a. The study of how the economy is rooted in cultural, social, economic, and other settings is the subject of Regulation Theory. The regulatory theory provides a conceptual framework for explaining capitalist growth, crises, and reproduction by combining the fundamental dynamics of capitalism with the institutional structures of society. The approach emphasizes the connections between the condensation process and the collection of institutional forms and practices that make up the mode of social governance. The application of regulation theory argues that real regulation’ would be insufficient to achieve sustainable development on its own, but will need to be accompanied by changes in beliefs and morals.
b. There are two types of policies: market-based policies and command-and-control.
Market-based instruments are tools that promote behavior by using market signals instead of explicit mandates about pollution prevention levels or procedures. These policy instruments, which include things like
“Harnessing market forces” has been used to characterize several sorts of information projects. This is because, if successfully conceived and executed, they incentivize businesses (and/or people) to engage in pollution control activities that are in their own best interests while also meeting policy objectives.
c. According To Regulatory Theory, There Are Two Potential Wastewater Solutions.
Due to the inclusion of many chemical components in such processes, manufacturing businesses play an important part in the generation of wastewater this wastewater harms the environment. These are the two possible wastewater treatment options listed below:
According to the regulatory theory, the expenses of such water filtration must be integrated into the costs of operations by using different environmental policies such as pollution taxes and subsidy elimination, among other things.
d.
|
Point of distinction |
Voluntary actions |
Command and control |
|
Interference by Statutory Authorities to put controls |
No such interference required |
Statutory auth have to take actions by making laws and policies |
|
No guarantee of effectiveness |
If an organization makes environmental protection one of its basic values, it will be far more likely to support the program. |
Perhaps out of fear of sanctions, the organization tries to exert control, but this will not be sustainable in the long run. |
To address environmental externalities, a variety of alternative activities can be executed and are already being used by businesses. Increasing company productivity and reacting to green customers are two of the most famous business initiatives. 3M Corporation’s “Pollution Prevention Pays” campaign, which began in 1975, is perhaps the most often mentioned example. Line employees were involved in finding waste reduction options for the first time. Simultaneously, the corporation claims to have saved more than $500 million by reducing raw material, regulatory, disposal, and liability expenses. If these kinds of results can be replicated by other companies, they suggest a “win-win” scenario in which environmental efficiency and business profits go together.
e. The developments in the both demand and supply sides of the economy have made environmental activities more economical, according to one prevalent justification for corporate environmentalism. Especially in industrialized nations, an increasing number of customers have reached a financial level where they are prepared to spend a premium for ecologically friendly items. 8 Businesses are prepared to go over and above the levels of care needed by environmental legislation to compete with these “green” consumers. Organic vegetables, tuna obtained using gasoline, and McDonald’s are all examples of ecologically friendly items.
a. Sustainable finance is the practice of considering ESG factors while making financial investment decisions.
Climatic changes adaptability and prevention, and also the environment in general, may be included in environmental concerns.
Inequality, inclusion, labor relations, human capital, community investment, and also human rights challenges, are all examples of social factors.
Sustainable financing is critical to achieving the policy goals outlined in the European Green Deal, and also the EU’s international climate and sustainability obligations. As a supplement to public funds, it achieves this by channeling private investment into the transfer to weather patterns, resource-efficient, and equitable economy.
b. Short-termism is defined as a concentration on short-term outcomes at the cost of long-term- term goals. Investors may become too focused on profit growth as a consequence of short-term performance demands, paying less importance to strategy, basics, and long-term value development.
d. A bank loan taken for particular work for a short period is a type of short-term investment but when the work period is increased then bank loan tenure is also increased. Therefore, a bank loan is shifted from the short term to long term investment
Catastrophic theories of growth: According to one idea, environmental stress can cause chromosomal rearranging, which in self-fertilizing animals might result in the emergence of a new species in the same location.
