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Questions and Answers
Weak sustainability allows for substitution between natural and human-based capital without concern for environmental degradation.
Weak sustainability allows for substitution between natural and human-based capital without concern for environmental degradation.
True
Strong sustainability argues that natural and human capital can be perfectly substituted without any limitations.
Strong sustainability argues that natural and human capital can be perfectly substituted without any limitations.
False
The Hartwick-Solow Rule suggests that resource profits should not be reinvested in any other forms of capital.
The Hartwick-Solow Rule suggests that resource profits should not be reinvested in any other forms of capital.
False
Thermodynamics includes the study of systems that can be open, closed, or isolated regarding energy and material exchanges.
Thermodynamics includes the study of systems that can be open, closed, or isolated regarding energy and material exchanges.
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Ecological economics views the environment solely as a means to achieve human welfare.
Ecological economics views the environment solely as a means to achieve human welfare.
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The First Law of Thermodynamics states that energy and matter are created and destroyed.
The First Law of Thermodynamics states that energy and matter are created and destroyed.
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According to the Second Law of Thermodynamics, systems naturally move towards order and lower entropy.
According to the Second Law of Thermodynamics, systems naturally move towards order and lower entropy.
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Using high-quality resources leads to the creation of more waste as per the laws of thermodynamics.
Using high-quality resources leads to the creation of more waste as per the laws of thermodynamics.
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Economic growth is always sustainable and beneficial to the global ecosystem.
Economic growth is always sustainable and beneficial to the global ecosystem.
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Since World War II, economic growth has resulted in a full world with limited resources.
Since World War II, economic growth has resulted in a full world with limited resources.
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The concept of 'Full World' Economics proposed by Daly focuses on large scale management of resources.
The concept of 'Full World' Economics proposed by Daly focuses on large scale management of resources.
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Alternatives to GDP emphasize measures of well-being rather than just economic output.
Alternatives to GDP emphasize measures of well-being rather than just economic output.
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Julian Simon argues that we should be pessimistic about human resource limits due to exponential growth.
Julian Simon argues that we should be pessimistic about human resource limits due to exponential growth.
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Entropy is a measure of energy quality and is lower in highly ordered systems.
Entropy is a measure of energy quality and is lower in highly ordered systems.
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Malthus predicted that food shortage would be inevitable due to limits in growth.
Malthus predicted that food shortage would be inevitable due to limits in growth.
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All systems operate independently of thermodynamic laws as they are just natural phenomena.
All systems operate independently of thermodynamic laws as they are just natural phenomena.
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Daly's steady-state principles advocate for harvesting renewable resources unsustainably to foster growth.
Daly's steady-state principles advocate for harvesting renewable resources unsustainably to foster growth.
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The Club of Rome expressed optimism about the consequences of economic growth in their 'Limits to Growth' report.
The Club of Rome expressed optimism about the consequences of economic growth in their 'Limits to Growth' report.
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Thermodynamic limits imply that continuous growth in the economy will eventually lead to environmental exhaustion.
Thermodynamic limits imply that continuous growth in the economy will eventually lead to environmental exhaustion.
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Alternatives to GDP are needed to provide a better measure of economic well-being.
Alternatives to GDP are needed to provide a better measure of economic well-being.
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Robert Ayres believes that technology alone can free us from the restrictions imposed by the planet's limits.
Robert Ayres believes that technology alone can free us from the restrictions imposed by the planet's limits.
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Study Notes
Week 7: The Problem of Sustainability & Economic Growth
- Topic: Sustainability and economic growth
- Course: ADMN 509 Economics for Policy Analysis
- Instructor: Katya Rhodes
- University: University of Victoria
Acknowledgment of Traditional Territory
- Recognition of the Lekwungen peoples on whose traditional territory the university stands.
- Acknowledgment of the Songhees, Esquimalt, and WSÁNEĆ peoples, whose historical relationships with the land continue.
Camas Lily Culture in Lekwungen Territory
- Camas lilies are significant to the Coast Salish peoples, especially for their edible bulbs.
- Camas were a dietary staple until the early 1900s.
