Transcript CH_19

19
CHAPTER
ENVIRONMENTAL
SUSTAINABILITY
Dr. Mansour Bataineh
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PHYSICAL LIMITS TO GROWTH
 What
is the problem of climate change in the
context of the physical limits to economic
growth,
 What is the idea of sustainable development
as a response to the identification of such
limits.
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CLIMATE CHANGE
 Greenhouse

Gases which include
carbon dioxide, ozone, water vapour,
chlorofluorocarbons (CFCs), methane and
nitrous oxide.
 Carbon
dioxide (C02), the most important
GHG, is mainly the result of the burning of
fossil fuels such as oil and coal to meet
our energy needs.
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Three main effects of the resulting
climate change are expected.

First, sea levels will rise as global warming causes the
water in the oceans to expand (Houghton, 1997, p.109).
Sea levels may rise by 3 to 10 centimetres a decade if
no action is taken to prevent climate change, and lowlying land by the sea may be inundated.
 Second, agriculture in many areas will be more
vulnerable to disruption by drought. A reduction in the
levels of soil moisture and the risk of summer drought
may be accompanied by changes in regional rainfall,
which could make arid zones even more arid.
 Third, there may be an increased risk of extreme
weather events, such as floods, heat waves, storms,
cyclones and typhoons.
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 There
is evidence that the climate has
changed since the Industrial Revolution.
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ECOLOGICAL ECONOMICS AND
PHYSICAL LIMITS TO GROWTH

Until the 1970s economists had generally
assumed that the physical world did not impose
any limits on growth.
 They assumed that if one natural resource ran
out, it would always be possible to replace it with
another that would maintain the rate of
economic growth.
 Economists tend to assume that inputs or
productive resources - the Fs - can be
substituted easily one for another. It is not
unusual for a firm to substitute new technology
for unskilled or low-skilled labour.
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 In
practice it is very hard to replace the
loss of environmental capital (raw
materials) with human capital (skill and
knowledge) and manufactured capital
(machinery).
 For ecological economists, the economy
must be situated in or be seen as
embedded in the physical world
 See figure 19-3
 The foundation of ecological economics
lies in the natural sciences.
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
Ecological economics holds that there are
physical limits to growth because economic
processes are part of the physical world and
hence subject to the law of entropy.
 The theoretical basis of irreversibility as a source
of environmental problems is that energy flows
in one direction and cannot be recycled.
 When the energy from the raw materials that the
environment provides has been used up,
economic activity comes to an end.
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 Natural
resources are used in the
manufacture of goods and eventually
transformed into pollution, thus depleting
the available energy.
 So, for the ecological economist, the
terrestrial stock of these natural resources
represents a physical limit to economic
activity.
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 Sustainable
development is development
that 'meets the needs of the present
without compromising the ability of future
generations to meet their own needs
 If it is accepted as a worthwhile social
goal, sustainable development implies that
development should be distributed evenly
across the generations.
 Sustainable development is therefore
based on a concept of 'intergenerational'
justice that refers to its distribution across
generations.
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 Technological
progress expands the
opportunities open to the future,
enhancing the production and
consumption possibilities of an economy
by raising the productivity of capital.
 sulfur dioxide is a pollutant, both in its own
right and as a precursor of acid rain, which
is a significant source of damage to
human health, buildings, materials and
ecosystems
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 Fuel
cell technology will help to bring GHG
emissions below the rate at which the
atmosphere can absorb them without
climate change.
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ETHICS AND THE SOCIAL
LIMITS TO GROWTH

