Transcript 1.2 Economic Influences

1.2 ECONOMIC INFLUENCES
“No economy based on consumption of physical
resources (alone) can grow indefinitely.”
- Paul Hawkens
1
We live in a world that is increasingly interconnected through the
globalization of technology, trade, commerce, culture, resources
and political systems.
Developing wealth falls into 3 categories:
a. Earth capital – natural resources
b. Manufactured capital
c. Human capital - using talents and
services of people
2
The Wealth Gap is the distance between the GNP of
developed and developing countries.
Environmental improvements come with increased national wealth 13 of the 15 most polluted metropolitan areas worldwide are in the
poorest (developing) countries of Asia.
The late Indira Gandhi, Prime
Minister of India once said,
“Poverty is the worst polluter.”
Economic progress leads to
environmental progress.
Once per capita income gets to about $8,000 annually, nations
start aggressively improving their environment.
3
Gross National Product (GNP) and Gross Domestic Product (GDP)
are often used to measure economic health.
GNP - gross national product is the
value of all goods and
services produced by a country in
one year from all national and
international business; per capita
means divided by population.
GDP - gross domestic product
measures only what is produced
with the country.
The flaw in both indexes is that it assumes each person has an
equal share and that everything has a dollar value.
4
The richest per capita countries are the U.S, Luxembourg, United
Arab Emirates, Norway, and Ireland. Malawi, Mozambique and other
eastern African nations are the poorest, per capita.
The U.S., Japan, and Germany
produce more than half of the
world’s economic wealth.
In a free market economy, commerce is
based on competition of mostly
privately owned companies for profit.
The U.S. has a supply and demand based, free market economy,
but there is government regulation on safety, labor laws,
environmental impact, monopolies, etc.
While most economic systems are mixed, in a command system,
all growth is solely controlled by government.
5
Out of 6.7 billion people in the world, ~1/5 live in luxury, 3/5 have a
meager existence, and 1/5 are starving.
The current world growth rate is 1.18
producing 15,300 babies per hour.
6
Developed countries have 1.2 billion people.
This is 21% of world’s population, but they use
88% of all natural resources and generate 75%
of the pollution.
Developed nations are have high per
capita income and a high standard of
living based with on economic health,
life expectancy, education and literacy.
7
Developing countries add 1 million
people every 4 days - but 27,400 die
each day from malnutrition.
Developing countries use minimal
amounts of resources per person, but
their total populations are huge.
They do less environmental protection and
the overall environmental impact equals
developed countries.
8
A per capita ecological foot print is the amount of impact each
person has on the planet and its resources.
If all of humanity used the resources at the rate of developed
countries , the Earth would have to be about 4 times larger.
The problem with these calculators is that they ignore who is
producing most of the capital and the footprint decreases as the
population increases – not a good solution.
9
Aldo Leopold first used the term land ethic to express the desire to
use the environment in a sustainable way.
“All ethics rest upon a single premise that the individual is a
member of a community of inter-dependent parts.”
When the Environmental Protection Agency (EPA) was first
established, its primary function was to set the rules of
environmental behavior.
10
An environmental ethic is a self-imposed
limitation on your own behavior.
Ethics tend to be codified into a
formal system or set of rules
adopted by a group of people.
Regulators and legislators at
all levels must choose how to
get the desired behavior.
11
All behaviors are maintained,
changed or shaped by the
consequences of that behavior.
Regulatory legislators and other officials at all
levels basically have 4 choices:
Reward the behavior
Punish the behavior
Ignore the rules
Change the rules
12
Positive consequences are commonly known as
the “Carrot Approach”, offering incentives to do
the right thing .
The “Stick Approach” involves regulation and
enforcement.
About 99% of the money spent on pollution is for cleanup of
ignored rules; prevention is MUCH cheaper.
Best Management Practices (BMP) are a set of behaviors for
industry, business, agriculture, and the government to act smarter
and operate more efficiently.
13
In Garrett Hardin’s “Tragedy of the Commons” (1968),
he notes how people behave toward free access
resources.
The idea that we treat public property
differently from private property is not new.
14
Aristotle Politics, Book II, (circa 350
B.C.) “What is common to the
greatest number gets the least
amount of care.
Men pay the most attention to what
is their own; they care less for what
is common.”
H. Scott Gordon (1954) “Everybody’s property is nobody’s
property. Wealth that is free for all is valued by none because he
who is foolhardy enough to wait for its proper time of use will
only find that it has been taken by another.”
15