Skip to main content
main-content

Über dieses Buch

This textbook provides a concise introduction to micro- and macroeconomics and demonstrates how economic tools and approaches can be used to analyze environmental issues. Written in an accessible style without compromising depth of the analysis, central issues in the public policy debate on environmental problems and environmental policy are discussed and analyzed from an economics perspective. The book is meant as an introductory (and in some parts intermediate) text for undergraduate students in environmental sciences without a background in economics. It also serves as a companion for economists interested in a presentation of the micro and macro foundations of environmental economics, in a nutshell.

The second edition has been revised, updated and extended in may ways, for instance by adding a microeconomic section on environmental technical change, a discussion of the significance of technical change for a sustainable development and a considerably extended macroeconomic section on economic growth.

Inhaltsverzeichnis

Frontmatter

1. Introduction

Abstract
In this brief introductory chapter, the authors open up the plan of the book for you. The readers can see the fundamental economic questions and how they will be dealt with in the subsequent chapters of this book.
Alfred Endres, Volker Radke

Economics: What Is It About and How Does It Relate to the Natural Environment?

Frontmatter

2. The Fundamental Problem

Abstract
The satisfaction of human needs constitutes the primary goal acknowledged in mainstream economics. In order to explore the nature of human needs, Maslow’s hierarchy of needs is discussed. Human needs are observed to be principally without constraint. A «good» is defined with regard to its ability to satisfy a human need. Within the set of goods, commodities are distinguished from services. A classification of goods according to the criteria of excludability from use and rivalry in use is presented. Production is identified as the most important approach to make goods available. The main problem that forms the point of departure of economic thinking is described as the tension between the boundlessness of human needs, on the one hand, and the limited availability of the means to satisfy those needs, on the other. This phenomenon is called «scarcity».
Alfred Endres, Volker Radke

3. The Economic Approach

Abstract
The economic principle is presented as the strategy best suited to deal with the problem of scarcity. Acting in accordance with this principle yields efficient results, such that there is no waste of resources. Consumers and firms are assumed to be agents who act economically. The structure of interaction between consumers and firms is outlined as a circular flow. A positive, i.e., merely observing and describing, analysis of this interactive structure is distinguished from a normative one, which evaluates the outcomes of interaction according to the criteria of efficiency, justice, and stability. (Efficiency is in the centre of mainstream economic analysis. This is so because the impetus for acting efficiently follows directly from the fundamental economic problem of scarcity. Therefore, this criterion receives particular attention in our discussion.) From any violation of these criteria, a justification of governmental action may be deduced. As two fields of governmental action, the choice of economic system and interventions in the economic process are discussed.
Alfred Endres, Volker Radke

4. Integration of the Natural Environment: Socially Undesirable Utilisation of Natural Goods

Abstract
The importance of natural resources for the satisfaction of human needs both as consumer goods and as factors of production is emphasized. This is contrasted with the circular flow diagram discussed in Chap. 3, which does not represent the natural environment at all. Instead, it is proposed that the economic system is embedded into and dependant on the natural system. Based on the criteria of non-excludability and non-rivalry it is argued that natural collective goods and natural open access resources are used inefficiently in the market system. Departing from the criterion of justice, the notion of sustainable development is introduced. Some examples of policy interventions aimed at efficiency and justice in connection with the use of natural resources are sketched.
Alfred Endres, Volker Radke

5. Summary to Part I and Looking Ahead

Abstract
The present Part I began with the observation that human beings are restricted, in all their attempts to satisfy their unlimited needs, by the limited availability of goods. This phenomenon was called scarcity. Humans oppose scarcity by acting in conformity with the economic principle. Based on rational behaviour, the negative consequences of scarcity can, in principle, be addressed better within a market system than in other forms of economic systems. However, given some special circumstances, market processes fail to produce outcomes that meet the goal of the greatest degree of satisfaction of human needs. In those cases, the application of economic policy measures is justified. The very special case of market failure, which constitutes the core idea behind the present text is the socially undesirable utilization of natural goods in the context of a market economy.
Alfred Endres, Volker Radke