- European colonization led to the suppression of camas cultivation.
- There's a resurgence of interest and education in camas cultivation in Lekwungen territory
- Historical techniques are used to cultivate camas and avoid "death camas" plants
- A restoration project has reintroduced camas to the University of Victoria campus, promoting ecological education and cultural importance.
Course Outline Topics
- Week 1: Introduction to economics
- Week 2: Supply and demand
- Week 3: Market efficiency and market failures
- Week 4: Economic trade-off analyses
- Week 5: Mid-term exam + Economic valuation methods
- Week 6: Policy evaluation
- Week 7: The problem of sustainability & economic growth & Assignment 1 due.
- Week 8: Economics of environmental pollution + guest lecture on Indigenous Economies
- Week 9: Renewable and non-renewable resource economics + guest lecture with BC policy-makers
- Week 10: Reading break (no class)
- Week 11: Special topics Assignment 2 due
- Week 12: Final exam
Reading for Next Week
- Feir, Donn L. "Policies for Other People: Reflections from an Economist on Research and Federal Policy Regarding Indigenous Nations in Canada after 1975." Canadian Public Policy 50, no. S1 (2024): 36-61.
- https://www.utpjournals.press/doi/pdf/10.3138/cpp.2023-051
Week 7: Learning Objectives
- Classify key environmental problems
- Human-based capital vs. natural capital
- Define and depict weak vs. strong sustainability
- Relate the first and second laws of thermodynamics to economic and ecological sustainability concepts
- Compare and contrast the "growth paradigm" with "steady-state" principles
- Define and discuss the appropriateness of GDP and alternative indicators for measuring societal well-being
Environmental Challenges
- The text discusses numerous environmental challenges, including water use, atmospheric CO2 concentration, species extinction, ozone depletion, loss of tropical rainforests/woodlands, land use, and environmental pollution.
The Great Transformation
- Land use has become more intensely used by humans since 2000.
- Relevant maps show the increased intensity and distribution
Environmental Kuznets Curve (EKC)
- Observation that environmental degradation can improve after a certain level of per capita income is reached. Turning points exist in various environmental problems, with household sanitation experiencing the biggest improvement
What Explanations for EKC Shape?
- Emissions and impacts rise as countries industrialize.
- Increased incomes enable more efficient technology, impacting values, and policies
- Citizens support pro-environmental government
- Governments enact more pro-environmental policies
But, EKC May Depend on Scale and Type of Pollution
- Household sanitation, urban pollution, and greenhouse gas emissions impact how economic progress affects environmental degradation
Thinking Further about GPD: Exxon-Valdez Oil Spill Example
- Example showing how various activities related to a spill can be marked as positives, negatives, or zero
Is GDP a Good Measure of Progress towards Sustainability?
- GDP doesn't account for resource depletion, environmental degradation, equity and distribution, social issues, and non-market services.
Conceptualizing “Capital” and Sustainability
- Understanding the different types of capital (physical, intellectual, human, natural).
- Different concepts of capital and how they relate to different ideas of sustainability
Can Sustainability be Defined?
- The idea of sustainability is often an exhortatory term rather than a concrete definition
- Values and biases of the speaker often influence the definition.
Understanding Natural Capital
- Capital is defined as all the goods and services used to create products.
- There are four major types of capital: physical, intellectual, human, natural
- The production function showcases how GDP depends on both capital and labor
Two Definitions of Sustainability
- Weak sustainability suggests natural and human capital are perfect substitutes.
- Strong sustainability shows that natural and human capital are complements and required for the economy's sustainability.
Strong vs. Weak Sustainability
- Figures show differences between models using two notions of capital and well-being
Definitions of Sustainability
- Brundtland Commission: meeting present needs without compromising future generations
- UNESCO: leaving future generations with clean water, air, and soil
- Solow: previous generations are as capable as the one in existence
Neoclassical Economics View (e.g., Solow):
- Weak sustainability—substitution between natural and human capital is possible
- Non-declining welfare per capita
- Environment is a means to an end, not the goal.
- Society doesn't care how welfare is produced.
