Introduction Definitions and Basics
● Natural Resources, from the Concise Encyclopedia of Economics
● The earth’s natural resources are finite, which means that if we use them continuously, we will eventually exhaust them. This basic observation is undeniable. But another way of looking at the issue is far more relevant for assessing social welfare. Our exhaustible and unreproducible natural resources, if measured in terms of their prospective contribution to human welfare, can actually increase year after year, perhaps never coming anywhere near exhaustion. How can this be? The answer lies in the fact that the effective stocks of natural resources are continually expanded by the same technological developments that have fueled the extraordinary growth in living standards since the industrial revolution….
● Environmental Quality, from the Concise Encyclopedia of Economics
● There are many different measures of environmental quality, and most of those in use show that environmental quality is improving. For example, from 1970 to 2000, concentrations of carbon monoxide, a pollutant, fell by 75 percent in the United States and by 95 percent in the United Kingdom. From 1975 to 2000, nitrogen oxides declined by 35 percent in the United States and by 40 percent in the United Kingdom. The percentage of beaches in Denmark not complying with local or European Union regulations fell from 14 percent in 1980 to approximately 1 percent by 2000. Between 1969 and 1994, DDT and PCB contamination of fish fell by more than 80 percent. Indeed, it is difficult to find measures indicating that environmental quality is deteriorating in countries enjoying relatively high incomes….
● “The Economics of Climate Change”, by Robert P. Murphy. Econlib, July 6, 2009.
● During the last ten years, one of the biggest drivers of public opinion and policy has been concern over global warming or climate change. The economics of climate change uses economic theory and computer models to study the interactions among government policies, the climate system, and the economy. In this article, I survey the field and some of its major controversies….
● Global Warming: A Balance Sheet, from the Concise Encyclopedia of Economics
● We live in a greenhouse world; without such gases Earth would be too cold to sustain life as we know it. Water vapor, the principal molecule that keeps us warm, accounts for almost all (98 percent) of the natural heating of the world. Other gases, such as carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O), also contribute to a warmer world. Over the last three hundred years, as the world has industrialized and become more and more dependent on fossil fuels, the concentration of CO2 in the atmosphere has increased by more than 30 percent while methane concentrations, mainly from agriculture, have increased by about 150 percent. Atmospheric scientists have predicted that increases in those greenhouse gases will lead to, or are already producing, a warmer world….
● “The Locavore’s Dilemma: Why Pineapples Shouldn’t Be Grown in North Dakota”, by Jayson L. Lusk and F. Bailey Norwood. Econlib, January 3, 2011.
● Oklahoma’s government, like those of 45 other states, funds a farm-to-school program encouraging cafeterias to buy their food from local sources. U.S. Representative Chellie Pingree (D-Maine) wants to help; she recently introduced the Eat Local Foods Act (HR 5806) to assist schools in providing local foods in school lunches. From Michelle Obama’s White House garden to grants from the U.S. Department of Agriculture’s “Know Your Farmer, Know Your Food” initiative, an agenda has emerged to give local foods more prominence on our dinner plates….
In the News and Examples
● David Owen on the Environment, Unintended Consequences, and The Conundrum, podcast on EconTalk. February 13, 2012.
● David Owen of the New Yorker and author of The Conundrum talks with EconTalk host Russ Roberts about the ideas in his book. Owen argues that innovation and energy innovation have increased energy use rather than reduced it and similarly, other seemingly green changes do little to help the reduce humanity’s carbon footprint or are actually counter-productive. Only large reductions in consumption are likely to matter and that prescription is unappealing to most people. Owen points out that New York City, ironically perhaps, is one of the greenest places to live because of the efficiencies of density. The conversation concludes with a discussion of how to best approach global warming given these seeming realities.
● Think Globally, Act Irrationally: Recycling, by Mike Munger. Econlib, July 2, 2007. Also: Munger on Recycling, EconTalk podcast.
● “These two bottles. Suppose you value earth stewardship, and want to use the fewest resources. What if you want to minimize the negative impact on the environment? With that as your goal… should these bottles be made of recycled glass? Should anything be recycled? How would we know?”…
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● “There is a simple test for determining whether something is a resource (something valuable) or just garbage (something you want to dispose of at the lowest possible cost, including costs to the environment)….”
