Environmental Economics 2

1. Introduction to Environmental Economics

- Three Themes:

* Efficiency.

o Technical.

o Allocative.

* Optimality - The property of a system to maximize or minimize some functions under a given constraints.

* Sustainability.

2. Environmental Vs. Resource Vs. Ecological

Environmental / Resource Ecological

- Originated from the introduction of natural resources in neo-classical model of business growth.

- Mainstream approach.

- Relative scarcity. - Study of the distribution and abundance of animals and plants.

- Nature's housekeeping and human's housekeeping, and their interrelations.

- Essentially interdisciplinary approach.

- Absolute scarcity.

- Sustainability.

ANOTHER EXPLANATION

Environmental Resource Ecological

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ENVIROMENTAL ECONOMICS = CONCEPTS FROM DIFFERENT FIELDS

- Economics

* Public Economics: Externalities, public goods and bads, pollution taxation.

* Welfare Economics: Sustainability, inter-temporal distribution, optimality.

* Economic Growth: EKC, optimal extraction of (non-)renewable resources.

- Other disciplines:

* Thermodynamics: Working of natural environment (i.e. Regeneration, energy conversion).

* Climatology: Cost of climate change.

SUSTAINABILITY

"Sustainable development is development that meets the need of the present community without damaging the ability of future generation to meet their own needs."

THERMODYNAMICS

Definition: Science of energy - potential to perform work or supply energy.

Laws:

* Conservation of energy: Energy cannot be destroyed or created but converted.

* Irreversibility in nature: Heat cannot be transformed into work with 100% efficiency.