
take for granted
GDP Vs. GPI
Real gain vs. economic gain
Gross domestic Product (GDP)
has doubled, and is still rising
which includes the economic
activity within the nation
On the other hand Genuine
Progress index (GPI) takes into
account the measure of real
progress in quality of life and
sustainability. And although our
GDP has increased our GPI has
gone almost nowhere
Estimated Annual Value of
Ecological Services
In 2003, economists from Cambridge
University (U.K) estimated that
protecting a series of nature
reserves representing samples of all
major biomes would cost $45 billion
(U.S) per year. But would preserve
ecological services worth between
$4.4 trillion to $5.2 trillion annually
Another way to save
• Emissions Trading
– The government requires companies to pay for the amount of
waste or emissions they release each year. And these
companies have to pay a certain amount of money depending on
their emissions, These new programs allow these companies to
give money to target reduction areas.
• For and example, say a company is emitting a certain amount of Co2 every
year, they can donate a set amount of money to Asia or some country for
them to buy up rainforests for preserves. This way the rainforest takes out
or uses a large amount of co2 from the atmoshpere.
Micro lending
• A small scale alternative to huge development
projects.
– The world bank provides community based banking. Giving out
small loan directly to the poorest people in a community.
– These loans of say a $100 give these people enough money to
buy either a sewing machine, bike, a loom, a cow. Its just
enough to get these people economically active and able to
support their families.
– The return rate of these loans is around 98%
• These loans must be paid back in a regular weekly installment.
• These loans create a sense of dignity, respect, and mutual support within
the group it also encourages individual responsibility and enterprise.
Protection For The environment
• Environment protection creates jobs
– Recycling
– Pollution control
– Environment protection
• It voices the importance of efficiency
– If we don’t start adapting and taking into
account that what we have now wont be
around forever we are headed for a lot of
trouble.
Overall View
Less is More
• There is an overall benefit in protecting the
environment. Yes it costs money but in
the long run we are saving billions of
trillions of dollars.
– The money we spend now is only benefitting
us in the future. The environment is a good
investment. It save us so much more money
than we have to put in to protect it.
Other sources
• http://www.fs.fed.us/eco/s21pre.htm
• http://forestpolicy.typepad.com/ecoecon/