Economics, Politics, Environment, and SustainabilityEconomics, Politics, Environment, and Sustainability

Brian Kaestner

Saint Mary’s Hall

Brian Kaestner

Saint Mary’s Hall

Thanks to Miller and ClementsThanks to Miller and Clements

Economic ResourcesEconomic Resources

Economic decisionsEconomic decisions

Economic resourcesEconomic resources

Natural resourcesNatural resources

Human resourcesHuman resources

Financial resourcesFinancial resources

Manufactured resourcesManufactured resources

Cultivated resourcesCultivated resources

Quantity

Pri

ce (

low

to

hig

h)

Demand curve Supplycurve

Quantitydemanded

Quantitysupplied

Surplus If the price is toohigh, more oil is

available than buyersare willing to buy

Quantitysupplied

Quantitydemanded

At this market equilibriumprice, the quantity of oil thatsuppliers are willing to sell is

the same as the quantitybuyers are willing to buy

If the price is too lowbuyers want to buy more

than supplies arewilling to sell

Shortage

Old New

Quantity

Pri

ce (

low

to

hig

h)

Old demandcurve

New demandcurve

Supply curve

Newequilibriumprice andquantity

Black

New

Old

Old equilibriumprice andquantity

Because of theshortage, buyer arewilling to pay more.

This establishes a newmarket equilibrium point

Increased demandis higher than

supply so there is ashortage

Old

Quantity

Pri

ce (

low

to

hig

h)

New

Old

Supply is lowerthan demand,so there is a

shortage

New equilibriumprice andquantity

Demand curve

New supply curve

Old supply curve

Because of theshortage, buyers arewilling to pay more.

This establishes a newmarket equilibrium point.

Old equilibriumprice andquantity

New

Economic SystemsEconomic Systems

Pure command economic systemsPure command economic systems

Pure free-market economic systemPure free-market economic system

Market price equilibrium pointMarket price equilibrium point

Capitalist market economic systemsCapitalist market economic systems

Mixed economic systemsMixed economic systems

Global market economyGlobal market economy

Ecological EconomicsEcological Economics

sunEarth

NaturalNaturalCapitalCapital

Air; water, Air; water, land, soil, land, soil, biodiversity,biodiversity,minerals, minerals, raw materials, raw materials, energy energy resources, resources, and dilution, and dilution, degradation,degradation,and recyclingand recyclingservicesservices

EconomicSystems

Production

Consumption

Heat

Depletion ofDepletion ofnonrenewablenonrenewableresourcesresources

Degradation and Degradation and depletion of renewable depletion of renewable resources used faster resources used faster than replenishedthan replenished

Pollution and waste Pollution and waste from overloading from overloading nature’s waste disposal nature’s waste disposal and recycling systemsand recycling systems

Recycling and reuse

Economic GrowthEconomic Growth

Environmentally sustainable economic development

Environmentally sustainable economic development

Economic growth

Economic growth

Characteristic

Production emphasis

Natural resources

Resource productivity

Resource throughput

Resource typeemphasized

Resource fate

Pollution control

Guiding principles

UnsustainableEconomic Growth

Quantity

Not very important

Inefficient (high waste)

High

Nonrenewable

Matter discarded

Cleanup(output reduction)

Risk–benefitanalysis

EnvironmentallySustainableEconomic

Development

Quality

Very important

Efficient(low waste)

Low

Renewable

Matter recycled,reused, or composted

Prevention(input reduction)

Prevention andprecaution

0 25% 50% 75% 100%

Co

st p

er u

nit

po

lluta

nt

rem

ove

d (

$)

It is very expensiveto try to get tozero pollution

As more pollutants areremoved, the cost of removingeach additional unit increase

Percentage of pollutants removed

100% 75% 50% 25% 0%

Low

High

Co

sts

Zero discharge(toxic waste)

This curve is thesum of the twobottom curves

Minimaleffort

Mostcost-effective

effort

Bettereffort

Extracost

Cost to society

Cleanupcosts

Pollution remaining

Harmful External Costs and Full-Cost PricingHarmful External Costs and Full-Cost Pricing

Internal costsInternal costs

External benefitExternal benefit

External costsExternal costs

Full-cost pricingFull-cost pricing

Internalizing external costsInternalizing external costs

Costs of PollutionCosts of Pollution

Direct costsDirect costs

Indirect costsIndirect costs

Repercussion costsRepercussion costs

Consumer (user) paysConsumer (user) pays

Taxpayer paysTaxpayer pays

Making the Transition to Environmentally Sustainable EconomiesMaking the Transition to Environmentally Sustainable Economies

Implementation of life-cycle management

Implementation of life-cycle management

Improving energy efficiency Improving energy efficiency

Inventing more sustainable technologies Inventing more sustainable technologies

Improving public awareness Improving public awareness

Case Study: Environmental Policy in the United StatesCase Study: Environmental Policy in the United States

Purchase recyclable,recycled, and

environmentallysafe products

Recycle cans,bottles,paper,

and plastic

Plant a garden

Individual

Donate clothesand used

goods to charities

Use water,energy,

and otherresources efficiently

Use mass transit,walk, ride a

bike, or carpool

Laws and regulationsMembership support

Lawyers LawyersCourts

Boycotts

Environmentalorganizations

Legal action Legal action

Laws andregulations

Corporationsand smallbusiness

Specialinterestgroups

Lobbyists Lobbyists

Lawmaking body

Publicadvisory

Publichearing

Regulatingenforcement

body

Factors Hindering Democracies in Dealing with Environmental ProblemsFactors Hindering Democracies in Dealing with Environmental Problems

Reactive to problems instead of proactive Reactive to problems instead of proactive

Short time between elections shift focus to short-term issues

Short time between elections shift focus to short-term issues

Major affected groups do not vote; no obligation on the part of politicians

Major affected groups do not vote; no obligation on the part of politicians

Elected officials spend much time raising money to be reelected

Elected officials spend much time raising money to be reelected

Environmental Groups and ClaimsEnvironmental Groups and Claims

Mainstream groupsMainstream groups

Grassroots groupsGrassroots groups

Specific issue focusSpecific issue focus

Raise understanding or awareness of issues

Raise understanding or awareness of issues

Many groups but not much cohesiveness

Many groups but not much cohesiveness

Anti-Environmental Groups and ClaimsAnti-Environmental Groups and Claims Threatened by environmental regulations Threatened by environmental regulations

Threats to private rights or property Threats to private rights or property

Spend much time attempting to discredit legitimate groups

Spend much time attempting to discredit legitimate groups

Often use “environmentally-friendly” sounding names

Often use “environmentally-friendly” sounding names

Raise questions and doubt in the minds of citizens

Raise questions and doubt in the minds of citizens