The economic and ecological approaches

Two different approaches address economic analysis of environmental issues. Specialists apply techniques of standard economic analysis and ecological analysis. The traditional economic approach to analysis of natural resource and waste flows uses the same kind of economic valuation applied to factors of production, goods, and services. Economic techniques can also be used to assess the money value of damages done by pollution and waste disposal. By placing a money value on natural resources and environmental functions, we can include them in the inner, or economic, circular flow. This is the goal of much standard resource and environmental analysis.

Ecological economists have often argued that standard economic pricing and valuation techniques must either be altered to reflect ecosystem realities, or must be supplemented by other forms of analysis focusing on energy flows, the carrying capacity of the environment, and the requirements of ecological balance. An ecological economics approach, by contrast, looks first at the physical requirements for a stable climate. Once the physical requirements for a stable climate are determined, the economic measures necessary to achieve this are analyzed.

The ecological economic approach views the economic system as a whole as a subset of a broader biophysical system. This approach emphasizes the need for economic activity that conforms to physical and biological limits. Environmental economics emphasizes the relationship between economic production and the major natural cycles of the planet (i.e. the economic system and ecosystem). A fundamental principle of ecological economics is that human economic activity must be limited by the environment’s carrying capacity ⁹. Carrying capacity is defined as a population level and consumption activities, whether of humans or animals that the available natural resource base can sustain without depletion.

Balancing economic costs and benefits through some form of cost-benefit analysis, often involves a combination of values observable in the market, such as values of land or goods, and estimates of non-market values, such as natural beauty and maintenance of species diversity. Seeking a balance between economic growth and ecosystem health has given rise to the concept of sustainable development ¹⁰. Forms of economic development that preserve rather than degrade the environment include renewable energy use, organic and low-input agricultural and resource-conserving technologies. A sustainable global economy also implies limits on population and material consumption.

A simple model of the relationship between population, industrial output, resources, and pollution indicates that unlimited economic growth will lead to exhaustion of resources, rising pollution, and eventual collapse of economic systems and ecosystems. Continuing population and economic growth will exert even greater demands on resources and the environment. The concept of sustainable development attempts to combine economic and environmental goals. In addition, the nature of economic growth itself must adapt to environmental and resource constraints.

Notes:

1. It is the source of amenities and esthetic pleasure 2. …to meet our material needs and wants in the face of scarcity   3. Environmental economics… 4. …ranging from overfishing to fossil fuel depletion… 5. …economic costs and benefits…   6. …externalities, or external costs and benefits 7. …in more subtle and pervasive ways 8. …the environment’s source function and the environment’s sink function   9. …the environment’s carrying capacity 10. …sustainable development

– Она (окружающая среда) – это красоты природы и источник эстетического наслаждения – удовлетворять наши материальные нужды и потребности с учетом ограниченности (дефицита) природных ресурсов – экономика природопользования – начиная от истощения рыбных запасов до истощения минеральных ресурсов – экономические издержки (затраты) и общий полезный результат – экстерналии или внешние (объективные) затраты и экономический эффект – более тонко и изощренно – функцией окружающей среды является источник жизни и поглощения (переработки продуктов распада) – потенциал окружающей среды – устойчивое развитие

Exercises

Ex.1. Pronounce correctly:

environment, environmental; amenity, amenities; quantity, quality; diverse, diversity; beauty, beautiful, pleasure, measure, ecosystem, biosystem; scarce, scarcity; fuel, fossil fuel, issue, exhaust, exhaustion; judge, prefer, preference; external, externalities; cause, through, throughput, esthetic, pervasive, circle, circular; solar, cycle, recycle; alter, require, requirement; biophysical, sustain, sustainable; new, renew, renewable, non-renewable; species, event, eventual; consume, consumption; create, creation, recreation, depletion, crucial, value, valuation; exert

 

Ex.2. Find the English equivalents in the text:

экономика природопользования; окружающая среда; потенциал окружающей среды; анализ затрат и результатов; ограничение; быть осведомленным; особенный; воздействие; устойчивое развитие; предпочтение; подразумевать (иметь в виду); иметь отношение; ускорять; создавать; истощение (природных ресурсов); экстерналии или внешние (объективные) затраты и экономический эффект; отдых; предпосылка; размещать; перерабатывать; твердые отходы; отравляющие вещества; качество воды; качество воздуха; глобальное потепление; неисчерпаемые ресурсы, возобновляемые и невозобновляемые ресурсы; поддерживать; экономические затраты и результаты; иметь дело с чем-либо; вызывать (быть причиной); благосостояние; потребление; дикая природа; с учетом чего-либо; скудный, дефицитный; цель; туристический отдых; увеличивать; вложение (инвестиции); оценивать; лежащий в основе, важный; начиная от истощения рыбных запасов до истощения минеральных ресурсов; удовлетворять требованиям; соответствовать чему-либо; теоретический, практический

 

Ex.3. Complete the sentences:

1. … is a resource system that contributes to human welfare in a variety of ways.

2. The environment can be used for a variety of recreational activities such as …, …, and … ….

3. The central concept in … … of the environment is that of, or external costs and benefits.

4. Economic activity is a process of speeding up … … … from the ecological cycle.

5. A fundamental principle of … … is that human economic activity must be … by the environment’s carrying capacity.

6. … … … also implies limits on population and material consumption.

7. Continuing population and economic growth will exert even greater demands on … … ….

8. The concept of … … attempts to combine … and environmental goals.

 

Ex.4. Translate into English:

1. Экономика – это наука о том, как управлять деятельностью людей и использовать природные ресурсы.

2. Экономика природопользования – это раздел экономики, занимающийся проблемами окружающей среды.

3. Политика, направленная на защиту окружающей среды, связана с экономическими издержками и общим полезным результатом.

4. Цель экономической деятельности – улучшение благосостояния людей.

5. Центральным понятием в экономическом анализе окружающей среды является понятие экстерналий.

6. Традиционный экономический подход к природным ресурсам – это та же (схожая) экономическая оценка относительно факторов производства, товаров и услуг.

7. Экономисты-экологи рассматривают экономическую систему как подраздел биофизической системы в более широком смысле.

8. Экономика природопользования выделяет взаимосвязь между производственной деятельностью и основными природными циклами планеты.

9. Неограниченный экономический рост приводит к истощению ресурсов, росту загрязнения и неизбежному коллапсу экономических систем и экосистем.

Ex.5. Answer the questions:

1. What is the environment?

2. What are the main objectives of economics?

3. What is environmental economics?

4. What problems does modern environmental economics address?

5. What are the particular issues of environmental economics?

6. What is the basic premise underlying benefit-cost analysis?

7. What is the benefit-cost analysis?

8. What is the central concept in the environment economic analysis?

9. What kind of process is economic activity?

10. What are the different functions of natural systems?

11. What are two different approaches to economic analysis of environment?

12. What problem do ecological economists discuss?

13. How does the ecological economic approach view the economic system?

14. What is the fundamental principle of ecological economics?

15. What is the concept of sustainable development based on?

16. What are the consequences of the unlimited economic growth?

 

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