KENLY DEFRANTDAVID MARTINEZ

3 R D PERIOD

Chapter 23Sections 3&4

Section 3

How Can We Use Economic Tools to Deal with Environmental Problems?

Most Things Cost a Lot More Than You Thin

Market price: does not include most of the external costs of harm to environment and human health associated with it.

Such costs are called hidden costsThe consumer does not pay for hidden costsHidden costs can have short and long term

harmful effects on peopleNeoclassical economists agree with not

including hidden costsEnvironmental and Ecological economists

believe they should be included

Using Environmental Economic Indicators Can Help Reduce Our Environmental Impact

Gross Domestic Product (GDP) provide a standardized and useful method for measuring and comparing the economic outputs of nations

Environmental and Ecological economists want use of widespread indicators to help monitor environmental quality and human well-being

We Can Include Harmful Environmental Costs in the Prices of Goods and Service

Environmental and Ecological economists argue that an environmentally honest market system would include harmful environmental and health costs

-this would reduce waste, pollution, and environmental degradation

Reasons that Full Costing is not used: - producers would have to charge more - difficult to estimate harmful costs - consumers do not connect them to things

they buy

We Can Reward Environmentally Sustainable Businesses

One way to encourage a shift to full-cost pricing it to phase out environmentally harmful subsidies and tax breaks

-such subsidies the economic playing field and create economic incentives

Japan, France, and Belgium have phased out all coal subsidies

We Can Tax Pollution and Wastes instead of Wages and Profits

Green taxes discourage pollution and resource waste which includes harmful costs

Three requirements for successful implementation of green taxes:

1. Must allow 10-20 years for companies to plan

2. Income, payroll, or other taxes have to be reduced or replaced so that there is no increase in taxes

3. The poor and middle class would need a safety net to reduce the regressive nature of any taxes on essentials such as food and fuel

Environmental Laws and Regulations Can Discourage or Encourage Innovation

Regulation is a form of government intervention in the marketplace that is widely used to help control or prevent pollution and reduce resource waste and environmental degradation

- Involves enacting and enforcing laws that set pollution standards, regulate harmful activities, and protect certain irreplaceable resources

We Can Reduce Pollution and Resource Waste by Selling Services instead of Things

Service Flow Economy: instead of buying most goods outright customers could rent the services that such goods provide

- manufacturers makes more money if its product uses the minimum amount of materials, lasts as long as possible, produces as little pollution as possible, and is easy to maintain, repair, reuse, or recycle.

Section 4

How Can Reducing Poverty Help Us Deal with Environmental Problems?

The Gap between the Rich and the Poor is Getting Wider

Poverty (Inability To Meet Basic Economic Needs)

Trickle-Down Effect (More Jobs/Revenue Providing Greater Tax Revenues)

Flooding Up (Rich Take Most of the Money)Wealth Gap

We Can Reduce Poverty

South Korea & Singapore reduced poverty in 2 decades by:

Education Hard Work Discipline Attracted Investment Capital China & India also on a Similar Path Developed countries can help by: Cancelling debt of the Poorest Nations (14 in

Africa, 4 in Latin America)

Case Study: Making Microloans to the Poor

1983: Muhammad Yunus: Grameen Village Bank in Bangladesh ($50-

$500 to 6.6 Million) Microloans Mostly to Women (Plant Crops,

Buy Cows, or Start Business as Seamstresses, Weavers, Bookbinders, Vendors and Phone Service Providers)

“Solidarity” Groups (5 Members Total, if 1 Member missed a payment, other members make the payment)

Case Study: Making Microloans to the Poor (Cont.)

2006: Muhammad Yunus and his Grameen Bank Both Won the Nobel Peace Prize.

2006: Citibank and TIAA-CREF each Committed $100 Million to Microloans.

We Can Achieve the World’s Millennium Development Goals

2000: Millennium Development Goals: Sharply Reduce Hunger & Poverty Improve Health Care Empower Women Moving Toward Environmental Stability by

2015 Developed Counties: Spend 0.7% of National

Budget Toward These Goals