Economists were interested into the land scarcity and

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Economists were interested into the land scarcity and land rents . --> farmers that have a good land were better off than farmers that had a bad land. Same today with the oil soil. It creates the rent associated with the quality of the land. We 1 st land the best land and so on, so it creates scarcity which is a thread to the economy. A bad use of lands can get poorer because of the scarcity of the natural resources. We can say the same story with coal. Like in UK, economists said the growth of an economy can stop because of the lack of coal (it never happened bc of technology) John Stuart Mill: the 1 st to talk about amenities. The natural resources aren't only used for production but also for they beauty itself. b)Neoclassical economists end XIXs c Capital creates the growth of an economy, so the next economists were not scared about scarcity anymore. Cray (1914), Hoteling (1931) Problem of the mine what extraction path a mine holder should follow? --> created the theory of optimal management of non-renewable resources Pigou (1920) Correction of externalities (not integrated in the market so they don't give a price). the correction of pollution externalities associated with the use of natural resources. c) Ecological economists They are advocating a multidisciplinary approach of the living world (biology, physics, etc.)
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III. Important lessons from physical sciences and biology a) 1 st law of thermodynamics Law of conservation of matter and energy in a closed system. Kneese, Ayres, D'Arge, "Economics & the environment. A materials balance approach" idea of conservation of material in a closed system. Imagine the earth is a closed system. Ultimately everything is sent back to the environment in the form of waste The environment: A ≡ B + C + D => waste Environmental firms: A ≡ A1 + A2 + C Non-environmental firms: B + R + E ≡ R + A1 + F Households: A2 + E ≡ D + F
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So, nothing disappears, everything is balanced back . We should do national account not only in money but also in term of energy. Because everything that goes in go out too. So according to this system waste has to be considered seriously since nothing disappears. We cannot consume without thinking how the waste is going to end (back in the nature). Ecological Economics: papers about economics of environment Ex: how much energy is needed to produce wine, where does it come from etc. Different approach that usual economics . b)2 nd law of thermodynamics (the entropy principle) The entropy principle : it means if you transform a fossil energy into energy by combustion, the process is irreversible . - Very disorganized system: high entropy , so you cannot transform the resource in high quantity of energy. The humans increase the entropy of a system, so increase the change that we cannot transform resources into energy.
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  • Fall '19
  • Ecological economics, Renewable resource

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