Environmental Economics

[JudoMinja]

So, I'm working on a final paper for a class in Environmental Economics and was wondering what people's thoughts are on this topic? The general precept behind environmental economics is trying to tie environmental and economic issues together- fixing the environment and the economy together.

To do this, we have to put a "price" on the environment. If something does not have a monetary value, in any economic analysis that value is zero. Without putting a price on something like a wetland, that wetland could end up destroyed- but destroying the wetland will end up doing more harm than good. In an analysis where we are trying to determine if the land is more profitable "as is" or more profitable bull-dozed with a mall, gas station, or other such business built on it, the business will always be seen as more profitable if we cannot price environmental services like the natural water sanitation provided by a wetland.

Now, that is the basic idea behind the class, but I'm finding as the class progresses that I see things from a bit of a different angle than the way the professor is presenting things. The professor keeps stressing the need for the "price" and that we need to "show him the money" in our papers. While I think this system will certainly prove helpful since unpriced items show up as "zero" in an analysis, I still think this method is "broken".

I am trying to tie something known as the "cradle-to-cradle" concept into economics for my paper. This is a concept focused on recycling, but it can easily tie into economics and is a better reflection of how I view environmental economics. Right now, we operate on a "cradle-to-grave" system- which is linear. We get fresh resources, make items for use/consumption, then waste whatever is left over. In the "cradle-to-cradle" system, the idea of waste is eliminated. The way we make products would need to completely change so that everything we use is reusable. Landfills would no longer be "dumps" but places where we could "re-mine" for materials for new products.

With this, I would also be tying in an ecological concept known as "carrying capacity". There have already been efforts to tie this into the economy, so it is not really anything new. However, it has mainly looked simply at human populations- at what point will our population "cap" and we find ourselves able to live sustainably off our resources?

Since the amount of matter on the planet is finite, we cannot keep using "new" resources and "wasting" the old. The economy cannot keep growing exponentially and growth does not necessarily equal "healthy". Just because something costs less and provides a greater profit, that does not necessarily make it better. If we are to have a stable environment and economy, we need to live off the "interest" of the earth's resources- don't use it faster than it can replenish itself. The world works in cycles, so instead of relying on a linear model for our economy, we need to create an economic cycle that works in tandem with the environment.

I'm trying to think of ways I can present this from my perspective in my paper and still provide the "prices" my professor wants. In essence, I am looking at things backwards. Instead of trying to fit the environment into the economy, I am trying to fit the economy into the environment. Anyone have any thoughts on this?

[NeuroTypical]

Sounds like a fun thought experiement run by your standard left-leaning professor. Such thinking has its useses, but often lacks a very fundamental bit of information.

Since the amount of matter on the planet is finite, we cannot keep using "new" resources and "wasting" the old.

Here's a better way to pose the issue: Our earth is constantly recieving energy from the sun. We gain energy by just sitting there floating through space. About 1500 watts per meter squared per day. In this reality, thinking in terms of a closed system, with finite non-replenishable resources, is often just flat out friggin' dumb. It might work for mineral resources, but it doesn't work for energy.

From Disney's The Lion King:

Mufasa: "Everything you see exists together in a delicate balance. As king, you need to understand that balance and respect all the creatures, from the crawling ant to the leaping antelope."

Simba: "But Dad, don’t we eat the antelope?"

Mufasa: "Yes, Simba, but let me explain. When we die, our bodies become the grass, and the antelope eat the grass. And so we are all connected in the great Circle of Life."

Anyone trying to make some zero-sum game of this circle is bound to immedately fail. Spending thirty seconds thinking about it, quickly has one realize that a lion will consume far, far, far more than the grass which will be nurished by the lion's body. Such a circle is possible - with each critter on the ladder taking more than it gives - because of the sun's free energy.

Anyway, Judo, tell your professor that. You can tell how leftie he is, by how far the veins stick out of his forehead.

LM

[marshac]

Easter Island is an instructive case study for the human carrying capacity of the environment, as is the economic thought experiment 'tragedy of the commons'. I listen to a weekly econ podcast called econtalk, and I know several previous podcasts covered this topic. Here's one of probably several links.

Yandle on the Tragedy of the Commons and the Implications for Environmental Regulation | EconTalk | Library of Economics and Liberty

IMO, it's highly probably that we've already exceeded the carrying capacity of the planet- we just happen to get by creating higher yielding crops, and due to fossil energy and fossil water utilization.

