Topic 4.1 Economics, Environment and Society
Economic Systems
Many people consider that our current economic system is a major factor preventing countries, regions and individuals from dealing with major environmental issues.
An economy is a system of production, distribution, and consumption of goods and services that satisfies people's wants or needs. Many people advocate that we need to move from conventional economic system to an ecological economic system which is a new transdisciplinary approach to understanding and managing the ecology and economics of our world for sustainability, on local, regional and global scales
Activity 4.1
Read Miller & Spoolman (2012), pages 613-618 and the text at the bottom of this table and answer the following:
- Describe how conventional economists and ecological economists disagree on the importance of natural resources in sustaining economies.
- Describe 6 strategies to help make the shift to an eco-economy.
Monitoring Economic and Environmental Progress
You will have heard of GNP and GDP which are often used as central indicators of the economy in political debates. We need to understand what is meant by GNP and GDP when considering whether these economic indicators are useful measures of economic or environmental health.
Activity 4.2
Read Miller & Spoolman (2012), pages 618-626, and answer the following:
- What is GDP, and why do ecological economists call for the development of a new economic indicator.
- Describe an indicator to monitor the economy with consideration or environmental and social well-being.
Internal, External and Full-Cost Pricing
One factor that is essential in a shift towards ecological economics is to have the market prices of goods and services to be based on full-price costing.
Activity 4.3
Read Miller & Spoolman (2012), pages 621-622, and answer the following:
- Distinguish between internal costs and external costs. What is full-price costing, and what are the pros and cons of using this approach to internalize external environmental costs?
- Describe three reasons why full price-costing has not been widely used.
Using Market Forces to Improve Environmental Quality.
One particularly controversial area of political debate is the use of government intervention in the economic marketplace to improve environmental quality. Governments can introduce regulations and use market-forces but these are usually very unpopular with interested big business parties and often with the public.
Activity 4.4
Read Miller & Spoolman (2012), pages 624-627 and answer the following:
- What are the pros and cons of using regulations to improve environmental quality?
- Describe 2 types of economic incentives that can be used to improve environmental quality and reduce resource waste. List the pros and cons of each type.
- Describe 2 types of economic disincentives that can be used to improve environmental quality and reduce resource waste. List the pros and cons of each type.
- What are the pros and cons of using tradable pollution and resource-use rights to reduce pollution and resource waste
Environmentally-sustainable Economies
I'm sure that after working through Modules 1, 2 and 3, you would understand why so many people think that we need to make the transition to a more environmentally sustainable economy. However, making the shift requires a political and social change.
Activity 4.5
Read Miller & Spoolman (2012), pages 630-633 (including Figure 23-16) and complete the following:
- List 5 principles for shifting to more environmentally sustainable economies over the next several decades. Do you agree with each?
- Do you personally consider that we are making efforts to shift towards an environmentally sustainable economy? Why (based on your personal knowledge)?
A Global Market Economy
Since the 1970's the world has been moving towards a global capitalist economy governed by global economic institutions such as the World Bank, International Monetary Fund, GATT and WTO. This is currently one of the most controversial environmental issues, with fierce protests at venues of globalisation meetings. The most well-known of these was the 'Battle for Seattle' in 1999 when trade ministers from 135 countries assembled in Seattle to launch a new round of global trade talks and were greeted by 50,000 to 100,000 demonstrators from around the world who delayed the start of the talks through a massive street protest that kept delegates from the convention hall
Why are so many environmentalists taking part in these disputes? It is a reaction to a number of WTO rulings that have found environmentally friendly policies are barriers to free international trade. One of the best known was the US laws banning imports of tuna caught by methods that prevent dolphins from drowning in tuna nets. Due to the WTO ruling (and threat of massive fines), the US Congress weakened the law.
A lot more information on globalisation can be found on the WWW. For anyone particularly keen on this topic, the text 'Vanishing Borders: Protecting the Planet in the Age of Globalization' by Hilary French is available in the library and bookshop.
Activity 4.6
Using the links in the WTO folder in the materials on learnline consider the following:
- Why do environmentalists and others have concerns about the WTO decisions?
- What are 5 suggestions for improving or revising the current rules of the WTO? Explain why you agree or disagree with each.
Environmental and Anti-environmental Groups.
The role of environmental groups in keeping environmental issues topical and achieving change cannot be overstated. They are very powerful lobby groups, particularly in the USA where they are able to fund many research, training, eductation and direct action programs. Environmental groups are supporting the notion of full-price costing and the shift toward environmentally sustainable economies over the next decades.
Activity 4.7
From Miller & Spoolman (2012), page 655-657 and your personal knowledge and experience,
- Describe 3 important achievements of environmental groups of the last 10 years.
Why are Environmental Issues Controversial?
During the semester you have become aware of how controversial most environmental issues are. This is demonstrated very well by the issues discussed in the text Taking Sides: Clashing Views on Environmental Issues. By completing this unit, I hope that you have been able to develop your skills in evaluating arguments presented to you and are able to assess their value based on empirical evidence versus opinion, fact versus fallacy and for evidence of bias.
Activity 4.8
- In light of what you have learnt this semester, what are the 4 main ways that you evaluate arguments about environmental issues?
Review Questions
- Describe ecological economics. How does it differ from conventional economics?
- Evaluate the commonly held belief that GNP is an indicator of a country's well-being. Describe two alternative indicators that take social and environmental factors into account. Evaluate the accuracy of these indicators.
- Distinguish between internal and external costs. Distinguish between external costs and external benefits. Describe measures that can be taken to achieve full-cost pricing.
- Summarize the concerns that many environmentalists have about the General Agreement on Tariffs and Trade and World Trade Organisation. Summarize seven steps to improving trade agreements.
- Describe ways in which market forces can be used to address environmental issues.
- Why are environmental issues so controversial?