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Lecture4Economics - EconomicIssues Lecture4 Introduction...

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Economic Issues and Ecological Economics Lecture 4
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Introduction The Problem Externalities Prevailing v. Sustainable  Economics Environmental Regulation Global Taxing Priorities Internalization Processes Free Market Processes Benefits to Firms Conclusions
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What is Ecological Economics? • Ecological economics  is a transdisciplinary field  of academic research that addresses the  interdependence between human economies and  natural ecosystems. Ecological economics  connects different disciplines within the natural  and social sciences. Fundamental focus is on the concept of  NATURAL CAPITAL. Economic definition of capital: A STOCK of  something that yields a FLOW of valuable goods  and services.  
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Ecology and Economics • From same Greek word  oikos , house • Ecology is the study of the house • Economics is the management of the  house
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The Five Forms of Capital Human Capital – physical, intellectual, emotional  and spiritual capacities of any individual. Manufactured Capital – the built environment,  infrastructure, tools, equipment, machinery and  technology Social Capital – social networks of family and  community, the “social glue” that holds society  together Financial Capital – monetary assets (really a form of  social capital) Natural Capital – any part of the natural world that  humans make use of or benefit from, including  resources, waste sinks and ecosystem services
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Capital: Stocks and Flows Human: stock of knowledge and experience yields a  flow of work skills Manufactured: stock of circuitry, metals and plastics  (computer) yields a flow of computing services Social: stock of family and personal friends yields a  flow of support and relationships Financial: stock of monetary assets yields a flow of  interest earnings Natural: stock of trees, soil, and microorganisms  (forest) yields a flow of timber, non-timber forest  products, clean water, oxygen, CO2 sequestration,  recreation, aesthetic enjoyment
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Linking Capital and Sustainability Basic economic rule: maintain capital intact in  order to maintain the flow (INCOME) of  useful goods and services from that capital  stock Conventional economics has interpreted this  rule to focus mainly on human, manufactured  and financial capital; largely ignoring social  and natural capital – WHY? Marketed vs. non-marketed Historical factors (abundance of natural  capital)
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Why is Natural Capital Overlooked?
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