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ENVI524 (Subject) / Part 1 (Lesson)

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• Role of Government: Aristotle vs. Machiavelli Aristotle humans are good ecological view: people defined by community (facilitates collective action, identity reflects community evolutionary, institutional, ecological economics: policies are based on and support inherent civic virtue Machiavelli humans are wicked mechanistic vie: social good is sum of individual desires, identity is relflected in material wants neoclassical economics: policies trick people into doing the right thing
• Labour Theory of Property John Locke ownership is created by application of labour limits: a person can only own what he can join his labour to; has to leave enough and as good in common for others balance between the commons and private property
• Externality (Pigou) affect how people use/protect the environment invisible hand (Smith) not realistic Pigovian tax: if social costs are added to supply curve, less of the polluting good is produced and market failure is corrected BUT: prices don't tell the ecological truth
• Malthus power of population > power of earth to produce sustenance premature deaths of humans carrying capacity
• Mill steady state competitive economies (essential to freedom) rely on private property rules some natural capital should be protected in a steady state people enjoy the fruits of their savings
• Incentive Design vs. Common Good spillover effects that cannot be managed by tweaking prices it's hard to design incentive mechanisms absence of full information necessary for ideal decentralised incentives big data needed to be placed in the hands of those designing incentives → incentive mechanism can't make ethical and other-regarding preferences redundant→ strong incentives may weaken civic norms (e.g. Haifa daycare, fee for tardiness)
• Economic Growth (Daly) continuing growth in market economic activity (GDP) can reduce well-being rather than increasing it rising income inequality is associated with greater social tension and makes building social capital more difficult inequality has no benefits for economic growth leads to more social and health problems, division, puts good policy at risk powerful lobby firms, undermines collective endeavours like envi protection, less regard among rich for interests of the future
• Value Locke: labour theory of property Marx: labour theory of value (neglects natural capital) Smith and Marshall: supply and demand determine value, price determines their interaction under institutionally determined conditions access to valued services: law, rules, customs, norms (institutions)→ environmental policy formulate and improve them types: cultural, social, spiritual, ethical/moral, intrinsic, instrumen
• Scarcity all resources are scarce economy: study of how to allocate scarce resources underlies value (and without value/demand, no concerns about scarcity) demand exceeds supply until it doesn't, at which point production ceases
• Choice exercising choice thought to reveal preference but, constraints: feasible alternatives, perceived ability to cope with particular choice stated preference may indicate more about reality than what is revealed by market choice
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• Prices as policy instrument getting prices right as policy prescription (e.g. OECD) but: irreversibility, long-term-effects, ethical issues (e.g. future impacts), high volatility in markets prices often too low
• Discounting utility now implies a high rate of time preference/discount rate/present orientation/short time horizon education and wealth leads to lower discount rates people have different discount rates: discounted-utility (DU) model averages rates across people gross simplification: faulty assumption that the varied considerations that are relevant in intertemporal choices apply equally to different choices → can't all be sensibly represented by a single discount rate
• Externalities and the Coase Theorem Coase abstracted to a world with zero transaction costs Externalities are a problem of contracting and allocation of property rights Matters little to whom the rights are assigned – contracting reallocates rights to maximise welfare Collapses in the real world with non-zero transaction costs, and equity considerations
• Sustainability having an economic structure within which we consume only as much as the natural environment produces and we generate only as much waste as that natural environment can absorb vs. neoclassical sustainability: ability of economy to maintain living standards over time (i.e. not decreasing): focuses on capital stocks / productive base
• The Commons critical for all economies, e.g. atmosphere, oceans, fish stocks free riding and excess demand if unregulated by custom or other mechanism struggles of common resource management, esp. difficult where:rapid change, monitoring is difficult, communication and trust not maintained, outsiders cannot be excludedproblems at large scale, involvement of non-local influences, top-down rules limit local experiments
• Capitalism 3.0 all the gifts we inherit or create  together, e.g. language, music, money, maths, the net joint obligation to preserve the commons Unlike mkt assets, there’s a moral obligation to keep them going→ enlarge the commons sector
• Market Imperfections imperfect information market power, collusion, adverse equity implications, present orientation, TC impeding info-gathering/negotiation/allocation of public goods
• Sources of Info Costs limited cognitive capacity self interested agents withhold preferences attributes of envi resources can only be learned over long time, if at all adjustments require learning, time and resources institutions scatter info, limit ability of agents o gather it
• Govt Imperfections rent seeking privileges special interests corruption (driven by business sector) favouritism, nepotism (rife in private sector) high TC (across economy) not adhering to rule of law (ditto)
• Safeguards against Government Imperfections independent public service transparency, avoid corruption PCE, Audit Commission civil society constitution
• Ecological Economics transdisciplinary focus on the links between economic, social and ecological systems traditions economics and natural sciences are not sufficient to address issues, or able to explain the past history of the human-envt system criticises that envi economists use neoclassical mainstream methodology which is reductionist core principles- economy is a sub-system of a larger human-envi system- models of economy must comply with biophysical principles (mainstream econ underemphasizes natural sciences)- abaility to sustitute human made inputs for envi/nat resources is limited (e.g. bc of thermodynamics/need for energy, basic human needs, higher psychological needs, essential natural capital required for planetary life support)
• Systems Thinking transdisciplinary Challenges mechanist thinking (‘the whole is just the sum of the parts”) Emphasises properties of the whole, not the parts Emphasises relationships rather than objects, e.g. the food web Pattern as much as structure / content Context / environment rather than just the object Processes… esp feedbacks
• Pressures & SOS rising population creates impacts on climate, biodiversity, other systems and resources strongly influenced by affluence and technology I= PAT: Impact = population * affluence * technology A safe operating space: facing the boundaries there are non-linearities and thresholds in systems that it is wise not to go beyond systems are too complex to model fully but we can detect or estimate thresholds in the paleo record or with other evidence need insights from multiple disciplines to determine thresholds (climate, change, biodiversity)
• Boundaries 3 big boundaries w catastrophic tipping points: Climate change strat ozone depletion ocean acidification 4 slow boundaries underlying Earth’s ability to buffer insults and be resilient: Land use Nutrient cycling Freshwater use Biodiversity loss 2 ‘human made’ boundaries: Particulate air pollution Chemical pollution
• Criticism of 'boundaries' Allen: actions must be taken regardless of exact boundaries Schlesinger: comforting for policymakers, but can also be risky when waiting for threshhold and continuing misbehaviour Molden: global boundaries overlook local circumstances
• WITs thought system: worldviews, institutions, technologies (WITs) WITs reinforce each other, dominate the way we act currently support unlimited growth of material production and consumption but such growth creates tightening resource constraints, and diminishing quality of life WITs have become maladaptive, and are locked in due to political, social, economic inertia fail to meet our system's needs in a full world: belief in unlimited growth, growing and unsustainable complexity transition/escape lock-in can be uncontrolled or deliberate/socially accepted crises are opportunity to redesign the socio-ecological regime

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