Chapters 4 and 5 highlighted the advantages of
competition: perfect competition reduces costs
and the competitive process speeds innovation.
 Fred Hirsch (1976) says that, competition can be
socially destructive.
 In clarifying this argument, he introduced the
concept of positional competition to indicate
competition among consumers for finite
resources when the acquisition of those
resources involves denying them to others.
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 For
example, people moving out of the city
to be closer to the tranquility of nature
cause more houses and roads to be built,
thereby denying that finite and fragile
resource to others.
 The solution Hirsch recommended was
‘moral reentry', so that economic agents
believe themselves to be obliged to cooperate, on the basis of traditional social
norms, religious beliefs and a sense of
civic duty.
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Subjective preferences and ethical
principles
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In economics, values are generally treated as subjective tastes or
preferences.
In explaining shifts in the demand curve, Chapter 3 mentioned
changes in tastes or in fashion as a possible cause.
If the demand in question is for, say, ice cream, then it seems
reasonable to think of the value consumers place on different flavors
in this way.
Perhaps consumers become bored with vanilla and strawberry, and
so ice-cream parlors try to renew their enthusiasm for the product by
introducing pistachio, caramel fudge and tequila sunrise. But
something seems to be left out if the same approach is taken to the
demand for solar panels, electricity from renewable sources or lowemission vehicles.
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
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What seems to be left out of the standard economic
approach to values is reason.
The distinction between positive statements and
normative judgments is characteristic of a certain
interpretation of reason and the scope for rational
thought.
Positive statements are objective or scientific
explanations of the way the economy works.
Normative judgments are recommendations, reflecting
subjective or personal feelings or preferences. This
distinction underlies the 'instrumental' conception of
reason, according to which subjective or personal
feelings provide us with wants, needs or desires, while
reason gives us the means to achieve those wants,
needs or desires. The eighteenth-century Scottish
philosopher David Hume, a friend of Adam Smith's, put it
rather memorably: 'Reason is, and ought only to be, the
slave of the passions, and can never pretend to any
other office than to serve and obey them' (Hume, 1906,
pp.414-5).
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 The
passions dictate to us what we want,
and reason tells us how to get it. For
example, your 'passions', inflamed by
advertising, might tell you that you must
have the new fragrance from Karl
Lagerfeld or a grooming product for men
from Aramis.
 What rational thinking does is to show you
how to get what you want in the world as it
is.
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
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For Aristotle, human happiness or flourishing comes only
through virtue.
A virtuous person is one who is disposed to perform
good actions, which requires three conditions to be met.
First, she must have a worthy goal in mind, rather than a
merely subjective preference.
Second, she must be able to identify the best action in a
particular set of circumstances. This second capacity
Aristotle thought of as 'practical wisdom', and it is clearly
very close to the instrumental rationality of the typical
economic account.
Third, the virtuous person must perform the action
identified as good. This means that 'he must not be ruled
by his passions, which often militate against reasoned
deliberation and moral action' (Yuengert, 2001, p.6).
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
As the Aristotelian approach suggests, it seems
that ethical principles have something in
common with economic theories: both are
susceptible to revision after we confront them
with data, evidence or experience.
 In other words, the passions are subject to
guidance and direction by reason.
 Amartya Sen has argued for the importance of a
'careful assessment of aims, objectives,
allegiances, etc., and of the conception of the
good' (Sen, 1987, p.42).
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Markets, Self-Interest, and
Environmental Values

Hirsch's ideal of moral re-entry can be illustrated
using two ethical principles of particular
relevance to the issue of climate change. If
political resistance to a GHG emissions
reduction programme is to be overcome, many
environmentalists and ecologists advocate two
departures from the self-interest that Hirsch
deplores. These altruistic principles are a sense
of justice for future generations and a perception
of the intrinsic worth of the non-human
environment.
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A sense of justice for future generations
 Pareto
principle states that society is
better off if a change in the allocation of
the inputs or outputs of economic activity
leaves at least one person better off
without making anyone else worse off.
 This gain is known as a Pareto
improvement
 and when all such gains have been
exhausted, Pareto efficiency is achieved.
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 When
the Pareto principle is used to
analys the efficiency with which resources
are allocated between current and future
generations, it can generate implications
that are somewhat similar to those of
sustainable development.
 A gain in current well-being at the expense
of future well-being is not an improvement
by the Pareto criterion.
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intergenerational justice
 lntergenerational
justice is the obligation to
ensure a fair distribution of resources
between the current generation and future
generations.
 It underpins the argument for sustainable
development, and hence the arguments
for climate change abatement policies.
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The Land Ethics

A sense of the intrinsic value or moral worth of
non-human nature expresses a very different
attitude to nature from the perception of it as a
repository of resources for production.
 The idea of 'use value' captures the economic
attitude to nature as something to be
appropriated and exploited.
 By contrast, the concept of 'existence value'
captures the valuing of something in and of itself
rather than for its uses.
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 People
clearly value the existence of
species such as elephants, mountain
gorillas or humpback whales, and they
value whole ecosystems such as rain
forest.
 Donations to environmental groups
represent one mechanism by which values
are revealed in people's behaviour.
 The land ethic expresses a sense of the
intrinsic value of non-human nature.
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
'We abuse land because we regard it as a
commodity belonging to us' (Leopold, 1970,
p.94). The alternative view hopes that when 'we
see land as a community to which we belong,
we may begin to use it with love and respect'
(Leopold, 1970, p.92).
 The implication for economic activity is that the
'destruction, overuse or excessive appropriation
of nature is morally wrong' (Cafaro, 2001).
 In Leopold's own words, 'A thing is right when it
tends to preserve the integrity, stability, and
beauty of the biotic community. It is wrong when
it tends otherwise' (Leopold, 1970, pp.158-9).
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
This chapter has discussed some of the ways in which
economists think about environmental sustainability, with
particular reference to climate change. Ecological
economists argue that there are physical limits to growth,
one of which is the carrying capacity of the Earth. A
sustainable economy would be one in which economic
activity is organized in recognition of these limits. It is
unlikely that such an economy could be constructed on
the foundations of contemporary market norms and
behavior. First, an ethical dimension needs to inform
economic understanding, establishing a critical distance
from which reason and reflection can comment upon
existing tastes and preferences. Second, markets can
contribute most effectively to climate change policy by
being used to achieve objectives set through the political
process.
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