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POSTGRADUATE INSTITUTE OF AGRCULTURE. EC 5106: RESOURCE & ENVIRONMENTAL ECONOMICS I (2:30) First Semester 2006/2007 L 1. INTRODUCTION TO REE I. S.THIRUCHELVAM Department of Agricultural Economics and Business Management Faculty of Agriculture, University of Peradeniya ,. COURSE CAPSULE.
RESOURCE & ENVIRONMENTAL ECONOMICS I (2:30)
First Semester 2006/2007
L 1. INTRODUCTION TO REE I
Department of Agricultural Economics and Business Management Faculty of Agriculture, University of Peradeniya,
Economics of Natural Resource & the Env. NY
The study of how scarce resources are allocated among competing uses
Something is said to be scarce when if, at a zero price, more is wanted than as available.
When one use is chosen, the opportunity cost of that choice is the value of the next best alternative.
Everything that is scarce requires allocation choice which has an economic value reflected in opportunity cost
Fundamental Questions of Economics
‘What’ Gs & Ss are produced (Derived from NRs)?
‘How’ they are produced (Tech,Pollu.& Harvest Issues)?
‘Who’ gets things (Allocation vs. rich subsidizing poor) ?
The existence theorem relates the scale & configuration of an economy to the set of environment – economy interrelationships underlying the economy.
The open linear economy needs to be revised revised to allow for the economic functions of natural environments and the & the thermodynamic equivalence between resource extraction and waste discharges. Resource
Recycling (Entropy Low)
Imperative to have the economy grow as long as human population continues to grow. Developing countries must have a mini. of 3% annual growth to achieve equity with developed world. However, if they use current forms of development to achieve this growth, their energy use alone would have to increase by a factor of five!
Third world is bearing large proportion of env. cost of developed world’s economic growthHow can these changes be brought about?
Agric. production must be shifted to developing world. This is currently undermined by dumping of W.Surpluses
Reduce energy cost/unit of production –
Recycling will also result in reduced energy &emissions
Most recent example is President Bush’s decision not to ratify Kyoto Protocol. Econ. growth means greater production, more Use of NRs & Pollution.
Environment Feedbacks on to the Economy
On a global scale, the following issues will affect the world’s economic systems: Ozone hole, Acid rain, Deforestation, Global warming, Desertification
For a sustainable economy… Must slow pop. growth.
Merge environment & economics in decision making
Stop externalizing environmental costs
Finally, remember that scarcity is the “enemy” of economic well-being wise resource use and reuse