Ecological Economics: Basic concepts

Lecture 1
 Major Events in Modern Environmental History
1962: First publication on excessive
Pesticide use impact on environment.
1970: The creation of Environmental
Protection Agency (EPA) by President
Nixon, USA.
1972: Creation of United Nations
Environment Program (UNEP) in Kenya.
1987: UN Brundtland commission first
defines Concept “Sustainable
Development”.
1992: Rio declaration recognises
promotion of economic activities that
need to address Environmental problems.
This declaration also identifies 27
principles of sustainable development.
1997: The Kyoto Protocol-to reduces
green house gas.
2002: Johannesburg declaration
recognized the three pillars of Sustainable
development which is economic
development, social development &
environmental development.
2009: Nations agrees to limit global
warming to no more than 2oC. Though
their was no binding commitment.
2015: Paris agreement on Climate change
agrees to reduce temperature to below
2oC above pre-industrial levels.
Source: Harris & Roach, 2018
Traditional Circular Economy Flow Model

Major limitations of
traditional circular
economy

Where do natural resources

and the environment fit in
this diagram???

What processes do natural

resources regenerate for
future economic use???

What is the ultimate fate of

waste & pollution
generated in the production
The Standard Circular Economy Flow Model process???
 Why environmental economics?

❑ Environmental economics helps us to understand how much

money society should spend on environmental quality and
how environmental policies should be structured.

❑ The Environmental system is a subset of the broader

economic system.

❑ Specifically, environmental economics helps us to

understand:
-The value of pollution abatement.
-The costs of pollution abatement.
-The welfare effects of different policies to control pollution
-Economically efficient way to manage natural resources
 Principles of Environmental Economics
❑ Environmental economics is based on
the application of several mainstream
economic theories and principles to
environmental issues---

➢ The theory of environmental

externalities.
➢ The optimal management of common
property and public goods.
➢ The optimal management of natural
resources over time.
➢ The economic valuation of
environmental goods and services.