[JudoMinja]

Sounds like a fun thought experiement run by your standard left-leaning professor. Such thinking has its useses, but often lacks a very fundamental bit of information.

Here's a better way to pose the issue: Our earth is constantly recieving energy from the sun. We gain energy by just sitting there floating through space. About 1500 watts per meter squared per day. In this reality, thinking in terms of a closed system, with finite non-replenishable resources, is often just flat out friggin' dumb. It might work for mineral resources, but it doesn't work for energy.

From Disney's The Lion King:Anyone trying to make some zero-sum game of this circle is bound to immedately fail. Spending thirty seconds thinking about it, quickly has one realize that a lion will consume far, far, far more than the grass which will be nurished by the lion's body. Such a circle is possible - with each critter on the ladder taking more than it gives - because of the sun's free energy.

Anyway, Judo, tell your professor that. You can tell how leftie he is, by how far the veins stick out of his forehead.

LM

I guess I'm the one being leftie, because the part you are disagreeing with is the part I came up with.

Yes, the sun's energy is the only open end of an otherwised closed system. However, even that has it's limits. I have a section on this in my paper because I'm trying to break the economy down to measuring things on an atomic/energy level and sunlight is the only truly "renewable" resource. Even though we are always getting more energy coming into the system, it is not infinite and any "excess" is lost as heat.

Molecules in the ozone layer block the suns rays and reflect energy back out into space. The amount reflected increases with angle and is why land is less fertile at the poles as well as the reason we have seasons. So this limits the amount of energy coming in. Without this blocking layer we would get "too much" energy, as it would burn everything up and destroy the balance created by our atmosphere. The amount of heat we lose is also controlled by this atmosphere, and greenhouse gases are stemming all the current debates about global climate change since we are increasing the amount of heat being retained.

Being able to capture and make use of that energy is what fuels the very existence of life, but the laws of physics demand that even energy is never gained or lost- it only changes form. Plants capture and use that energy to exact a chemical transformation of other finite materials within the soil, air, and water in the process of photosynthesis. It turns the rock, water, and air into something entirely different- but on a molecular level the total number of atoms never changes. These atoms simply combine and recombine in different forms. Any atoms captured in the form of the plant are lost to the ground and air until otherwise returned.

Now, the Lion King example is wonderful but limited. It does not present the whole picture. What the lion gives back to the land will be the same as what he has taken. His body will not "become the grass" literally- he will not fertilize and create the same amount of grass that had to be consumed by the number of gazelle he ate to sustain his own life. However, he will expel or transfer every bit of energy and/or material he consumed in some form or another (feces, exhalation, passing gas, sweating, etc) throughout the course of his life and death.

Just how much life can be sustained by this process? Energy from the sun is the most under-used and under-appreciated by humanity. We could accomplish much more if we could recreate the process of photosynthesis perfected by plants, but it is not really limitless. It just appears so, because so much goes un-utilized. Yet, trying to set the limit based on the greatest available source will result in all other sources being depleted to the point of uselessness. When fertilizing plants, there is a point where continuing to add fertilizer becomes pointless. This is because the limiting factor is whatever resource is available in the smallest supply.

Determining an economic "carrying capacity" and finding the limit to our growth that will allow a sustainable continuation of human life is not necessarily dumb. Continuing to rely on resources like fossil fuels that will eventually be depleted is dumb when we could be turning to smarter methods of energy extraction- like perfecting technologies to capture and utilize solar energy. In that, you are most certainly right.

The problem is, we do have a "closed" system and expecting the economy to grow indefinitely without limits will result in a growth that exceeds our capacity and causes a crash.

Where I am struggling in my paper is in trying to tie in what my professor is really looking for- "the money". I am proposing a total change to the way we look at economics, so how do I use a pricing system that relies on our desire to pay for something to argue for that change? How do I make "the money" agree with what I am presenting and put numbers to it, when the paper I am trying to write changes the way we think about money?

[JudoMinja]

Easter Island is an instructive case study for the human carrying capacity of the environment, as is the economic thought experiment 'tragedy of the commons'. I listen to a weekly econ podcast called econtalk, and I know several previous podcasts covered this topic. Here's one of probably several links.

