Environmental Problems, Their Causes, and Sustainability 1

Manage public land resources such as nationalforests, parks, and wildlife reserves■26-2 ECONOMISTS’ VIEWSOF POLLUTION CONTROL ANDRESOURCE MANAGEMENTHow Do Economists Differ in Their Viewof Market-Based Economic Systems? TheImportance of Natural CapitalNeoclassical economists see natural resourcesas a component of an economic system, and ecologicaleconomists see economic systems as a componentof nature’s economy.Neoclassical economists view the earth’s natural capitalas a subset or part of a human economic system (Figure26-3). Natural resources are seen as important butnot vital because of our ability to find substitutes forscarce resources and ecosystem services.To neoclassical economists, economic growth isnecessary, desirable, and essentially unlimited. It isseen as the best way to provide jobs and distributewealth. If the economy is growing, there is moneyavailable to provide jobs, develop new resources, andsupply public services such as environmental protection,education, national security, and crime protection.In this prevailing view, the global economy is,and should be, hard-wired to accelerating growthbased mostly on increasing throughputs of matter andenergy resources. (Figure 3-18, p. 53).Ecological and environmental economists disagreewith this model. They view economic systems as subsystemsof the environment that depend heavily on theearth’s irreplaceable natural resources (Figure 26-4).According to ecological economist Herman Daly, theneoclassical model of an economy “ignores the originof natural resources flowing into the system and thefate of wastes flowing out of the system. It is as if a biologisthad a model of an animal that contained a circulatorysystem but had no digestive system that tiedit firmly to the environment at both ends.” Ecologicaleconomists also believe that conventional economicgrowth eventually is unsustainable because it can depleteor degrade the natural resources on which economicsystems depend.Ecological and environmental economists distinguishbetween unsustainable economic growth andenvironmentally sustainable economic development(Figure 26-5, p. 588). They call for making a shift fromour current economy based on unlimited economicgrowth to a more environmentally sustainable economy,or eco-economy. See the Guest Essay on this topic byHerman Daly on the website for this chapter.Various ecological and environmental economistshave suggested eight strategies to help make the shiftto an eco-economy over the next several decades.■ Use resources more efficiently■ Use indicators that monitor economic and environmentalhealth.■ Have the market prices of goods and services includetheir harmful effects on the environment andhuman health (full-cost pricing).■ Phase out environmentally harmful governmentsubsidies and tax breaks.■ Shift taxes by lowering taxes on income andwealth and increasing taxes on pollution and resourcewaste.■ Pass laws and regulations to prevent pollution andresource depletion in certain areas.■ Use tradable permits or rights to pollute or use resourceswithin programs that limit overall pollutionand resource use in given areas.■ Use eco-labeling to identify products produced byenvironmentally sound methods and thus help consumersmake informed choices.Let us look at these solutions in more detail.+ + =Natural Resources Manufactured Resources Human Resources Goods and ServicesFigure 26-3 Neoclassical economists view the earth’s natural capital, or natural resources, as a subset orpart of a human economic system. They contend that economic growth is not limited by the earth’s naturalresources because we should be able to find substitutes for scarce resources and ecosystem services.Economic growth is seen as good and essentially unlimited.586 CHAPTER 26 Economics, Environment, and Sustainability