Environmental Economics

The Environment and Economics

by Kara Simpson

​Information adapted from Environmental Science Your World, Your Turn Savvas Learning Company 2021

​Learning Goals

• ​Describe two basic concepts of economics.

• ​Explain the relationship between economics and the environment.

• ​Describe ways that economies are working toward sustainability.

​Cleaning the Tides of San Diego and Tijuana

​How do economic factors influence environmental policy?

​Economics

​The study of how resources are convered into goods and services and how these goods and services are distributed and used.

​

​Goods are the manufactured materials and products that individual consumers and businesses buy

​

​Services are the work that someone or a company does for others as a form fo business

​Supply and Demand

​Supply = the amount of a product offered for sale at a given price

​

​Demand = the amount of a product people will buy at a given price if free to do so

Multiple Choice

If a nonrenewable resource such as oil suddenly became scarce while demand remained constant _________.

• the equilibrium price would increase.

• the equilibrium price would decrease.

• demand would increase.

• demand would decrease. 

​Cost-Benefit Analysis

​A decision making tool used to compare what they will sacrifice and gain by a specific action

​Cost-Benefit Analysis Mini-Group Activity

​Maria finishes a jar of peanut butter while making a sandwich. She starts to rinse out the jar so she can throw it in the recycling bin. But the remaining peanut butter is quite stuck to the inside of the jar. As more and more water flows down the drain, she thinks, "I know recycling is important, but so is water conservation. At what point should I just throw this jar in the trash?"

​

​Discuss with your group:

​1. How is Maria's decision similar to the cost-benefit analysis that a company might perform?

​2. In a table, list the cost and benefits of Maria's two choices: continuing to prepare the jar for the recycling bin or throw it out.

​3. Maria decides to research her question. List three questions that Maria should try to answer as she does her research.

Open Ended

​How is Maria's decision similar to the cost-benefit analysis that a company might perform?

Open Ended

In a table, list the cost and benefits of Maria's two choices: continuing to prepare the jar for the recycling bin or throw it out.

Open Ended

Maria decides to research her question. List three questions that Maria should try to answer as she does her research.

​Economics and the Environment

​Economics is dependent on material from the environment for products and production waste.

​

​Consequences to relying on natural resources in a growing economy:

​- Suport from the environment

​- Impact on the environment

​Support from the Environment

​Natural resources that we need to survive.

​

​Need these for economics to take place.

​

​Ecosystem Services - services the ecosystems provide (purifying air and water, cycling nutrients, recycling waste produced by economic activities).

​Impact on the Environment

​Ecological systems are harmed due to economic activity when:

• ​natural resources are depleted

• ​too much pollution is produced​

​This then reduces economic activity

Multiple Select

What happens to a vacation destination when the local sewage treatment facility can no longer keep up with the waste being generated?

• Waste pollutes water

• Tourists swim in polluted waters causing them to get ill and go to the hospital which boosts the economy.

• Tourists stop coming

• Local businesses have increased numbers of customers because tourists cannot visit the beach.

Multiple Select

A beach is closed down due to pollution. How does this effect the community?

• No effect

• Economic decline

• Environmental decline

Multiple Choice

Which of the following is an economic factor that has an impact on the economy, but no monetary value?

• beautiful views

• coal

• gold

• herds of elk

​The Cost

​Economists look at the cost and benefit to the buyer and seller directly involved in the transaction.

• ​Internal costs and benefits

​A second cost and benefits also exist, but because they are not directly related to the transaction, they are not taken into account in the cost benefit analysis

• ​External cost and benefits

Multiple Choice

A company in the United States is preparing to purchase a factory in China to make their products. They hire an economist to conduct a cost and benefit analysis of the potential transaction. Which of the following is NOT part of the internal costs and benefits analysis?

• cost of land/building

• cost of labor

• cost of business closed in a city on the coast due to pollution from the factory

• cost of resources to make the product

What is considered by economists?

Short Term Effects​

• Valued over long-term costs and benefits

• ​resource depletion

• ​pollution

​Endless Resources

• ​Do not take into consideration that resources can run out

​Growth

• ​Assume that continued growth is needed to keep employment high

• ​Current economy has many goods for sale, not sustainable at the current growth rate

​Ecological Economics

​Study of economics that applies the principles of Earth's systems to economics.

​

​Argue that history suggests civilizations do not overcome their resource limitations

​

​Advocate the economy to be stable and sustainable like the complex interactions between the living and non-living components of an ecosystem

​Environmental Economics

Advocate for more efficient use of resources from the environment

​

​Economies are stable if environmental challenges are addressed and the environment is sustainable

​

​Assign market values to ecosystem services and addressing market failure

​Non-Market Values

​Values are not usually included in the price of goods or services

​

​Market Failure

​Occurs when markets do not consider the environment's positive effects on economies such as ecosystem services or when they do not reflect the negative effects of economic activity on the environment or on people such as external costs

​Ecolabeling

​A label that tells consumers how products were grown, harvested, or manufactured

​

​Lets consumers know which brands are made with processes that do not harm the environment

Multiple Choice

the field of economics that recognizes the relationships between ecosystems and economic systems

• economics

• cost-benefit analysis

• environmental economics

• ecological economics

Multiple Choice

the amount of a product or service people will buy at a given price if free to do so

• demand

• subsidy

• economics

• supply

Multiple Choice

a labeling system that tells consumers which brands are made with processes that do not harm the environment

• command-and-control approach

• green tax

• ecolabeling

• cap-and-trade

Multiple Choice

the study of how resources are converted into products and services and of how those products and services are distributed and used

• ecological economics

• subsidy

• green tax

• economics

Multiple Choice

The amount of a product or service offered for sale at a given price.

• Economics

• Supply

• Demand