Microeconomics and the Natural Environment

Frontmatter

6. Fundamental Concepts of Microeconomics

Abstract
This chapter starts with the introduction of two of the «protagonists» in the «drama» of economics, consumers, and firms. We elaborate on how they make their decisions and on how these individual decisions are coordinated in the marketplace. Sometimes, most of society is unhappy with the results of private decision making and market coordination; such an example is environmental destruction. We explain environmental problems to be a case of «market failure», the inability of the market system to attain socially satisfactory («optimal») results.
Alfred Endres, Volker Radke

7. A Sketch of Environmental Microeconomics

Abstract
The preceding section closed by stating a serious problem: market failure. It is at this point that a third «protagonist» is called upon the «stage» of economics to make amends, the government. To see how this might be done in principle, we introduce the concept of «internalizing externalities», an idea that the media love to quote but seem to not always fully understand. Then, we turn from the principle to its practical application. Pollution taxes and command and control are introduced as alternative environmental policy instruments, and are evaluated according to economic criteria. This chapter is supposed to show how microeconomic analysis, as discussed in the preceding chapter, is useful for the analysis of environmental problems and policy. In the main part of this chapter, we will follow the standard economic textbook procedure assuming production and abatement technology to be given. However, the chapter is completed by a discussion of environmentally friendly technical change.
Alfred Endres, Volker Radke

8. Summary to Part II and Looking Ahead

Abstract
In the two preceding chapters we offered our cherished readers a guided tour through the realm of general microeconomics and environmental microeconomics (ah, we can hear the sweet sound of applause here, at least we think so!). As it turned out, both areas may be looked at through the lenses of positive just as well as of normative analysis.
Alfred Endres, Volker Radke

Macroeconomics and the Natural Environment

Frontmatter

9. Fundamental Concepts of Macroeconomics

Abstract
Macroeconomics deals, inter alia, with the problems of unemployment, of price instability and of stagnation (or even underdevelopment). It is argued in Sect. 9.1 that for environmental studies the problem of stagnation and the corresponding goal of economic growth are of main interest, while unemployment and price instability are to a lesser extent. Hence, Sect. 9.2 focuses on basic concepts and models of growth theory. It is demonstrated that the growth of a country’s flow of income is based on this country’s stock of wealth. Any growth in the flow of income requires investments in the productive stocks available. In neoclassical growth theory, the feasibility of unbounded growth via investment activities is postulated. For practical purposes, the abstract notion of «economic growth» has to be operationalised. The most common indicator of economic growth is the real gross domestic product (GDPr). Therefore, in Sect. 9.3 it is outlined how the GDPr is computed within the United Nations’ System of National Accounts (SNA). Furthermore, the procedure used in the SNA to account for the stock of national wealth is sketched.
Alfred Endres, Volker Radke

10. A Sketch of Environmental Macroeconomics

Abstract
In Sect. 10.1, we examine how the conclusions of neoclassical growth theory that were explained before in Chap. 9 are altered if a non-renewable natural factor of production is introduced. The neoclassical assumption of unlimited growth possibilities has been questioned by, among others, the Club of Rome, by hinting at the exhaustability of natural productive stocks. The neoclassical rejection of the assumption of natural limits to growth rests on the possibility to substitute for declining natural productive stocks by investing in man-made capital in order to ensure intergenerational justice. The latter is interpreted as constant consumption of goods over time. The idea of intergenerational justice forms the base for the concept of sustainable development, which is, controversially, discussed. Technological progress might relax the dependence on natural production factors but hast o be analysed in a differentiated manner. ► Section 10.2 reports on attempts to incorporate natural resources into national acounting procedures more completely. Both the flow indices and the stock indices of the SNA have been criticized for neglecting important contributions of the natural environment. As a response to this critique, the United Nations’ System of Integrated Environmental and Economic Accounting (SEEA) is presented. Both the SEEA and various other approaches of integrating the natural environment into national accounting are assessed with regard to their ability to measure progress toward sustainable development.
Alfred Endres, Volker Radke

11. Summary to Part III

Abstract
When the scarcity of natural resources is considered within the context of macroeconomics, many difficult questions arise. Two of those questions were addressed in Part III of the present text:
Alfred Endres, Volker Radke

Backmatter

Weitere Informationen

Premium Partner

    Bildnachweise