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Brendan Moore- MI2407 Economics and Sustainability

Brendan Moore- MI2407 Economics and Sustainability

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Published by: Brendan Moore on Jan 07, 2012
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Economy

Human society is an open subsystem of the biosphere...

Biosphere Society .

Biosphere Society .

.. .The economy is an open subsystem of human society.

Biosphere Society Economy .

Biosphere Society Economy .

GDP private consumption + gross investment + government spending + (exports í imports) .A few definitions...

University of Chicago Press IGBP synthesis: Global Change and the Earth System. Steffen et al 2004 .Total real GDP Nordhaus (1997) The economics of new goods.

.

Why does the economy matter? .

A few definitions... Prosperity and Well-being .

GDP growth GDP de-growth .

42 .Sweden 1800 (off chart) Sweden 1900 Sweden 2008 Source: Jackson 2009.

created by Mnmazur for Wikimedia Commons .The Great Recession GDP Growth Rate. 2009 Data from CIA World Factbook.

S. U. U. Data from CIA World Factbook. Unemployment.S. created by Mnmazur for Wikimedia Commons .The Great Recession Housing Prices.

Source: Millenium Development Goals Report 2010. 10 .

Source: Millenium Development Goals Report 2010. 9 .

.It matters to decision makers. ..

Source: Stimson 2004 .

Source: Stimson 2004 .

Source: Hibbs 2007. 6 .

Perhaps it¶s more sustainable? .

updated. PNAS.Fossil Fuel Emissions: Actual vs. 2007. Nature Geoscience. IPCC Scenarios 01 F o ss ilF ue lEm ss on G C y -1) i i ( t Averages Raupach et al.8% GDP: -1.1% C intensity: -1. 2009.7% Full range of IPCC individual scenarios . Le Quéré et al. International Monetary Fund 2009 5102 0102 retneC sisylanA noitamrofnI edixoiD nobraC 5002 ycnegA ygrenE lanoitanretnI 0002 noitcejorP 5991 I F1 A T1 A 2A 1B 2B B1 A 0991 9 8 7 6 5 Projection 2009 Emissions: -2.

8 .Source: HSBC 2009.

How do we handle this? Source: Steffen et al. 2004. 17 .

Regulation .

Source: Millenium Development Goals Report 2010. 54 .

The Market .

Economy .

Neoclassical Economics Environmental Economics Ecological Economics .

Price SUPPLY EQUILIBRIUM PRICE DEMAND Quantity (#) .

The market allocates efficiently, given a few assumptions...
1. 2. 3. 4. 5. 6. 7. 8. 9. Static conditions for one time period Identical product functions Property rights Free trade Full information No transaction costs Many buyers and sellers (competition) Everyone is a pricetaker (no one sets price unilaterally) No externalities

The Self-Correcting Market
SUPPLY
Price

DEMAND
Quantity (#)

³Economics ± and macroeconomics in particular ± is ecologically illiterate.´ -Tim Jackson Prosperity without Growth

Neoclassical Economics .

Environmental Externality is outside of the market .

9 .Source: Millenium Ecosystem Assessment 2005.

Is intervention needed? .

John Maynard Keynes Keynesian Economics Spending by Governments for Full Employment .

.

3 .Source: HSBC 2009.

Source: HSBC 2009. 3 .

Environmental Economics .

NEW CURVE Price SUPPLY DEMAND Quantity (#) .

$4000 Public Net Present Value per PrivateNet Present Value per hectare Value (per hectare) 1987 1999 $1.700) timber products ($90) Pollution Costs (-$230) Restoration (-$8.900) Fishery nursery ($70) Timber and NonMangrove Conversion 0 Source: Millennium Ecosystem Assessment.000 (Gross $17.000 to $3.400 Shrimp Farm: $2000 to $200 $2000 Coastal Protection (~$3. Sathirathai and Barbier 2001 Source: UNEP Less subsidies (-$1.900 less costs of $15.600 Mangrove: $91 $-5.240) Mangrove Shrimp Farm .840) Net: $2.

Many services are public goods Spiritual & religious Aesthetic Flood/Fire regulation Disease regulation Water purification Climate regulation Freshwater Genetic Resources Recreation & tourism Fiber Food ? ? ? ? ? Economic Valuation ? Private Benefit Capture Difficult Difficult or impossible ? ? ? ? Easy ? Easy Economic Value ($) .

Ecological Economics .

QUOTA Price SUPPLY DEMAND Quantity (#) .

Neoclassical Economics .

Environmental Economics .

.

Decoupling ..Thinking about throughput..

Source: Jackson 2009. 49 .

Source: Jackson 2009. 50 .

52 .Source: Jackson 2009.

Do rich countries need growth? .

Benefits level off.. ..

Source: Jackson 2009. 42 .

43 .Source: Jackson 2009.

Source: Jackson 2009. 33 .

Growth in the developed countries might be unsustainable. ...

..but a lack of growth is unstable... ..

and instability has consequences. ....

But why is growth necessary? Firms (Businesses) Households (Consumers) .

Revenue Costs = Profit! Firms Capital Materials Labor .

Source: Kroszner 2006 .

and Jobs .Productivity. Novelty.

.

61 .The Iron Cage of Consumerism Source: Jackson 2009.

Source: Jackson 2009. 79 .

Source: Jackson 2009. 80 .

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