History of Environmental Economics

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The historical development ofenvironmental economics (1:1)

Economics of RegionalResources

Dr. Maurizio PROSP R! (PhD)"niversit# of $o%%iaDept. Pr!M & $acult# of '%ricultureia apoli *+, -11 $o%%iatel. /0 2 3312+3 .0+4email: m.prosperi5unif%.it

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Preface Stud#in% environment from a social science perspective causes

some pro6lems to students:

man# have (almost) no social science trainin% at all those 7ho have social science trainin%, have 6een

raised on 8mainstream economics8 , and therefore aremainl# focused on economic efficienc# , rather thansustaina6ilit#

The course 7ill focus on 8sustaina6le development8 , 7ith somelin9s to some 8deviations8 from mainstream economics (e.%.nvironmental ethics colo%ical conomics, etc.)

;e 7ants to understand modern environmental pro6lems, 7ithsmall emphasis on 8real8 social issues of the da#, and stron%interest to7ards lon% term horizon (e.%. ne


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;ho cares a6out sustaina6ilit#? mpirical evidence sho7s us that povert# is a ma@or cause

and effect of environmental pro6lems Povert#

denies poor people of the means to act in their o7nlon%2term interest

creates environmental stress (e.%. Over%razion% ofran%eland soil erosion desertification) 22=resources de%radation 22= povert# 7orsenin%

rror in economic plannin% ma# lead to irreversi6le chan%e on the natural assett

nvironmental conomics is the ne7 economic paradi%mincorporatin% a diversit# of economic doctrines (i.e. >lassical,Mar


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conomic paradi%ms and nvironment ;hat is a 8paradi%m8?

B!t is a fundamental economic 6elief , a 6asic unchan%in%economic principle, that %overns the 7a# economists vie7the 7orld C

>lassical conomic Mar


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eoclassical paradi%m

conomics is transformed into a ri%orousl# mathematic

scientific discipline (a social BscienceC) mphasis moved a7a# from suppl#, and turnin% to

demand Mar9et is supposed to 6e neutral and value2free ' particular mode of human: rational F e%oistic

;illiam Stanle# Gevons(130+2133*)BGevons8 parado


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Aumanistic paradi%m

Re@ection of the 8rational economic person8 model Preferences are not static , independent and determined

6# %enetics instead the# are interdependent !ndividuals are capa6le of altruistic acts:

self2interested / altruistic preferences

!ndividuals possesses a sense of communit# ( extendedrationality ) Jovernment intervention reIuired to promote a more

e%alitarian distri6ution of income amon% people

rnst Shumacher(1 1121 --)Beconomic thin9in% iscompati6le 7ith spiritualit#as opposed to materialismC

Mar9 Hutz(1 E12 )Beconomic for the >ommonJood, in the era or%lo6alizationC


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Post ;orld ;ar !! economics conomic %ro7th driven 6# technical innovation

appeared to offer limitless pro%ress (i.e. B %reenrevolution C in the 84 s, in the "S)

Ao7ever, startin% from the 84 s, increasin% a7arenessof pollution pro6lems

Rachel >arson (1 4*): B Silent Sprin% C.Aou%hton Mifflin.

The 6oo9 inspired 7idespread pu6lic concerns 7ithpesticides and pollution of the environment. !tfacilitated the 6an of the pesticide DDT in 1 -* in the "S.

Still most of mainstream (neoclassical) economistsclaim that optimal resource allocation is possi6le 7ithan efficientl# functionin% price s#stem.

Technical chan%e 7ill miti%ate the ris9 for resourcese


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nvironmental conomics (1) BtechnocentricCKTR M >OR ">OP!'

atural resources are spontaneousl# created, andservin% at man9ind purposes

conomic %ro7th conceived in material value terms Prioritar# o6@ective: M'K (J P) $ree mar9et mechanism and central plannin%, in

con@unction 7ith technolo%ical innovation, 7ill miti%atelon%2run ph#sical resource scarcit#

ature has a mere B instrumental valueC (use value)

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nvironmental conomics (0) BecocentricC>OMM" 'H!ST

Resource should 6e preserved

The ri%ht of the %overnment to fi< environmentalconstraints, limitin% economic %ro7th, to compl# 7ithph#sical and social limits (e.%. !nte%rated farmin%)

Decentralization of socio2economic s#stem, to pursuesustaina6ilit#

Loth instrumental and intrinsic value in nature areconsidered

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i f l i l di% (!!)


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ariants of eoclassical paradi%m (!!): The materials 6alance approach

Pollution is a pervasive and inevita6le phenomenon,reIuirin% %overnment intervention (re%ulation orincentives)

'n optimum (efficient) level of pollution can 6e defined: Min (pollution) , such that:

mar%inal net private 6enefits N mar%inal e


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Polic# anal#sis (alternative) frame7or9s >ost26enefit (>L'): it implies

Monetar# valuations (not al7a#s possi6le) !nfinite su6stituta6ilit# Positive rates of discount Hon%2term resilience capacit#

$ionstraints ma# 6e refined over time (fle


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Total economic value >onsists of t7o main elements:

use value and nonuse value Direct use value: ;TP or ;T' for

onl# an actual use of the %ood orservice. !t tends to dominate thetotal value of most ordinar# (non environmental) %oods

!ndirect use value: special functions of someecos#stems

Option alue: Joods and servicesare valued for their potential to 6e

availa6le in the future


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colo%ical F >o2evolutionar# economic paradi%m

ver#thin% is interloc9ed, #et ever#thin%is chan%in% accordance 7ith the interloc9edness

conomic development vie7ed as a process of adaptation tochan%in% environment, 7hich 7ill also 6e a source ofenvironmental chan%e

0 sources of chan%e (none of them alone eo2evolutionar# perspective: provides a lin9 6et7een ecolo%icaland economic anal#sis

Richard L. or%aard(1 E02 )Bor%anisms activel# see9alternatives in theirenvironment or chan%e7hat the# findC

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volutionar# conomics paradi%m

The rational 6ehaviour of individuals is replaced 6# 6oundedrationalit#, 7hich can ta9e the form of ha6its, routines,m#opia and imitation ( elson F ;inter, 1 3*)

The economic s#stems evolves under the effect of t7ostrivin% forces:

The creation of diversit#, throu%h the application of variousmechanisms

The reduction of diversit# (e.%. natural selection)

mphasis on shoc9s and technolo%ical innovation Geroen van den Ler%h(1 4+2 )Bunderstandin% ho7 tofoster a social2technolo%ical

transition to a sustaina6leener%# s#stemC

Richard R. elson(1 0 2 )Btechnolo%ical and

institutional histor# 7ithprofound concerns for the roleof technolo%# in societ#C

Sidne# J. ;inter(1 0+2 )Bevolutionar# economics, and

especiall# technolo%icalchan%e (strate%icmana%ement)C

*0


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$inal remar9s nvironmental conomics deals 7ith

Suppl# F demand of non2mar9eta6le %oods !ncomplete information volvin% s#stems (economic ecolo%ical) "ncertaint# >omple

History of Environmental Economics

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