B - 淡江大學
Introduction of Environmental
Why People Pollute?
What is Economy?
• The economy is a collection of
technological, legal, and social
arrangements through which a group of
people seek to augment their material and
spiritual standards of life.
» See the next two pages for further discussions on
“their” and “material and spiritual”.
Moral discussion on
• 現在人類(或某些人種)之福祉(welfare) ，
敬盡什麼樣的責任？ . . .
Moral discussion on
“material and spiritual”
則 material 與 spiritual 何者重要？
The fundamental circular flow
model of economic activity, “Q&A”
Supply for goods and
The materials balance model: the interdependence of
economic activity and nature, “Q&A”
Demand for goods
Supply for goods
Produce Less Waste by
Practicing the 3 Rs:
Reduce, Reuse, Recycle,
Source reduction, often called waste
prevention, means consuming and
throwing away less.
Reusing items by repairing them,
donating them to charity and
community groups, or selling them also
reduces waste. (A shower curtain story, 暖手包)
Recycling turns materials that would
otherwise become waste into valuable
resources and generates a host of
environmental, financial, and social
再加一個R , 3+1,一共4R “Q&A”
Definition of economics
• Economics is the study of how people
choose to use their limited resources (land,
labor, and capital (資本的) goods like
trucks and machinery and buildings) to
produce, exchange, and consume goods and
• Natural resource economics:
• A field of study concerned with the flow of
resources from nature to economic activity.
• Environmental economics:
• A field of study concerned with the flow of residuals
from economic activity back to nature.
– residual: The amount of a pollutant remaining in the
environment after a natural or technological process has
Scope of environmental damage
Local pollution examples
• Urban smog (=smoke + fog)
• Solid waste pollution
– Leaching contaminants such as lead and
mercury may flow into soil or groundwater.
Regional pollution examples
• Acid rain damages:中央氣象局
– human respiratory system
– ecosystems: soil, lake, forest
Global pollution examples
• Ozone depletion --- ultraviolet radiation
– Caused by CFCs (ChloFluoroCarbons)
• weakens human immune system
• cause skin cancer
• affect ecosystems
• Global warming --- 水世界, …
An Abrupt Climate Change
Scenario and Its Implications
for United States National
• “Recent research, however, suggests that there is
a possibility that this gradual global warming
could lead to a relatively abrupt slowing of the
ocean's thermohaline conveyor （熱鹽環流傳輸
帶） , which could lead to harsher winter weather
conditions, sharply reduced soil moisture, and
more intense winds in certain regions that
currently provide a significant fraction of the
world's food production.” See home page
• “The research suggests that once
temperature rises above some threshold (門
檻值，起點), adverse weather conditions
could develop relatively abruptly, with
persistent changes in the atmospheric
circulation causing drops in some regions of
5-10 degrees Fahrenheit in a single decade. ”
• “The report explores how such an abrupt
climate change scenario could potentially
de-stabilize the geo-political environment,
leading to skirmishes, battles, and even war
due to resource constraints such as: ”
• “1) Food shortages due to decreases in net
global agricultural production
2) Decreased availability and quality of
fresh water in key regions due to shifted
precipitation patterns, causing more
frequent floods and droughts
3) Disrupted access to energy supplies due
to extensive sea ice and storminess ”
• “As global and local carrying capacities are reduced,
tensions could mount around the world, leading to two
fundamental strategies: defensive and offensive. Nations
with the resources to do so may build virtual fortresses
around their countries, preserving resources for
themselves. Less fortunate nations especially those with
ancient enmities with their neighbors, may initiate in
struggles for access to food, clean water, or
energy. Unlikely alliances could be formed as defense
priorities shift and the goal is resources for survival rather
than religion (Israel?), ideology (Taiwan?), or national
honor (Nazi?). ” 電影: 明天過後
Environmental objectives, “Q&A”
1. Environmental quality (present
2. Sustainable development (future
3. Biodiversity (future oriented)
• Demand for zero pollution is impractical.
• What pollution level is acceptable to society?
– It is a difficult decision, and it depends on the following
pollution reduction expenditures
availability of pollution abatement technology
the risk of a given environmental hazard
• Definition: The management of earth’s
resources such that their long-term quality
and abundance are ensured.
• But, a nation’s primal objective is speeding
its economic growth that is usually
measured by GDP.
Definition of GDP
• Gross domestic product (GDP) is the total
value in money terms of all the production
in a country in one year.
• GDP calculation: adding the price of goods
and services produced.
The objective: GDP growth
• Economists and many government officials
often use GDP as a measure of economic
• The desire to achieve the targeted GDP
growth may imply the growth of industrial
GDP is not a good indicator!
