REM 363/ENV 399 - Week 3 Economy & Environment

1. REM 363/ENV 399 - Week 3 Economy & Environment

2. Basic “Economy in Environment” Model Solar Energy GLOBAL ECOSYSTEM ECONOMIC SYSTEM ENERGY & MATERIALS EXPLOITATION MATERIALS RECYCLING AMENITIES PRODUCTION CONSUMPTION GOODS & SERVICES ENERGY & MATERIALS EXPLOITATION ENERGY & MATERIALS WASTES ENERGY & MATERIALS WASTES AMENITIES Waste Energy

3. Stocks versus Flows Refer to the stock-flow relationship as: St = St-1+ At – Ot where: S = stock A = inflow O = outflow t = time period Stock Inflow Outflow

4. Consumption, Production and Investment Solar Energy GLOBAL ECOSYSTEM ECONOMIC SYSTEM PRODUCTION CONSUMPTION GOODS & SERVICES Consumption – use of goods and services to satisfy needs and wants Production – process by which inputs are transformed into goods and services for consumption or investment in durable, human, intellectual or social capital Waste Energy

5. Energy and Materials (Resources) as Inputs Solar Energy GLOBAL ECOSYSTEM ECONOMIC SYSTEM ENERGY & MATERIALS EXPLOITATION PRODUCTION CONSUMPTION GOODS & SERVICES ENERGY & MATERIALS EXPLOITATION Waste Energy

6. Natural Resources • Flow resources (e.g. solar radiation) … no stock aspect • Stock resources • Non-renewable: no reproduction/fixed supply St = St-1– Et • Renewable: able to reproduce at some rateSt = St-1+ Gt – Et [Note: what if G = E?] where: S = resource stock G = growth in stock (inflow) E = extraction or harvest (outflow)

7. K Maximum Sustainable Yield (MSY) Growth Rate (t/yr) POPULATION (stock size) Time STOCK SIZE Carrying Capacity (K) The logistic curve (left) and the Schaefer curve (right), showing the formulation of MSY from basic ecological considerations

8. Waste accumulation and damages Solar Energy GLOBAL ECOSYSTEM ECONOMIC SYSTEM ENERGY & MATERIALS EXPLOITATION PRODUCTION CONSUMPTION GOODS & SERVICES ENERGY & MATERIALS EXPLOITATION ENERGY & MATERIALS WASTES ENERGY & MATERIALS WASTES Waste Energy

9. Wastes and Damage Relationships • Wastes are an unwanted by-product of economic activity • Also observe principles of thermodynamics .. entropy (p103) • They may accumulate in the environment as “stocks” St = St-1+ Wt – Dt where: S = stock of wastes W = flow of wastes during period D = removal of wastes by natural processes • Wastes instead may not persist [i.e. St = Wt] • Damages associated with waste accumulation may be non-linear

10. Economic damages with threshold (e.g. biodiversity) Source: Perrings and Pearce (1994)

11. Recycling of waste flows Solar Energy GLOBAL ECOSYSTEM ECONOMIC SYSTEM ENERGY & MATERIALS EXPLOITATION MATERIALS RECYCLING PRODUCTION CONSUMPTION GOODS & SERVICES ENERGY & MATERIALS EXPLOITATION ENERGY & MATERIALS WASTES ENERGY & MATERIALS WASTES Waste Energy

12. Recycling • Recycling (R) .. diversion, interception of part of the waste stream for reuse in production • Non-renewable with no recycling is: St = St-1– Et • Recycling reduces extraction (E): Et = (Ut – Rt) [Note: Ut is resource used during t] • Non-renewable with recycling is: St = St-1– (Ut – Rt) • Various factors determine its feasibility (e.g. recovery technology, costs relative to extraction of virgin materials ..) • Recycling versus waste treatment

13. Provision of Amenity Services from the environment Solar Energy GLOBAL ECOSYSTEM ECONOMIC SYSTEM ENERGY & MATERIALS EXPLOITATION MATERIALS RECYCLING AMENITIES PRODUCTION CONSUMPTION GOODS & SERVICES ENERGY & MATERIALS EXPLOITATION ENERGY & MATERIALS WASTES ENERGY & MATERIALS WASTES AMENITIES Waste Energy

14. Amenity services • Services provided by environment that do not require any “transformation”; therefore, enjoyed directly • Often non-consumptive (no extraction or depletion) • Examples include .. scenic views, hunting, other recreation Source: Calish et al. (1978) Assumptions for amenity service flows used in study of old growth forest values in BC

15. Is the global ecosystem Empty or Full? Solar Energy GLOBAL ECOSYSTEM ECONOMIC SYSTEM ENERGY & MATERIALS EXPLOITATION MATERIALS RECYCLING AMENITIES PRODUCTION CONSUMPTION GOODS & SERVICES ENERGY & MATERIALS EXPLOITATION ENERGY & MATERIALS WASTES ENERGY & MATERIALS WASTES AMENITIES Waste Energy

16. Herman Daly’s “Full World” GLOBAL ECOSYSTEM ECONOMIC SYSTEM Solar Energy MATERIALS RECYCLING ENERGY & MATERIALS EXPLOITATION AMENITIES PRODUCTION CONSUMPTION GOODS & SERVICES AMENITIES ENERGY & MATERIALS EXPLOITATION ENERGY & MATERIALS WASTES Waste Energy