Ecological Economics: Chapter 3 Section 1 Sustainable Scale, Fair Distribution, Efficient Allocation

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Ecological Economics Chapter 3 Section
1Sustainable Scale, Fair Distribution, Efficient
Allocation

• Jesse Dann
• jdann_at_du.edu
• International Studies Student
• University of Denver

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Ecological Economics (EE) as a Transdisciplinary
Enterprise

• Environmental Problems manifest in diverse
  disciplines such as Climatology, Economics,
  Physics, Chemistry, Biology, etc.
• The EE perspective suggest that a holistic (e.g.
  transdisciplinary perspective) is needed to
  address these problems.

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Disciplinary approach
Transdiciplinary approach
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Key consensus points of EE

• Earth Is a thermodynamically closed system
• All citizens of the world are entitled to high
  quality of life within biophysical constraints of
  the earths ecosystems.
• Precautionary principle. We are uncertain about
  some environmental consequences, so we should err
  on the side of caution.
• Institutions and Management must be proactive

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Three basic Goals in EE

• Efficient Allocation (Do the MOST with Less)
• The economists questions.
• Fair Distribution (Equity now tomorrow)
• Societys questions (the moral questions)
• Sustainable Scale (How big is the economy? At
  what spatial scale should policies be
  implemented? Always keep economy a sustainable
  process within the ecosystem.)
• The Scientists Questions

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Separate, but Equal

• The three goals of EE have to be addressed
  equally.

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Sustainable Scale

• Scientists have to ask themselves
• Is global warming happening? Why? What could be
  done about?
• Is the ozone layer disappearing? Why? What could
  be done about it?
• Loss of Biodiversity? How fast? Why? What could
  be done about it?
• Is freshwater being contaminated? Why? What can
  be done about it?
• Is our population growing too fast? Why? What can
  be done about it.
• Note The what could be done about questions are
  sent on to economists and society to decide which
  policy is fairest and most economically efficient.

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Sustainability Analogy

• This is Jed, he is smiling because he just
  inherited a huge sum of man-made capital.

But, Jed became addicted to spending his money on
expensive women, cars, clothes and other
luxuries. And eventually he took it all out of
the bank!
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Sustainability Analogy continued

• Jed spent ALL of his inheritance and becomes a
  homeless bum, who prematurely ages, has no
  friends, and dies of TB.

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What that had to do with Sustainability

• If we spend the earths stored natural capital,
  in the same way that Jed spent all of his
  inherited man-made capital, then we will share a
  similar fate as Jed who is dead.

But the story is not over
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Scale Analogy

• Using the same Jed scenario, I forgot to tell you
  that Jed had siblings.

• The inheritance was meant for all of them.
  However, because Jed spent ALL the inheritance,
  what did they get? Nothing! That bastard Jed
  spent it ALL on himself!

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The significance of that Analogy

• Just like in Jeds sibling analogy, what about
  our siblings (other species), the earths
  natural capital is just as much theirs as it is
  ours. Are we going to be like Jed and not only
  be dead, but screw everyone else while we are at
  it?
• Scale is the question of how much can be claimed
  as ours to harvest.

I am scared of the greedy humans
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How to have a Sustainable Scale

• Do not follow Jeds bad example.
• - Jed should have kept his inheritance in the
  bank. He and his siblings could all have lived
  comfortably off of the interest!
• We too can live comfortably off of the earths
  natural capital interest instead of spending
  our inheritance.
• - Renewable energy, especially solar.

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Finite Global Ecosystem
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Empty World" Model of the Economy
Individual
Property rights
Utility/welfare
Private
Public
Consumption
(based on fixed
Manufactured
Building
preferences)
capital
Goods
Cultural
Norms and
Economic
GNP
and
Education, Training,
Perfect Substitutability
Labor
Policy
Research
Process
Services
Between Factors
Investment
Improvement
Land
(decisions about, taxes
government spending,
education,
science and
technology
policy, etc., based
on existing property
rights regimes)
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Full World Model of the Ecological Economic
System
positive impacts on human capital capacity
Well Being
being, doing, relating
(Individual and
having, being
Ecological
Community)
Complex property
services/
doing, relating
rights regimes
amenities
- having,
Individual
Public
Common
having
- being
Consumption
(based on changing,
Solar
adapting
Wastes
Energy
preferences)
Restoration,
Natural Capital
Conservation
Evolving
Goods
Education, training,
Human Capital
Cultural
Economic
GNP
and
Between Capital Forms
Norms and
research.
Limited Substitutability
Production
Services
Policy
Institutional
Process
SocialCapital
rules, norms, etc.
Investment
(decisions about, taxes
Manufactured
Building
community spending,
Capital
education, science and
technology policy, etc., based
negative impacts on all forms of capital
on complex property
rights regimes)
Materially closed earth system
Waste heat
From Costanza, R., J. C. Cumberland, H. E. Daly,
R. Goodland, and R. Norgaard. 1997. An
Introduction to Ecological Economics. St. Lucie
Press, Boca Raton, 275 pp.
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Pricing the Planet
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Efficient AllocationQuestions for Economists