Catastrophe theory incorporates one variable (x) and one (u) or two (u1 and u2) parameters or control variables.
a. Neoclassical theories of growth: According to this theory, economic growth is caused by three factors i.e., labor, technology, and capital. Whereas capital and labor resources are restricted, technology’s commitment to growth is limitless.
b. Development may wreak havoc on the environment, which, in turn, can wreak havoc on development. Poverty is indeed a cause and a result of environmental deterioration, which may be stated more concisely. Air, Land, water, energy resources, forests, coal, minerals and metals, and a plethora of all other natural resources are all vital for economic growth. It offers services that customers directly use, such as the air and water as a source of life (Your Article Library 2022).
Sustainability should not necessitate material consumption limitations since attaining sustainable consumption and production of goods and services ensures effectiveness and efficiency improvements while keeping actions within the planet’s bearing ability and honoring future generations’ rights. The correct method to provide for the benefit of the whole human community is to use natural resources sustainably.
a. Property rights are based on the Coase Theorem, which claims that in perfectly competitive marketplaces without transaction expenses and an appropriate set of outputs and inputs, the best judgment will be made.
Based on common-pool resources, access is provided through property regimes established by the government, which include:
Benefits Of Assigning Property Rights:
b. Transaction costs are the costs associated with purchasing or selling a product or service. The work necessary to get an item or service to market is represented by transaction expenses, which have given rise to entire businesses dedicated to simplifying transactions.
An economy gets more efficient when there is a reduction in transaction costs decrease; nevertheless, because transaction costs are never zero, any institutional system cannot be presumed to be efficient. A movement of this magnitude is not without its challenges, because as labor market adjusts to its new surroundings.
c. Property regimes give access to forest-based common pool resources including waterways, groundwater, as well as other water bodies in forest regions or agricultural land. In practically every portion of India today, villagers have a broad legal right of accessibility to just a few types of land, such as ‘pasture and grazing grounds’ and ‘village woods,’ these are in control of the village or village panchayat.
In this situation, the government grants them the right to buy the property they work on. The land is used for agriculture. In between crop rotation cycles, the common right on this land is fallow. The deterioration of embankments will increase the salinity of the soil. Village or village panchayat must take action and maintain the embankments.
a. Environmental goods and services: Environmental goods and services are commodities and services produced with the primary goal of minimizing or limiting pollution, erosion, or destruction of natural resources, as well as decreasing, reducing, mitigating, and regulating pollution.
Private environmental goods: Environmental products contain the features of private commodities, such as excludability against consumption competition, and they also have beneficial external consequences on the environment, such as improved environmental preservation. For example, grocery shopping, and airline journeys
Public goods: Many environmental resources, such as open space, water quality, wildlife, and a stable environment, are classified as public goods. Law enforcement and national defense, for example.
Excludable goods: A good for which it is feasible to restrict use to consumers who have not purchased or paid for it. Take, for example, theatre.
Non-excludable goods: non-excludable commodities are those which could not be used by a certain individual or group of people. For example, public road
Rival goods: A competitor good is a product that can only be owned or enjoyed by one person. Only one can be utilized at a time. for instance, food, television, and clothing (Corporate Finance Institute 2022).
Non-rival goods: A non-rival good, on the other hand, is one that may be eaten or held by several people. broadcasts on television, for example
b. Footpaths, national defense, food shopping, cinema, television, and television broadcasts are all examples of environmental goods and services.
National defense is an example of public goods since it utilizes the entire public.
Because it is exclusively used by those who have paid for it, grocery shopping is an example of a private environmental good.
Because it is accessible to everybody, the walkway is an example of non-excludable products.
Because it is only utilized by those who have paid for it, cinema is an example of excludable products.
Because it can only be used once, television is an example of a competitor’s good.
Television broadcasts are an example of non-rival commodities since one person watching them does not prevent another from seeing them.
c. Natural capital: Natural capital refers to the world’s natural assets, which also include geological, soils, water, air, and all living creatures. Humans obtain a vast range of benefits, sometimes referred to as ecosystem services, from such a Natural Capital, that allow human life feasible.
Natural capital stocks that are weakly exchangeable by technology or other kinds of capital are referred to as crucial natural capital, implying that they must be deemed unchangeable and also that their use cannot be justified. This is consistent with the strong sustainability model, which holds that not all types of capital may be presumed to be interchangeable, as contrasted to the weak sustainability approach, which holds that all capitals are entirely interchangeable. The accumulated natural capital rule states that as long as the total value of natural capital assets does not decrease, losses in certain stocks can be offset by gains in other stocks.
d. Vaccination has a favorable impact that extends beyond people and has indirect advantages for others who have not been vaccinated. Vaccines have a “positive externality,” meaning that they are a good that helps others in addition to the person who receives them. A person who has been vaccinated is protected against the virus and they also less prone to spread it to others. Governments consider items with significant positive externalities to be “public goods.”
Vaccination is treated as a non-rival commodity since one person is vaccinated it does not prevent another from taking benefit.
Vaccination is treated as a non-excludable item because vaccination is allowable or compulsory for everybody.
(Your Article Library 2022)
Characteristics of ecological economics
Differences between environmental economics and ecological economics
Environmental economics is concerned with the expansion of the national economy, whereas ecological economics is concerned with the long-term viability of the global economic and ecological system (The Conversation 2022).
b. The environment as a whole plays an important role in our economy. it offers a direct input into manufacturing, mostly via numerous services. Minerals, water, air, oil, gas, energy resources, metals, and fossil fuels are examples of environmental resources that directly aid the creation of products and services. These natural resources are necessary for the economic prosperity of the country. The economic cost-benefit of environmental resources, their distribution, and exploitation is evaluated. Both the economy and the wider environmental systems are linked because the environment supplies natural resources that aid economic growth.
c. Positive economics emphasizes the importance of economic justice or what the economy should be, whereas normative economics discusses and explains numerous economic events such as economic programs, circumstances, and conditions.
Positive economics is a branch of economics that focuses on describing, quantifying, and explaining economic trends, expectations, and related phenomena. Normative economics is concerned with ideological, opinion-based, prescriptive, value judgments, and “what should be” assertions made in the context of economic development, investment initiatives, and situations.
A rise in tax rates usually resulting in a drop in overall tax income, is an example of positive economics. The economy affected by unemployment is more than inflation is a normative economics example.
The following methods are used to value the environment:
i. Expressed Preference Methods: Individuals’ declared preferences for environmental products can be compared to their demand for other products and services to determine the demand for environmental goods.
Contingent Valuation Method (CVM): Analytic survey methodologies that establish a monetary value on commodities or services rely on theoretical circumstances.
ii. The Preference Methods That Have Been Revealed:
iii. Cost-Based Approaches:
The following are some examples of cost-based methods:
iv. Other Techniques:
(Docs.ufpr.br 2022)
b. Travel cost method: The travel cost approach is used to calculate the value of ecosystem-generated recreational benefits. It is assumed that the worth of the place or its recreational activities is represented in the amount of money people are prepared to spend to go there. This technique determines the worth of a tourist location and trip cost based on real behavior and choices (Travel Cost Method 2022).
Reasons why the resulting estimate may be inaccurate:
c. Economic valuation is a technique that may help you make tough judgments. The estimation of a monetary value for an environmental asset in comparison to other accessible products is its economic value. BCA is a method for determining the prospective risk reduction benefits of a risk response project and comparing such advantages to the project’s costs.
As a result, without valuing environmental goods, BCA has not examined the project’s mitigation and compared the benefits to the costs.
a. The goal of the neoclassical growth theory is to make the environment consumable that can be examined in the same way as any other commodity. Breaking down the environment into its essential products and services is the first step.
Because natural capital is an important factor of the likelihood of long-run sustainable economic growth, it can be replaced by manufactured or human capital in production. Resources for production, garbage absorption, fundamental life-supporting activities, and direct benefits to human wellbeing are all provided by natural capital. Natural capital will be more substitutable for produced capital as a result of technological advancements. More effective utilization of natural resources, for example, implies we are less reliant on resources for every given unit of production (Annual Reviews 2022).
b. The environmental Kuznets curve (EKC) is a proposed link among environmental degradation indices and per capita income. Pollution emissions rise and environmental quality fall in the initial phases of economic expansion, but above a certain threshold of per capita income, the tendency reverses, and economic growth leads to environmental enhancement at high-income levels.
It’s a method for calculating empirical relationships between GDP and environmental quality metrics. The environmental impact will worsen as the country begins to develop. While per capita income goes up, so does the desire for a clean and healthy environment, environmental laws are passed, and the environment improves. They’re called environmental Kuznets curves because they’re similar to the ones Kuznets computed for the link between income inequality and GDP per capita.
c. The term “critical natural capital” refers to a component of the natural environment that serves significant and permanent services. Natural capital has monetary worth since it is used to power numerous enterprises. Minerals, water, carbon dioxide absorption, and fossil fuels are examples of natural capital.
a. Interest Group: Any alliance of persons or groups, generally formally established, that strives to affect public policy in its favor on the grounds of one or even more common issues. It participates to advance policy goals that are shared by all members (Encyclopedia Britannica 2022).
Two examples of interest groups:
Interest organizations such as the Sierra Club, Moms Clean Air Force, and Green Latinos have swayed government decisions on pollution management.
b. Environmental protection requires public awareness and information to avoid contamination. Several environmental issues are triggered by a lack of public knowledge as well as agricultural and industrial pollution. As a result, increasing public knowledge regarding environmental preservation is critical.
The legislature’s role in raising public awareness of the environment is as follows:
(Repositorio.cepal.org 2022)
a. A cap-and-trade system is a method of determining the price of greenhouse gas emissions. It’s a market tool in which a government sets a cap or restriction on the overall amount of greenhouse gases released into the atmosphere. Greenhouse gas producers are required to pay for releasing each carbon dioxide and other toxic gases under this plan (unescap.org 2022).
It offers the following advantages to businesses:
b. Environmental subsidy: A transfer that is designed to assist initiatives that safeguard the environment or minimize the use and destruction of natural resources is described as an environmental subsidy or a comparable transfer.
Subsidies, for example, are payments made by the government to commercial enterprises such as agriculture, electric automobiles, renewable energy, and welfare payments.
Environmental subsidies may help finance and lower R&D expenditures as well as the costs of setting up an enterprise, hence reducing the positive consequences of development. The corporation receives an environmental subsidy to safeguard the environment from carbon dioxide and greenhouse gases, as well as to protect the water.
As a result of the subsidy, the marginal cost rises. Producing an additional unit of production requires the business to expand more capital, lowering the overall subsidy. However, because businesses are receiving this large sum of money from the government as an environmental subsidy, the average cost falls. Because of the decreased expenditure, the firm’s profit increases.
a. A voluntary agreement: The voluntary agreement denotes a contract between European social partners which is mostly the consequence of talks between official social partner organizations instead of a political decision-making process carried out only inside the range of authorized EU institutions (Eurofound 2022). For Example, a voluntary agreement is used by the non-profit organization to set up volunteers but it cannot be used by a commercial entity.
Voluntary programs: Voluntary programs as structures mitigate environmental harm by taking progressive action more than what is required by law. Businesses and other organizations are encouraged to take environmental protection measures through voluntary initiatives. For example, to control energy, air emissions, green purchases, hazardous materials management, and solid waste management, a corporation may use a voluntary program.
b. List the motives that can drive a company to engage in environmental voluntary action:
Self-help or mutual assistance: This can range from casual gatherings to more official organizations and clubs. Example Mountain cyclists may volunteer to help create new trails and routes in the woods, which will benefit them, and others.
Service to others: A third party is the primary benefit of this. Enhancing the local environment for the advantage of the entire community, especially the consumers of the green space, is one example.
Participation: Individuals have a role in governance processes in this way.
Campaigning vs. advocacy: This might involve lobbying or public awareness campaigns.
a. Environmental Fee: Businesses and industrial groups that use, create, or store harmful products or chemicals, or engage in operations involving such materials, are required to pay an environmental charge.
An environmental fee is a method of learning to understand the costs of pollution and ecosystem degradation into manufacturing costs and market pricing, then allocating environmental benefits via market processes. Environmental taxes are separated into two types based on whether the taxed item is a direct pollutant or an item that could produce pollution. Carbon taxes, water and sewage charges, and waste taxes are examples of the former. The environmental tax, which is divided into multiple categories, attempts to reduce energy consumption and emissions and is based on the environmental fee concept.
b. The change in overall cost arising from the manufacturing of an extra unit of an item or service is known as marginal social cost (MSC). It takes into account both marginal internal and marginal external costs. Marginal social cost is not any type of fee or charge. On the other hand, Environmental fees are levied to pay the expenses of appropriately dumping harmful substances to protect the environment.
The cost of the product is increased by both environmental levies and marginal social expenses. For instance, one company spends $50 to create an additional unit of products. Pollution is discharged as a result of the increased manufacturing, causing $25 in damage to your car’s paint. As a result, the marginal cost is equal to the extra unit cost plus the $75 external cost.
The environmental fee is fixed and it is charged based on the toxicity of emissions. For example, the production cost of one unit is $50 and the environmental fee is $5. Therefore, the total cost of the unit is $55.
Environmental goods and services, with exception of most commodities and services, are not exchanged in traditional markets or markets at large because of their qualities and prices, and the circumstance that they frequently appear as repercussions, outside the scrutiny of suppliers and users (Adb.org 2022). There is a difficulty with the environmental valuation of goods that are not traded on market at large:
Benefit-cost analysis (BCA), is often known as cost-benefit analysis. This approach analyses the advantages of a risk mitigation project to its expenditures to calculate future risk reduction benefits. As a consequence, a Benefit-Cost Ratio is calculated (BCR). If the BCR is 1 or more than 1, then the project is valued as a cost-effective project.
Performing a reliable Benefit-Cost Analysis (BCA) for projects has the following goals:
Example: A house near parkland or schools, and the hospital may command a higher price. on the other hand, a home near a highway may offer for less. Hedonic pricing uses regression to determine which elements are most important and their relative weight.
Club Goods: In economics, club goods, sometimes known as artificially scarce products, are a sort of good. It’s a subtype of public good that’s utilized by one individual but doesn’t restrict others from utilizing it, at least until there’s a point where overcrowding arises. The finest example of a club good is cable television or a television set, which may be consumed or held by several people at the same time yet is excludable (Courses.lumenlearning.com 2022).
|
Club Good |
Pure Public Good |
|
Club goods are non-rivalrous |
Pure public goods are both perfectly non-rivalrous and non-excludable. |
|
Example: Television set |
Example: Air and emergency services |
The ideal price of Pure Public goods is zero.
Pure Public Goods have no price, but when certain prices are included, demand for a Pure Public Good may be calculated by summing how much individuals are ready to pay for each amount. Park is a Pure Public Goods but when the price is applied then visitors of the park are reduced.
Pure Public Goods example: Each game has ten repetitions, and every game has a group of five players, each with ten tokens to distribute among the cash as well as the public good. If you pay in cash for tokens, you will receive $1 in cash. I give to the common good and receive $.5 from each of the five participants.
Voluntary measure: A voluntary measure or tactic isn’t enforced against a single source. It is usually intended to improve the effectiveness and breadth of current rules. The goals of voluntary environmental protection measures in which essential economic agents can choose whether or not to engage.
Environmental products contain the features of private commodities and they also have beneficial external environmental consequences. Household appliances that save energy and hybrid autos are two examples.
Both energy-saving home products and hybrid cars create minimal carbon emissions, which is why the government encourages them. The government helps the company with subsidies and market access. A charge for the environment is also paid to the company.
Green economy: A Green Economy is also characterized as decreasing carbon, being resource-efficient, and being socially equitable. A green economy attempts to reduce the risk of environmental and ecological scarcities while also pursuing long-term development that does not harm the environment (unep.org 2022).
Resource efficiency: Resource efficiency refers to the appropriate use of the Earth’s finite resources while minimizing environmental damage. It enables us to produce more with fewer resources and offer more value with fewer resources.
Circular Economy: The circular economy is a type of model of consumption and production paradigm that encourages people to share, lease, reuse, repair, refurbish, and recycle existing resources and products for as long as feasible. The product’s life cycle can be prolonged in this way. In reality, this means eliminating waste to the absolute minimum (Europarl.Europa.EU 2022).
The role that increased resource-efficiency
Reference
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