● Are we running out of resources? Youtube video with Prof. Steve Horwitz. LearnLiberty.org.
● Prof. Steve Horwitz addresses the common belief that the world is running out of natural resources. Instead, there are economic reasons why we will never run out of many resources. In a free market system, prices signal scarcity. So as a resource becomes more scarce, it becomes more expensive, which incentivizes people to use less of it and develop new alternatives, or to find new reserves of that resource that were previously unknown or unprofitable. We have seen throughout history that the human mind’s ability to innovate, coupled with a free market economic system, is an unlimited resource that can overcome the limitations we perceive with natural resources.
● Grab Bag: Munger and Roberts on Recycling, Peak Oil and Steroids, podcast on EconTalk. Sep. 24, 2007.
● Mike Munger, of Duke University, and EconTalk host Russ Roberts clean up some loose ends from their previous conversation on recycling, move on to talk about the idea of buying local to reduce one’s carbon footprint and then talk about the idea of peak oil. They close the conversation with the Rick Ankiel story and the implications for the Barry Bonds saga.
● Greenhouse Effect, from the Concise Encyclopedia of Economics
● The “greenhouse effect” is a complicated process by which the earth is becoming progressively warmer. The earth is bathed in sunlight, some of it reflected back into space and some absorbed. If the absorption is not matched by radiation back into space, the earth will get warmer until the intensity of that radiation matches the incoming sunlight. Some atmospheric gases absorb outward infrared radiation, warming the atmosphere. Carbon dioxide is one of these gases; so are methane, nitrous oxide, and the chlorofluorocarbons (CFCs). The concentrations of these gases are increasing, with the result that the earth is absorbing more sunlight and getting warmer….
● Energy, from the Concise Encyclopedia of Economics
● Most of the energy consumed in America today is produced from the combustion of fossil fuels, primarily oil, coal, and natural gas. Energy can be generated, however, in any number of ways….
A Little History: Primary Sources and References
● The Coal Question: An Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of Our Coal-Mines, by William Stanley Jevons. First economics work to express concern about running out of resources.
● “The expression ‘exhaustion of our coal mines,’ states the subject in the briefest form, but is sure to convey erroneous notions to those who do not reflect upon the long series of changes in our industrial condition which must result from the gradual deepening of our coal mines and the increased price of fuel. Many persons perhaps entertain a vague notion that some day our coal seams will be found emptied to the bottom, and swept clean like a coal-cellar. Our fires and furnaces, they think, will then be suddenly extinguished, and cold and darkness will be left to reign over a depopulated country. It is almost needless to say, however, that our mines are literally inexhaustible. We cannot get to the bottom of them; and though we may some day have to pay dear for fuel, it will never be positively wanting….”
● An Essay on the Principle of Population, by Thomas Robert Malthus. First economics work to explore the relationship between population–including birth control–and land in order to produce sufficient food from those two resources.
● “I said that population, when unchecked, increased in a geometrical ratio; and subsistence for man in an arithmetical ratio….”
● “Impelled to the increase of his species by an equally powerful instinct, reason interrupts his career, and asks him whether he may not bring beings into the world, for whom he cannot provide the means of subsistence. In a state of equality, this would be the simple question. In the present state of society, other considerations occur. Will he not lower his rank in life? Will he not subject himself to greater difficulties than he at present feels? Will he not be obliged to labour harder? and if he has a large family, will his utmost exertions enable him to support them? May he not see his offspring in rags and misery, and clamouring for bread that he cannot give them? And may he not be reduced to the grating necessity of forfeiting his independence, and of being obliged to the sparing hand of charity for support?…”
● “These considerations are calculated to prevent, and certainly do prevent, a very great number in all civilized nations from pursuing the dictate of nature in an early attachment to one woman….”
Advanced Resources
● Arthur Pigou, biography from the Concise Encyclopedia of Economics
● Arthur C. Pigou, a British economist, is best known for his work in welfare economics…. He argued that the existence of externalities is sufficient justification for government intervention. If someone is creating a negative externality, such as pollution, for instance, he is engaging in too much of the activity that generated the externality.