• Global Warming Stop deforestation or switch to
  hydrogen economy or both?
• Ozone Depletion -- halt production of chlorine or
  bromine containing substances or come up with
  ozone creation facilities, or what?
• Over fishing Subsidize fishermen not to work or
  support aquaculture or something else?
• Contamination of Freshwater Stores stop the
  polluters, make them pay fines, or find other
  water sources?
• Over population -- Give monetary incentives to
  have less children, or make laws against multiple
  children?

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Efficient Allocation

• How can we create the most, from what is
  available?
• What is the best investment to protect the
  environment?
• Advancing technology that increases efficiency
  and sustainability.

Efficient
Inefficient
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Fair Distributionquestions for all of us

• Stop deforestation - how will lumber company
  workers be affected?
• Replace Cl and Br - is it affordable?
• Put restraints on fishing industry - how will
  fisher-people be affected?
• Halting water pollution - how expensive for
  companies? At what price would utilizing other
  water sources be at?
• Stopping population growth - If it fair to
  control a persons freedom to reproduce?

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Fair Distribution

• We cannot grow out of poverty, when we have not
  the resources to continue growing.
• "We can have a democratic society, or we can have
  the concentration of great wealth in the hands of
  the few. We cannot have both."
• Supreme Court Justice Louis Brandeis

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The Distribution of Wealth in the USA
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Distribution of Wealth Internationally

• The gap is far worse than within the USA.
• The richer countries are getting richer, while
  the poorer countries are getting poorer.
• The World Bank has recorded
• 1 of GNP of the USA would double the income of
  24 of the poorest countries.

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Why Redistribution should be avoided/minimized

• People should be able to keep what they work hard
  for.
• It will destroy the incentive to work hard. (why
  should my hard work benefit some lazy sob?!)
• However, we do need to lessen the gap between the
  rich and the poor.

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Policies that support a sustainable, efficient,
and fair economy

• Dont be a Jed.
• Efficiency is paramount.
• People keep (most of) what they work hard for,
  but must also pay their dues to society. (the
  price of peace)

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Discussion Exercise

• Split into three equal groups.

• Scientists, economists, and society.

• Address and come up with a possible solution for
  the following problem
• Hamster overpopulation, which is destroying
  agricultural fields, and could cause global
  starvation.

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Discussion Questions

• How do we compensate the future, for leaving them
  our problems? Is it possible?
• Is Ecological Economics practical? Do you see it
  being implemented in our lifetime?
• What do you agree with or disagree with in terms
  of these three goals of EE?

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El Fin
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• Works Cited
• An Introduction to Ecological Economics
• By Robert Costanza and Co.
• Ecological Economics
• Presentation by Robert Costanza and Co.
• 3) Sustainable, Fair, and Efficient Economy
• By Joshua Farley _at_ The Gund Institute for
  Ecological Economics at UVM.

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Sustainability
Sustainable Community The Amish base their lives
on their horses. Nothing happens faster than a
horse can go. They live in a sustainable manner.
Their houses dont need electricity, and their
horses dont need oil. They have a very high
quality of life. Verses Unsustainable
Community We depend on transporting resources to
where we are living. (our food, oil, electricity,
goods, etc.) Very few of the people in the world
qualify as having a high quality of life.
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Scale

• UV radiation and ban of CFCs to help ozone.
  Easily related to because of sun burn.
• Versus, glacier melting, sea level rising, etc.
  Remote effect what about moral values, duty to
  aid fellow man.
• We take our resources and products from around
  the world, but we do not sympathize with their
  plight. We have a global economy, not global
  empathy. We felt 9/11, but did not care about
  the 20,000 Indians that died in the 2001
  earthquake. Again, remote effect.