- Hartwick-Solow Rule: reinvest resource profits into other forms of capital
Ecological Economics View (e.g., Daly):
- Strong sustainability—substitution between natural and human capital is often impossible.
- Critical level of natural capital is required for production.
- Critical level accounts for resilience and precautionary principles
- Nature has more than instrumental value—other species rights exist
Thermodynamics, Biophysical Limits, and Sustainability
- Explains the concept of open, closed, and isolated systems and relates them to sustainability
Neoclassical Economics: Open, Closed, or Isolated?
- Economic systems are open systems, exchanging with other parts of the biosphere.
“Economy in Environment” or Ecological Economics: Open, Closed, or Isolated?
- Describes the global ecological system as an open system in which the economic system also exchanges with the environment.
Laws of Thermodynamics
- First Law: Conservation of energy and matter
- Second Law: Entropy—systems naturally move toward disorder; "losses" exist
Example: Canada's Energy Flow
- Diagram showing energy flows within and to Canada. Illustrates the interconnectedness of energy systems
- Illustrates conversions of energy and limitations from energy
Are There Limits to the Economic System? The Biosphere?
- Diagrams illustrate the exchange of resources and wastes between the economic and ecological spheres, highlighting their interaction..
Is It a Question of Scale? Daly and "Full World" (Large Scale) Economics
- The graph diagrams illustrate the concept of scale in relation to resources, production, consumption, and waste generation in the economy and the environment, stressing the idea of interconnected limits.
Daly
- Exponential economic growth since WWII has resulted in a "full world."
- Neoclassical assumptions about ample resources no longer apply.
- The current system creates more waste and depletes resources from global ecosystems.
Controversy of Economic Growth and Sustainability
- Pessimists (Malthus, Club of Rome): Resource limits inevitable, exponential growth is unsustainable
- Optimists (Simon, Nordhaus): Human ingenuity, new materials, and other resources are sufficient.
Which Statement Best Fits ...Thermodynamic Limits?
- Several possible stances on thermodynamic constraints and their effects on economic systems
Is Decoupling of GHGs from GDP Possible?
- Graph showing historical data on GDP and GHG emissions and some countries and territories showing decoupling.
Decoupling Countries and Territories: 2010-2019
- Map visualizer shows which regions or countries are better in decoupling between GDP and CO2
Alternatives to Growth
- The various alternatives include numerous indexes, for example GPI, HDI, and others)
Daly's (2004) Steady-State Principles
- Principles necessary for a sustainable economy: harvest maximum yield on renewable resources and keep nonrenewable resources to a minimum
Indicators for Alternatives to GDP
- Several sustainable indicators that alternative to GDP, include HDI, Green-adjusted GDP, GPI, ISEW
Genuine Progress Indicator (GPI)
- Indicator accounts for income distribution, volunteer work, family breakdown, crime, resource depletion, pollution, and loss of farmlands and wetlands
The BC NDP–Green Party Confidence and Supply Agreement
- Three objectives are outlined: affordability, services, and sustainable economic growth.
- GPI is a tool that can assist this goal.
Pembina (2005): 2 Different Views of Alberta (1961-2003)
- GPI and GDP growth are compared side-by-side, showing different aspects of progress
USA Genuine Progress Indicator
- Illustrates US GDP and GPI from 1950 to about 2000
Measuring Happiness Directly
- Describes Bhutan's Gross National Happiness Index
- Describes how happiness can be used as a measure of success
Happiness and GDP: What is the Relationship...?
- Correlation between GDP and happiness. A rise in GDP doesn't translate to a rise in happiness.
Side Note: Pro-Environmental Behaviour (PEB)
- Study showing that pro-environmental behavior is linked to higher life satisfaction
Which Indicator?
- A question about the best measurement of progress and well-being
Sustainability Debate Exercise
- Introduces an exercise for discussion
- Shows the resolution and role assignment.
Debate Rules
- Information on the format of how the debate will proceed
Debate Format
- Specific instructions for the debate
Debate Teams
- The resolution for the debate
- Teams given and what their position will be
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