Resources Natural Capital IB syllabus 3 2 Syllabus

Resources – Natural Capital IB syllabus: 3. 2

Syllabus Statements n n n n 3. 2. 1: Explain the concept of resources in terms of natural capital 3. 2. 2: Define the terms renewable, replenishable, and non-renewable natural capital 3. 2. 3: Explain the dynamic nature of the concept of a resource 3. 2. 4: Discuss the view that the environment can have its own intrinsic value. 3. 2. 5: Explain the concept of sustainability in terms of natural capital and natural income 3. 2. 6: Discuss the concept of sustainable development 3. 2. 7: Calculate and explain sustainable yield from given data

vocabulary n n n n Natural Income Natural Capital Non-renewable Replinishable Sustainability Sustainable yield

Economic view n n n Traditional economy based on land, labor and capital See environment as only one set of resources within a larger economic sphere Environmental economists view environment as providing goods and services on which humans depend Economy is constrained by limits of environmental resources Environment provides raw materials and means of absorbing wastes

Economic Activity: Classic View

n Economic production is the process of converting the natural world into a manufactured world. n Example: trees to paper to trash

Economic Activity: Environmental View

Resources & Natural Capital n n n Term coined by ecologically minded economists If properly managed renewable & replenishable resources are forms of wealth that can produce “natural income” = indefinitely available valuable goods and services (based off of renewable and replenishable) n n n Marketable commodities or goods (timber, grain) Ecological / Life-support services (flood & erosion protection from forests) Non-renewable resources = forms of economic capital that cannot generate wealth without being liquidated

Natural Capital & Natural Income n Natural Capital Standing stocks n n n Stock = present accumulated amount of capital Forests, Fish Natural Income Flows n n Sustainable rate of harvest of a stock Harvests of timber, fishing

New England Groundfish Fisheries Example

Too many boats, too few fish n n n n n November 1994 moves to shut down north atlantic groundfishery Public outcry and economic effects What caused the collapse Decades of unsustainable harvest Magnuson Act of 1976 supported unprecedented growth of the fishing fleet 570 boats to 900 Bigger boats with more technology to catch fish Removing large breeders and young before they can breed Common syndrome for fisheries collapse The flow (harvest) was bigger than the stock (population) could support

Classes of Natural Capital I RENEWABLE NATURAL CAPITAL Living species, ecosystems Self producing & self maintaining May use solar energy in photosynthesis Can yield marketable goods (wood, meat) Essential services when left in place (climate regulation) n n n

Classes of Natural Capital II REPLENISHABLE NATURAL CAPITAL Non-living & dependent on solar engine for renewal Groundwater, Ozone layer n n n

Classes of Natural Capital III NON-RENEWABLE NATURAL CAPITAL Like inventories Any use requires liquidating part of the stock Fossil fuels, Metals, & Minerals Some may regenerate in a geological time scale n n n

The status of these resources changes over time n n Cultural, economic, and technological factors influence a resource’s status over time and space Uranium – never valued, but with advent of nuclear technologies now extremely valuable Bluefin Tuna – prior to 1970 exclusively sport fish (. 05 / lb) Japanese specialty market develops –now a single large fish has sold for $180, 000 Solar Power – 1960 s space race makes it important 1970 s oil embargo makes it critical 1990 s competes with dropping oil prices now peak oil and increasing price make it desirable again

Natural Capital has Value n n n Ecological, Economic, Aesthetic value Value assigned based on diverse perspectives Industrial Societies emphasize monetary & economic valuations of nature Economic value determined by market price of goods or services produced Extrinsic Values

Ecosystem Capital: Goods and Services

Natural Capital has Intrinsic Value n n n Ecological processes have no formal value Still important though waste elimination, flood & erosion control, nitrogen fixation, photosynthesis Essential for existence but taken for granted

Natural Capital has Intrinsic Value n n Organisms & Ecosystems valued for aesthetic or intrinsic reasons may not produce commodities identifiable as goods or services Unpriced & undervalued from economic standpoint Value from spiritual, ethical, or philosophical perspective So diverse perspectives needed to evaluate natural capital

Value vs. Sustainability n n Hard to compare the values without prices Attempts being made to acknowledge the diverse values so they are weighed more rigorously against traditional values (GNP, etc. ) Is this kind of valuation possible? Sustainability debate hinges around the problem of how to weigh conflicting values of natural capital

Wealth of Nations n n Determined by 3 components Produced assets, Natural Capital, Human resources Complement each other and contribute to well being Dominant source of national wealth may vary between the 3 components

How Society’s Assets Complement Each Other

Composition of World Wealth

Wealth of Nations n n n n Often represented by GNP (Gross national product) sum of goods and services produced in a country Shows economic health and wealth GDP = GNP – net income from abroad Often used to compare rich and poor countries Depreciation in materials accounted for Depreciation of natural capital never taken into account This is a problem

n n n Example If a country cuts down 1 million acres of forest We see positive on income side from timber sales Only depreciation accounted is in chain saws and trucks What about the loss of natural services Situations like this lead to undervaluing natural resources

Sustainability n n Living within the means of nature, on the interest or sustainable income generated by natural capital Societies supporting themselves by depleting essential forms of natural capital is unsustainable If well being dependent on certain goods or services must harvest with care Specifically long term harvest or degradation should not exceed rates of capital renewal

Sustainable Development n n n Term first used in 1987 in Our Common Future Development that meets current needs without compromising the ability of future generations to meet their own needs Economist view stable annual return on investment regardless of environmental impact Environmentalist view stable return without environmental degradation http: //www. earthsummit. info/

http: //www. binishells. com/index. html

The Earth Summit (1992) and its aftermath n n Rio de Janeiro Conference on the Environment and Development Env. Issues that cross international borders n Pollution, ocean conditions, atmospheric effects, forest destruction, loss of biodiversity Agenda 21 focus on sustainable development for the 21 st century n Reconcile future economic development with environmental protection Followed by 2002 world summit on sustainable development in Johannesburg

Sustainable Yield n n n Sustainable Yield = SY SY = Rate of increase in natural stock Amount to exploit without depleting initial stock or potential for replenishment SY for a crop = annual gain in biomass or energy These gains from growth or recruitment (production of offspring)

Calculating sustainable Yield

Sample Calculation n n An average bluefin tuna produces 10 million eggs per year but only 10 of those survive to adult hood. Out of every 10, 3 will migrate to other areas of the ocean. If you start with 5000 tuna, what is the sustainable yield in your fishery? So what would be a scenario where it would be a simple calculation?