Transcript PPT Resources and Natural Capital

Resources – Natural
Capital
IB syllabus: 3.2
Syllabus Statements
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3.2.1: Explain the concept of resources in terms of
natural capital
3.2.2: Define the terms renewable, replenishable, and
non-renewable natural capital
3.2.3: Explain the dynamic nature of the concept of a
resource
3.2.4: Discuss the view that the environment can
have its own intrinsic value.
3.2.5: Explain the concept of sustainability in terms
of natural capital and natural income
3.2.6: Discuss the concept of sustainable
development
3.2.7: Calculate and explain sustainable yield from
given data
vocabulary
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Natural Income
Natural Capital
Non-renewable
Renewable
Replinishable
Sustainability
Sustainable yield
Economic view
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Traditional economy based on land, labor and capital
See environment as only one set of resources within a
larger economic sphere
Environmental economists view environment as
providing goods and services on which humans depend
Economy is constrained by limits of environmental
resources
Environment provides raw materials and means of
absorbing wastes
Economic Activity: Classic View
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Economic production is the process of
converting the natural world into a
manufactured world.
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Example: trees to paper to trash
Economic Activity: Environmental View
Resources & Natural Capital
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Term coined by ecologically minded economists
If properly managed renewable & replenishable resources
are forms of wealth that can produce “natural income”
“natural income” = indefinitely available valuable goods
and services (based off of renewable and replenishable)
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Marketable commodities or goods (timber, grain)
Ecological / Life-support services (flood & erosion protection
from forests)
Non-renewable resources = forms of economic capital
that cannot generate wealth without being liquidated
Natural Capital & Natural Income
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Natural Capital  Standing stocks
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Stock = present accumulated amount of capital
Forests, Fish
Natural Income  Flows
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Sustainable rate of harvest of a stock
Harvests of timber, fishing
New England Groundfish Fisheries
Example
Too many boats, too few fish
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November 1994 moves to shut down north atlantic
groundfish fishery
Public outcry and economic effects
What caused the collapse
Decades of unsustainable harvest
Magnuson Act of 1976 supported unprecedented growth
of the fishing fleet
570 boats to 900
Bigger boats with more technology to catch fish
Removing large breeders and young before they can
breed
Common syndrome for fisheries collapse
The flow (harvest) was bigger than the stock (population)
could support
Classes of Natural Capital I
RENEWABLE NATURAL
CAPITAL
Living species, ecosystems
Self producing & self
maintaining
May use solar energy in
photosynthesis
Can yield marketable goods
(wood, meat)
Essential services when left in
place (climate regulation)
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Classes of Natural Capital II
REPLENISHABLE
NATURAL CAPITAL
Non-living & dependent
on solar engine for
renewal
Groundwater, Ozone
layer
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Classes of Natural Capital III
NON-RENEWABLE
NATURAL CAPITAL
Like inventories
Any use requires
liquidating part of the
stock
Fossil fuels, Metals, &
Minerals
Some may regenerate in
a geological time scale
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The status of these resources
changes over time
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Cultural, economic, and technological factors
influence a resource’s status over time and space
Uranium – never valued, but with advent of nuclear
technologies now extremely valuable
Bluefin Tuna – prior to 1970 exclusively sport fish
(.05 / lb)  Japanese specialty market develops –now
a single large fish has sold for $180,000
Solar Power – 1960s space race makes it important 
1970s oil embargo makes it critical  1990s
competes with dropping oil prices  now peak oil
and increasing price make it desirable again
Natural Capital has Value
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Ecological, Economic, Aesthetic value
Value assigned based on diverse perspectives
Industrial Societies emphasize monetary &
economic valuations of nature
Economic value determined by market price of
goods or services produced
Extrinsic Values
Ecosystem Capital: Goods and Services
Natural Capital has Intrinsic Value
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Ecological processes have no formal value
Still important though  waste elimination,
flood & erosion control, nitrogen fixation,
photosynthesis
Essential for existence but taken for granted
Natural Capital has Intrinsic Value
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Organisms & Ecosystems valued for aesthetic or
intrinsic reasons may not produce commodities
identifiable as goods or services
Unpriced & undervalued from economic
standpoint
Value from spiritual, ethical, or philosophical
perspective
So diverse perspectives needed to evaluate natural
capital
Value vs. Sustainability
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Hard to compare the values without prices
Attempts being made to acknowledge the
diverse values so they are weighed more
rigorously against traditional values (GNP,
etc.)
Is this kind of valuation possible?
Sustainability debate hinges around the
problem of how to weigh conflicting values of
natural capital
Wealth of Nations
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Determined by 3 components
Produced assets, Natural Capital, Human
resources
Complement each other and contribute to well
being
Dominant source of national wealth may vary
between the 3 components
How Society’s Assets Complement
Each Other
Composition of World Wealth
Wealth of Nations
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Often represented by GNP (Gross national
product) sum of goods and services
produced in a country
Shows economic health and wealth
GDP = GNP – net income from abroad
Often used to compare rich and poor countries
Depreciation in materials accounted for
Depreciation of natural capital never taken into
account
This is a problem
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Example
If a country cuts down 1
million acres of forest
We see positive on
income side from timber
sales
Only depreciation
accounted is in chain saws
and trucks
What about the loss of
natural services
Situations like this lead to
undervaluing natural
resources
Sustainability
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Living within the means of nature, on the interest or
sustainable income generated by natural capital
Societies supporting themselves by depleting
essential forms of natural capital is unsustainable
If well being dependent on certain goods or services
must harvest with care
Specifically long term harvest or degradation should
not exceed rates of capital renewal
Sustainable Development
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Term first used in 1987 in Our Common Future
Development that meets current needs without
compromising the ability of future generations to
meet their own needs
Economist view  stable annual return on
investment regardless of environmental impact
Environmentalist view  stable return without
environmental degradation
http://www.earthsummit.info/
http://www.binishells.com/index.html
The Earth Summit (1992) and its
aftermath
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Rio de Janeiro Conference on the Environment and
Development
Env. Issues that cross international borders
 Pollution, ocean conditions, atmospheric effects, forest
destruction, loss of biodiversity
Agenda 21  focus on sustainable development for the 21st
century
 Reconcile future economic development with
environmental protection
Followed by 2002 world summit on sustainable
development in Johannesburg
Sustainable Yield
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Sustainable Yield = SY
SY = Rate of increase in natural stock
Amount to exploit without depleting initial
stock or potential for replenishment
SY for a crop = annual gain in biomass or
energy
These gains from growth or recruitment
(production of offspring)
Calculating sustainable Yield
Sample Calculation
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An average bluefin tuna produces 10 million
eggs per year but only 10 of those survive to
adult hood. Out of every 10, 3 will migrate to
other areas of the ocean. If you start with 5000
tuna, what is the sustainable yield in your
fishery?
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So what would be a scenario where it would be
a simple calculation?