ECON 436 Lecture .pdf - ECON 436 LECTURE NOTES SUMMER 2019...

This preview shows page 1 - 3 out of 16 pages.

1 ECON 436 LECTURE NOTES SUMMER 2019 Introduction Economic View of the Environment The economic view of the environment is essentially anthropocentric, that is, it values the environment for the services that it provides to humans. However, the services are not necessarily materialistic, much less market-based. Instead, they consist of whatever enters individuals’ utility functions, which may include esthetics, preservation of species, etc. Environmental services can be grouped broadly into four types: 1. Life support for humans 2. Amenities 3. Material inputs 4. Disposal of residuals Services 3 and 4 are directly linked because of the law of conservation of mass, which implies that the total mass of residuals disposed of in the environment is equal to the total mass of inputs taken from the environment, as illustrated by the simplified materials balance model in Figure 1.1. Figure 1.1 Materials Balance Model P Production Consumption ECONOMIC SYSTEM ENVIRONMENT/ECOLOGY Final products Residuals Inputs Residuals Recycling Recycling g. we care about the environment what it could die to us - ( keep us alive ) fgenrironment does all sat directly ¢ ( desirable , useful for the society ) the good things for as greedy ( clean water , clean air , etc . ) apart of amenities kN ( what we throwaway ) we will always go Kmart total inputs = production residuals -1 consumption residuals -_ thnepwt
Image of page 1

Subscribe to view the full document.

2 Residuals are created in both the production and consumption of goods and services. Some of the residuals are recycled back into production, which reduces both the amount of residuals disposed of in the environment and the amount of inputs required. The equality between the mass of inputs and mass of residuals does not necessarily hold in any one year because some of the inputs are used to produce durable assets, but in the long-run they too are eventually disposed of in the environment. Total inputs = industrial residuals + household residuals = throughput. Environmental quality is defined as the level and composition of all environmental services except disposal of residuals. Pollution is defined as the reduction in environmental quality caused by the disposal of residuals, and the costs of pollution are equal to the value of other services foregone. It is important to note that pollution is not simply proportional to the amount of residuals. Instead, the amount of pollution depends on both the quantity of residuals and how damaging they are to environmental quality. Therefore, pollution can be reduced either by reducing the economy’s through-put (inputs in, residuals out) or by reducing the amount of environmental damage per unit of residuals. Technical alternatives for reducing pollution 1. Reduce through-puteqinputs in, residuals out). a. Reduce the rate of production by reducing GDP while keeping its composition unchanged.
Image of page 2
Image of page 3
  • Fall '08
  • Staff
  • Pollution, Externality, Ronald Coase

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern