The Environment Is An Economic Good
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- The Environment Is An Economic…
Economic Concepts | Environmental Context |
---|---|
Markets incorporate incentives to reduce costs | Solving environmental mysteries |
National Content Standards Addressed:
Standard 1: Productive resources are limited. Therefore, people cannot have all the goods and services they want. As a result, they must choose some things and give up others.
Standard 2: Effective decision making requires comparing the additional costs of alternatives with the additional benefits. Most choices involve doing a little more or a little less of something; few choices are all-or-nothing decisions.
Standard 4: People respond predictably to positive and negative incentives.
Standard 5: Voluntary exchange occurs only when all participating parties expect to gain.
Standard 6: Markets exist when buyers and sellers interact. . . .
Standard 10: Institutions evolve in market economies to help individuals and groups accomplish their goals. . . .A different kind of institution, clearly defined and well enforced property rights, is essential to a market economy.
Key Points
-
- Review the tools of economic reasoning used throughout the workshop
- i. The environment, like all economic goods, is scarce.
- Environmental problems result from choices made by people.
- Governments, societies, and organizations do not make choices; people do.
- People choices are rational. They choose the alternative they believe to have the greatest excess of benefits over costs.
- Environmental problems result from choices made by people.
- ii. All choices bear costs.
- The choice to address (or not address) environmental problems imposes opportunity costs.
- Low cost
- iii. Incentives influence people’s choices about the environment.
- People respond to incentives in predictable ways.
- If we want to change people’s behavior, we must change the incentives.
- Policies that reward or reduce the cost of environmentally-friendly choices and behavior will be more successful than policies that do not.
- Many current policies lack effectiveness or experience only limited success because they increase the cost to individuals of environmentally-friendly behavior.
- iv. Property rights shape incentives
- People tend to take better care of things they own because they bear the costs and reap the benefits of their stewardship.
- Common ownership undermines incentives for conservation and wise use.
- Many problems of environmental degradation result from a lack of private ownership because no one is rewarded for conservation and wise use.
- People tend to take better care of things they own because they bear the costs and reap the benefits of their stewardship.
- v. Voluntary trade through markets can provide effective solutions to environmental problems.
- People in markets respond to positive financial incentives, work to avoid high costs, and attempt to preserve valuable uses.
- Environmental policies that mimic or promote market exchanges can achieve environmental goals with lower costs than policies that ignore or exclude market mechanisms and incentives.
- vi. You can’t do just one thing. The consequences of choices lie in the future.
- All choices dealing with environmental issues have secondary effects.
- A challenge in designing environmental policy is to anticipate unintended, secondary effects
Assessment Activity: “The Activity That Fails” – reviewing and reinforcing the basic principles of economic reasoning
- i. The environment, like all economic goods, is scarce.
- Mysteries:
- Review solutions to mysteries posed in opening session of workshop.
- Review the tools of economic reasoning used throughout the workshop
Individual (or small group) Assessment: 3 new mysteries
Conclusion
- Economic reasoning about environmental issues is a model for:
- Teaching the economics content standards in the issues context, and
- Adopting an intellectual’s approach; learning to play with ideas.
Assigned Reading: “Save the Environment! Ban High School Car Washes,” by Michelle Malkin
- The Economic Perspective
- Bag and Baggage
- Environmental Quality Is A Choice
- Site Selection: A Land Use Simulation
- Creating Teachable Moments: Economic Content in the Environmental Context
- The Activity That Fails
- Property Rights and “Green” Incentives
- Incentives Change With the Rules of the Game
- How Clean Is Clean?
- Using Markets to Reduce Pollution
- The Environment Is An Economic Good

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