BESC 201 1st Edition Lecture 10 Outline of Last Lecture I Species Interactions and Community Ecology Outline of Current Lecture II Central Case Study for Chapter 5 III Economics Approaches an Environmental Implications Current Lecture Environmental Economics and Environmental Policy Central Case Study San Diego and Tijuana Pollution Problems and Policy Solutions The Tijuana River flows across the international border from Mexico and empties into the Pacific Ocean Sewage tsunamis happen when heavy rains overwhelm the ability of sewage treatment plants to process wastewater The Tijuana River watershed is a transboundary watershed Beach closures and health advisories since then Economics Approaches and Environmental Implications Economics the study of how people decide to use resources to provide goods and services in the face of demand for them Several types of economies exist Economy a social system that converts resources into goods material commodities manufactured for and bought by individuals and businesses and services work done for others as a form of business Subsistence Economy people meet their daily needs by subsisting on what they can gather from nature or produce on their own Capitalist Market Economy interactions among buyers and sellers determine which goods and services are produced how much is produced and how these are produced and distributed State Socialist Centrally Planned Economy government determines how to allocate resources These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Mixed Economy Economy borrowing elements from different styles to make a hybrid 1 2 3 4 5 Governments intervene in a market for different reasons Eliminate unfair advantages held by single buyers sellers Provide social services national defense medical care education Provide safety nets for elderly and disaster victims Manage the commons Reduce pollution and other threats to health and quality of life Economies rely on goods and services from the environment Traditional economies have overlooked importance of environment Modern economists recognize that human economies are subsets of the environment and depend crucially upon it for natural resources Economic activity uses natural resources the substances and forces we need to survive Environmental systems naturally function in a manner that supports economies The degradation of ecosystem services can disrupt economies Adam Smith proposed an invisible hand Adam Smith believed that self interested behavior could benefit society as long as the behavior was constrained by the rule of law and private property rights and within competitive markets Classical Economics idea that when people are free to pursue their own economic selfinterest in a competitive marketplace it will behave as if guided as an invisible hand that leads their actions to benefit society as a whole Neoclassical economics incorporates psychology and cost benefit analysis Neoclassical economics examines the psychological factors underlying consumer choices explaining market prices in terms of consumer preferences for units of particular commodities 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 Cost Benefit Analysis economists total up estimated costs for a proposed action and compare these to the sum of benefits estimated to result from the action Problems often arise because not all costs and benefits can be easily identified defined or quantified o Environmental advocates often feel these analyses are biased in favor of economic development and against environmental protection Neoclassical economics has profound implications for the environment Are the resources infinite or substitutable One assumption is that natural resources and human resources workers are either infinite or largely substitutable and interchangeable Should we discount the future Short term costs and benefits are granted more importance than long term costs and benefits causing us to ignore the long term consequences of policy decisions Are all costs and benefits internal It is assumed that the costs and benefits are internal to the transaction experienced by the buyer and seller alone When market prices do not take the social environmental or economic costs of pollution into account then taxpayers bear the burden of paying them External Costs costs of a transaction that affect people other than the buyer or seller Is all growth good It is assumed that economic growth is required to keep employment high and maintain social order Affluenza the way material goods often fail to bring contentment to people affluent enough to afford them