Yandle on the Tragedy of the Commons and the Implications for Environmental Regulation | EconTalk | Library of Economics and Liberty

IMO, it's highly probably that we've already exceeded the carrying capacity of the planet- we just happen to get by creating higher yielding crops, and due to fossil energy and fossil water utilization.

I already allude to Easter Island and the Rapa Nui in my paper. Yes, we have already exceeded the carrying capacity IF we continue to do things the same way. The United States has the most wasteful population of anwhere on the planet. I don't remember the exact numbers of the top of my head, but we are something like 5% of the world population but use somewhere around 60% of the world's resources. If we can change the way we do things so that we are not so wasteful and not relying on resources we are depleting faster than they can replenish, we could sustain current populations.

[Blackmarch]

So, I'm working on a final paper for a class in Environmental Economics and was wondering what people's thoughts are on this topic? The general precept behind environmental economics is trying to tie environmental and economic issues together- fixing the environment and the economy together.

To do this, we have to put a "price" on the environment. If something does not have a monetary value, in any economic analysis that value is zero. Without putting a price on something like a wetland, that wetland could end up destroyed- but destroying the wetland will end up doing more harm than good. In an analysis where we are trying to determine if the land is more profitable "as is" or more profitable bull-dozed with a mall, gas station, or other such business built on it, the business will always be seen as more profitable if we cannot price environmental services like the natural water sanitation provided by a wetland.

Now, that is the basic idea behind the class, but I'm finding as the class progresses that I see things from a bit of a different angle than the way the professor is presenting things. The professor keeps stressing the need for the "price" and that we need to "show him the money" in our papers. While I think this system will certainly prove helpful since unpriced items show up as "zero" in an analysis, I still think this method is "broken".

I am trying to tie something known as the "cradle-to-cradle" concept into economics for my paper. This is a concept focused on recycling, but it can easily tie into economics and is a better reflection of how I view environmental economics. Right now, we operate on a "cradle-to-grave" system- which is linear. We get fresh resources, make items for use/consumption, then waste whatever is left over. In the "cradle-to-cradle" system, the idea of waste is eliminated. The way we make products would need to completely change so that everything we use is reusable. Landfills would no longer be "dumps" but places where we could "re-mine" for materials for new products.

With this, I would also be tying in an ecological concept known as "carrying capacity". There have already been efforts to tie this into the economy, so it is not really anything new. However, it has mainly looked simply at human populations- at what point will our population "cap" and we find ourselves able to live sustainably off our resources?

Since the amount of matter on the planet is finite, we cannot keep using "new" resources and "wasting" the old. The economy cannot keep growing exponentially and growth does not necessarily equal "healthy". Just because something costs less and provides a greater profit, that does not necessarily make it better. If we are to have a stable environment and economy, we need to live off the "interest" of the earth's resources- don't use it faster than it can replenish itself. The world works in cycles, so instead of relying on a linear model for our economy, we need to create an economic cycle that works in tandem with the environment.

I'm trying to think of ways I can present this from my perspective in my paper and still provide the "prices" my professor wants. In essence, I am looking at things backwards. Instead of trying to fit the environment into the economy, I am trying to fit the economy into the environment. Anyone have any thoughts on this?

well we can extract methane and hydrocarbons from decaying material in landfills, so maybe look up natural gas prices, and look up at what some say how much can be extracted from a certain size/volume over an amount of time.

[Guest]

I'm probably over-simplifying your problem or I don't exactly understand what you are trying to do ... but it seems like you are making some mountain out of a molehill in this project.

From your OP, it makes me think that your professor is asking you to make an Environmental Impact Assessment. This is nothing new. It's a requirement by law that started way back in the 70's and is covered in ISO. An EIA costs out all relevant effects - negative or positive - on the nvironment. This includes pollutants (including carbon emission), species endangerment, waste materials, historical preservation, and even social impacts among others. Everything is costed out in hard dollars. It's not really used as a "regulating" document but more of a "decision making aid".

Cap and Trade bill pretty much uses part of the EIA and uses it as a regulatory mechanism.

EIA is a science by itself.

[JudoMinja]

I'm probably over-simplifying your problem or I don't exactly understand what you are trying to do ... but it seems like you are making some mountain out of a molehill in this project.

