CHAPTER 13, LESSON 2 (A SUSTAINABLE GLOBAL ECONOMY)

1. CHAPTER 13, LESSON 2 (A SUSTAINABLE GLOBAL ECONOMY) HARIKRISHNAN RAVIKUMAR

2. INTRODUCTION • One of the main goals of sustainability is achieving economic strength. • Economic growth is usually associated with progress. • Economic growth can give people jobs, help fight poverty, and even increase peoples’ • The most common indicator used for measuring economic growth is the gross domestic product (GDP). • The GDP is the total value of all goods and sevices produced in a country in a given period of time. • Most of the time, GDP is divided by population, creating an average GDP per capita, or per person. • GDP per capita compares the GDPs with other nations.

3. INTRODUCTION • People interested in sustainability have found that the GDP is not a good indicator of progress. • This is because it assumes all economic activity is good. • Say there is an oil spill and jobs are created to clean it up. • This would make the GDP greater, but won’t care about the effects of the oil spill in the environment it is in. • The GDP even assumes that people being poor or malnourished is good economic activity. • Because of this, the GDP does not reflect social and ecological losses. • Igoring these problems can soon cause big economic problems.

4. INTRODUCTION • Suppose a tropical nation is selling cutting down trees for wood to sell. • The nation would become rich, but would soon suffer after all trees are cut.

7. NEW MEASURES OF PROGRESS • Since there are these concerns, many people are trying to develop sustainability indicators, that put in factors like ecological, economic, and social losses. • A group has created an alternative to the GDP, called the genuine progress indicator (GPI). • The GPI is a measure of progress that includes social, economic, and environmental factors. • It contains most of the same information as the GDP. • However, it includes things like housework and volunteering as gains. • Things that are categorized as things that cause decrease in progress include crime, overuse of natural resources, and loss of free time.

8. NEW MEASURES OF PROGRESS • The GPI paints a different picture of economic health than the GDP. • For example, from January 2000 to January 2003, the GDP says that the U.S. economy grew 2.64% ($180 more per person). • But the GPI shows that the economy grew by 0.12% ($212 less per person). • Critics and Supporters • Critics say the economic indictators are too subjective. • Supporters this say that the new indicator is a better measure of progress because it includes many factors that the GDP and other traditional economic indicators ignore.

11. VALUING NATURAL RESOURCES • Many people value the parts of the natural world, but do not need to pay for them. • Because of that, in traditional economics, they have no value. • Economists are experts in the field of economics. • Environmental economists say that traditional economics ignores ways that the natural world help the economy. • Environmental economists are economists who work to account for nature’s value in economics. • In traditional economics, financial capital is stressed.

12. VALUING NATURAL RESOURCES • Financial capital is wealth that is used to generate more wealth. • Environmental economicsis showing the importance of natural capital. • Natural resources that produce a flow of goodsand sevices. • This is also a region’s reserve of natural resources. • Keeping this reseve can be good for future economic health as maintaining financial capital. • Basically, we are trying to put a price tag on nature. • Consider the plan by Yellowstone to reintroduce wolves back into the park.

13. VALUING NATURAL RESOURCES • Many people argue that wolves have a ecological and historical value. • Environmental economists calculated the economic benefits of wolves as more evidence. • One benefit is that tourists will spend more money and stay longer to hear the wolves howling. • Wolves would produce more game, bringing in more money for hunting licenses. • Even if you put into account the money lostby loss of nearby livestock, wolves can create 110 million dollars in just 20 years. • The economists who had expressed wolves’ benefits in economic terms have opened the eyes of many people.

14. VALUING NATURAL RESOURCES • Other environmental economists have used similar ways to calculate the economic value of other things in nature. • One economist has looked at the economic value of wild bees that pollinate blueberries. • A study has found that one bee pollinates 15-19 liters of blueberries, making what bees, what environmental economists call, “flying $50 bills.” • Another team of economists has found the value of sevices brought to us by our world’s ecosystems. • They have found that the ecosystems bring 15 trillion dollars per year more then all human-produced goods and services.

15. VALUING NATURAL RESOURCES • All of these ways of thinking about economics is to help create a sustainable global economy. • A sustainable global economy is an economy that contributes to the sustainability of the Earth. • It recognizes the value of natural capital. • It encourages businesses that supprot human and environmental health, while discouraging industries who don’t do this. • It also tries to bring a more fair distribution of wealth. • Together, these trends hope to promote a more sustainable society.