ECON 3804 Lecture Notes - Lecture 1: Natural Capital, Environmental Policy, Sustainable Development
ECON 3804
What is Environmental Economics? (Ch. 1)
Economy-Environment Linkages (Ch. 2)
Maya Papineau
Department of Economics
Carleton University
ECON 3804
September 13, 2016
M. Papineau (CU) ECON 3804 - Environmental Economics 13/09/2016 1 / 49
Lecture Outline
Introduction: Definitions, major themes and concepts
-What is environmental economics?
-Why do environmental problems emerge?
-Why are they so difficult for economies to deal with?
Sustainability and Natural Capital
-What is sustainable development?
-What “goods” and services do ecosystems provide?
-How are the economy and environment linked?
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Introduction
What is environmental economics?
Economics is the study of how and why economic agents make
decisions about the use of scarce resources.
Environmental economics studies:
-How economic activity affects the environment
-Why economic activity causes environmental problems
-What policy responses will lead to an efficient use of resources
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Document Summary
How are the economy and environment linked: papineau (cu) Economics is the study of how and why economic agents make decisions about the use of scarce resources. What policy responses will lead to an e cient use of resources: papineau (cu) Economic e ciency is a primary criterion for evaluating economic outcomes. An economy is e cient if all resources are put to their highest value use. Our economy creates incentives that can lead to environmental degradation. An incentive is something that either encourages or discourages certain behavior or activities. Inherent characteristics of environmental goods can exacerbate these incentives. Lack of property rights (can"t own environmental goods) Open access (e. g. beach or public park) These characteristics lead to market failure a socially ine cient outcome. Relatively simple example: garbage and waste dumping. Created by one party; borne by another; not re ected in prices: papineau (cu) The air we breathe is a public good: non-excludable, non-rival.