From your OP, it makes me think that your professor is asking you to make an Environmental Impact Assessment. This is nothing new. It's a requirement by law that started way back in the 70's and is covered in ISO. An EIA costs out all relevant effects - negative or positive - on the nvironment. This includes pollutants (including carbon emission), species endangerment, waste materials, historical preservation, and even social impacts among others. Everything is costed out in hard dollars. It's not really used as a "regulating" document but more of a "decision making aid".

Cap and Trade bill pretty much uses part of the EIA and uses it as a regulatory mechanism.

EIA is a science by itself.

Actually, anatess I think you hit the nail on the head. I'm good at making things more complicated than they need to be. And this professor is not very good at spelling out his expectations. He just told us to pick any topic in environmental economics for our final paper and include what level we were addressing it at "local, state, national, or international". Then he kept stressing the need to "show him the money". I'm realizing now that you brought up EIA that what he really wants us to do with our papers is an economic analysis of an environmental issue, and I am trying to make this far too big.

I am still presented with a bit of a problem though.. since I think what really needs to be done is an environmental analysis of our economic issue- if that makes any sense at all. I guess I'm thinking too far outside the box, because I think trying to fit things into an economic analysis with the system we currently have will always fall short and we will just continue having the same problems.

[Backroads]

Yikes. Economics. Not my thing. I'm fine following the environmental angle, but I have no advise how to apply any of that to economics. Which... is that what you're trying to do?

[JudoMinja]

Yikes. Economics. Not my thing. I'm fine following the environmental angle, but I have no advise how to apply any of that to economics. Which... is that what you're trying to do?

Yes. Lol. I realize this is all very complex. Probably better suited for a master thesis...

[Guest]

Yes. Lol. I realize this is all very complex. Probably better suited for a master thesis...

And here's what I think... please, remember, I have no idea what type of professor you got or even what rubric you are graded on... or even what class this is for. LOL...

Anyway, just basing off what I understand from your OP... and thinking that this is a class project not a master thesis or a degree qualification exam...

I think what he wants you to do is take a section of the economy and apply EIA to it. The easiest one to do this on is the commercial construction industry because it is directly affecting geophysical areas as well as social environments (causes traffic that impacts polution, etc. etc.). There are a lot of research material on the internet on EIA for construction as well as stuff from the university library (most of which are accessible online, er, if you are in UCF...).

If you constrain your paper to that, then you can have a much more manageable outline and you can get into much more level of detail on each concept you present.

You are a wonderful writer. You have a way of describing something in a very clear, concise manner that fully encompasses where you want to take the reader. This is going to be a good asset in this effort - because, even if you put the application of the concept into a very small, specific segment of economy, you have a way of describing it such that it can be applied to other segments or to the economy as a whole.

Make sense?

[JudoMinja]

Anyway, just basing off what I understand from your OP... and thinking that this is a class project not a master thesis or a degree qualification exam...

I think what he wants you to do is take a section of the economy and apply EIA to it. The easiest one to do this on is the commercial construction industry because it is directly affecting geophysical areas as well as social environments (causes traffic that impacts polution, etc. etc.). There are a lot of research material on the internet on EIA for construction as well as stuff from the university library (most of which are accessible online, er, if you are in UCF...).

If you constrain your paper to that, then you can have a much more manageable outline and you can get into much more level of detail on each concept you present.

Make sense?

Yes. It seems my problem was a fairly common one- just trying to make my topic too big. I can still express my point of view while focusing on something smaller, and then I can probably just build on this as a starting point for a master thesis in the future. This paper is only supposed to be ten pages long and my outline of everything I wanted to cover was half that.

I just need to think smaller. :)

[Backroads]

Yeah... that's a huge topic to tackle.

[JudoMinja]

I just want to let out a big ol' WOO-HOO!!! I aced my final paper! And I was so worried I wouldn't be doing an adequate job of "showing the money". Whew. Thank you everyone for your helpful input. It really did help me shape my paper.

Mods can feel free to close this thread now. :) I just wanted to voice my happiness about my good grade.

[Blackmarch]

I just want to let out a big ol' WOO-HOO!!! I aced my final paper! And I was so worried I wouldn't be doing an adequate job of "showing the money". Whew. Thank you everyone for your helpful input. It really did help me shape my paper.

Mods can feel free to close this thread now. :) I just wanted to voice my happiness about my good grade.

congrats!