• The consequences of this expended
productive activity are ecological damages
and natural resource depletion.
• Biodiversity, or biological diversity, refers
to the variety of distinct species, their
genetic variability, and the variety of
ecosystems they inhabit.
• Biologists believe there may be as many as
100 million species on earth.
• The major threat to biological species is
the destruction of natural habitat.
– Reasons for the destruction:
• population growth
• economic development (which includes)
– harvesting for tropical forests (woods for example)
– conversion of natural land masses into alternative uses
• Other minor threats to biological species are,
– commercial activity
– sport hunting
• In contrast, killing in animal world is not for pleasure.
Example: Lion cub murder. Stronger or better gene are
preserved through the killing process.
Why people pollute?
Main Entry: 2good
Function: noun 3 a : something that has
economic utility or satisfies an economic want
b plural : personal property having intrinsic
value but usually excluding money, securities,
and negotiable instruments
• The interaction between consumers (or
buyers) and producers (or sellers) to execute
the exchange of a well-defined commodity.
• A commodity that has two characteristics,
rivalry in consumption and excludability.
• Examples: ice cream, tissue paper, ….
• rivalry in consumption: The consumption of the
goods by one person precludes that of another.
• excludability:The benefits of consumption are
exclusive to that single consumer.
What is market failure?
• 當market在classical microeconomic theory
(outcome) 。此現象稱為market failure 。
– Inefficient market conditions （見下頁）常會
（i.e., the equilibrium point under the
allocative efficiency criterion），故將此市場
• Market failure (e. g., the problem of
environmental pollution) is the result of an
inefficient market condition such as,
• imperfect information: 如consumer不知道污染、
• imperfect competition: 如某行業有entry barrier 。
• public goods: (see next slide)
• A commodity that is non-rival and non-excludable.
– Examples: light house, national defense, environmental quality.
– non-rivalry in consumption: The characteristic that makes it
impossible (or prohibitively costly in a less strict sense) to
prevent others from sharing in the benefits of a good’s
– non-excludability: The characteristic of individual benefits of
consumption such that one person’s consumption of a good
does not preclude that of another.
• This behavior occurs when a rational
consumer recognizes that the benefits of a
public good are accessible by allowing
someone else to purchase it.
Why people pollute?
• Environmental quality is a public good.
• Free-ridership is an attitude toward a public
– This attitude implies everyone expects others to
pay the abatement cost for the degraded
environmental quality. As a result, pollution
problems persist and no further improvements
due to polluters’ free-ridership attitude.
• The desire of profit motivated self-interest,
or greed, is the cause of degraded
environmental quality and ecological
Common property resources
• Those resources for which property rights are
shared by some, not all, group of individuals.
– Common property resources fall somewhere on a
continuum between the extremes of pure public
goods and private goods.
– Examples: fisheries, animal populations, road
network common, and grass land for pasture（牧草
A famous paper by a biologist,
• Hardin, G., “The tragedy of the commons”,
Science, 168:1246-1248, 1968.
– The system containing resources, e. g., food, air, energy,
to which most people have ready access are called
commons. 此common泛指public good及common
• He presents a cold logic that indicates the ruin of a
common is resulting from the self-interest motive
of those resource exploiters.
A grass land for pasture example
• Four farmer families live on a grass land,
farmer Jones is one of them, and each
farmer has 10 cows.
• The carrying capacity （涵容能力）of this
grass land is 40 cattle.
The other farmers’ action
Does not add
Farmer Jones’ action
Does not add
Each add one
Farmer Jones’ rational decision
• No matter what the other farmers do, Jones’
rational choice is to add one cow.
• The other three farmers make the same rational
• The result: 44 cows on this grass land.
» Note that the carrying capacity allows 40 cows only.
• The tragedy begins from these self-interest
We can act luxuriously, as long as
we take within the limit of
nature’s carrying capacity.
An example of non-tragedy :
American bison, 150 years ago …
The solutions to avoid the
tragedy , “Q&A”
• Direct provision of public goods
• Examples: roadways, parks, and fire protection,…
• Education and public information
• Many people do not know the implications or the
consequences of pollution or resources depletion
• No laws, no enforcement.
The solutions to avoid the
tragedy , “Q&A”
• Assignment of property right
• Property (e. g., park, lake, forest) owners will
protect their property from damages.
• Establish policies that raise the price of a
product to reflect the social cost of
• Establish a market and a price for pollution
•  Callan, Scott J., Thomas, Janet M.,
Environmental Economics and Management:
Theory, Policy, and Applications, Dryden Press,
•  Chechile, Richard and Carlisle Susan,
“Environmental Decision Making: a
multidisciplinary perspective”, Van Nostrand