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Objectives:. 1. Differentiate between the different ways of assessing wealth. (GDP, GNP, ISW, HDI & GDI). 2. Contrast internal costs, external costs & costs & internalizing costs. 3. Contrast Grameen and World Bank loans. 4. What factors a successful Cooperative Management System.

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1. Differentiate between the different ways of assessing wealth. (GDP, GNP, ISW, HDI & GDI).

2. Contrast internal costs, external costs & costs & internalizing costs.

3. Contrast Grameen and World Bank loans.

4. What factors a successful Cooperative Management System.

Warm Up:

  • What were the factors that impacted your decision to upgrade your power plant or to decline to upgrade.
  • Do you think this activity was realistic?

Cost-benefit analysis: Attempts to assign values to resources as well as to social & environmental effects of carrying out or not carrying out a given undertaking.

  • Who or what might be affected by this plan.
  • What are the potential outcomes & results?
  • What alternative actions might be considered?
  • After identifying & quantifying the above, an attempt is made to assign monetary costs & benefits to each factor.
  • Conservatives like it b/c it is a way of eliminating what they consider to be unnecessary & burdensome requirements to protect clean air, clean water, human health or biodiversity.
  • Environmentalists like that there is recognition of environmental consequences; others see it as amoral.

Steady-state economy – low human birth & death rates, use of renewable energy sources, material recycling, emphasis on durability rather than a high throughput of materials.

High throughput - maximizes the movement of materials , minimizes labor, creating lots of waste.


Internal costs – expense of gaining access to a resource and turning it into a useful product or service.

  • External costs – expenses borne by others that do not use the resource. EX. Health effects of using waster or air to dispose of wastes.
  • Internalizing costs – Those who reap the benefits of resource use also bear all the external costs. This is very controversial.

GNP – Gross national product.

  • Money flow from households to businesses in the form of good & services purchased.
  • Cost of production (wages, rent, interest, taxes & profit) subtract capital depreciation.)
  • GDP – Gross Domestic Product
  • Only the economic activity within national boundaries.
  • Because these 2 indicators do not take into account degradation of the environment or human health environmentalists recommend
  • ISW – Index of Sustainable Economic Welfare – Also takes into account real per capita income, distributional equity, natural resource depletion, environmental damage, & the value of unpaid labor.
  • HDI – Human Development Index – Used by the United Nations Development Program incorporates life expectancy, educational attainment, standard of living.
  • GDI – Gender Development Index – accounts for inequality or achievement between men and women


World Bank – large loans for large projects (many with adverse environmental impacts – like dams).

Grammeen - $67 is typical. For gaining an income – ex. Sewing machine.


Capital – any form of wealth available for use in the production of more wealth.

Natural capital – comes from the earth

Human capital comes from humans: abilities, imagination

Nonrenewable resources – earth’s geological endowments.

Renewable resources – can be replenished (unless used faster than replenishment time.)

Intangible resources – open space, beauty, serenity, wisdom, diversity & satisfactions. They can be both infinite and exhaustible.


Use value- the price we pay to use or consume a resource.,

Option value – preserving for the future.

Existence value, aesthetic value, cultural value, scientific value.


Proven – thoroughly mapped and are economical to recover.

  • Known resources – located but not completely mapped.
  • Undiscovered – speculative or inferred from similarities with known deposits.
  • Recoverable resources – accessible with current technology but are not necessarily economical. Diffuse or remote. Only 0.1% of the resources in the upper crust will every be economically recoverable = 10,000 x’s as much is NOT available.

Cooperative or communal resource management –

  • Community members have lived on the land or used the resource for a long time & anticipate that use by their future generations.
  • The resource has clearly define boundaries.
  • The community groups size is known & clearly enforced.
  • The resource is scarce & highly variable so they are forced to be interdependent.
  • Management decisions have evolved over time & are enforced.
  • The resource is actively monitored to prevent cheating.
  • Conflict resolution mechanisms.
  • There are incentives for compliance & sanctions for non-compliance.


In nature the “Wastes from one organism become the food of another”.

“What responsibilities do businesses have to protect the environment or save resources beyond the legal liabilities spelled out by the law?”

NONE says Milton Friedman. “It would be unethical for corporate leaders to consider anything other than maximizing profits.”

Summarize Ray Anderson’s eco-efficient carpeting.