Introduction to the economy
of the environment
The economy as an open system
The relationship between
economy and environment
1) The environmental limits to the economic
activity
2) The harmonic visions of the development
3) The environmental consequences of the
economic activity
4) Private cost and social cost
Renewable and non-Renewable
Resources
1) The exploitation of the non
renewable resources
2) The exploitation of the renewable
resources
The economy as an open system

Extract resources from the
environment

Transform these resources

Replace it in the environment
in a different state
More resources are extracted,
More wastes are produced !
The environment puts some
limits to the economic activity
MALTHUS - The environment as absolute
limit
RICARDO - The environment as relative
limit
MARX - The importance of the social
limits
STEADY STATE:
Situation of equilibrium in which the
economy ceases to grow
The harmonic visions of the
development
MILL - Same convergence to the static
state
DALY - The static state as a political
choice
But do we need really to realize
the static state to safeguard the
environment?
The environmental
consequences of economic
activity:



Contamination
Pollution
Economic pollution
Economic activity produces
external cost
that influence other subjects
PIGOU:
we must distinguish between
PRIVATE COST AND SOCIAL COST
of an economic activity
the real forms of contamination
produce a very great social cost
SOCIAL COST
=
PRIVATE COST + EXTERNAL COST
To manage the resources
economically
The resources can be:
RENEWABLE
NON RENEWABLE
(EXHAUSTIBLE)
The renewable resources require
TAXES FOR EXPLOITATION
It is necessary to maximize the profit
on a large temporal horizon rather
than in every instant of the time!
COST OF USE:
To utilize an exhaustible resource today means
not to utilize it tomorrow! If tomorrow the
resource will be more than toda, it can be
worthwhile to differ the exploitation of it.
COST Of EMPLOYMENT OF AN
EXHAUSTIBLE RESOURCE
=
COST OF EXTRACTION + COST OF USE
Also for the renewable resources, whose level
increases by time, it is essential to choose the
moment in which the resource will be utilized
More the potential exploitation will
make.
But we can not wait forever..