Weak VS Strong sustainability
38 important questions on Weak VS Strong sustainability
What is weak sustainability associated with in economics?
- Relative scarcity
- Mainstream (neoclassical) economics
- Dominance of neoclassical thought
- Environmental economics focus
How does strong sustainability differ from weak sustainability?
- Absolute scarcity
- Non-mainstream economics
- Pluralism
- Ecological economics perspectives
Why is scarcity considered the heart of economics?
- Limited resources
- Financial constraints (budgets)
- Necessity for choices
- Fundamental economic issue
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What does neoclassical economics emphasize in decision-making?
- Maximizing profits and utility
- Self-interest as societal interest
- Price mechanism
- Efficiency in resource allocation
What characterizes rational people in neoclassical economics?
- Specific preferences
- Utility optimization
- Incentive response
- Marginal decision-making
What does Adam Smith's concept of the invisible hand indicate?
- Self-interest equals public interest
- Self-regulating markets
- Optimal resource allocation
- Minimal external intervention
What principle did L. Robbins describe in 1932 regarding economics and scarcity?
- Economics studies human behavior
- Involves relationships between ends and scarce means
- Recognizes alternative uses of resources
- Emphasizes the scarcity principle
What happens when there is an oversupply in the market?
- Oversupply leads to too many products compared to consumers.
- Results in a decrease in prices.
- Market adjusts through reduced production or increased demand.
How does scarcity affect the market?
- Scarcity occurs when there are too few products for consumers.
- Leads to an increase in prices.
- Market may respond with increased production or reduced demand.
Explain the supply and demand curve shown.
- Equilibrium point is where supply equals demand at P and Q.
- At P₁, there's a surplus (Qₛ₂ > Qd₁).
- At P₂, there's a shortage (Qd₂ > Qₛ₁).
What are individual (private) goods, and how are they categorized in terms of consumption rivalry and excludability?
- Rival in consumption
- Excludable from consumption
- Examples: food, clothing, car, house
How are common pool resources characterized in relation to consumption rivalry and excludability?
- Rival in consumption
- Not excludable from consumption
- Examples: water, energy, nature, environment
What defines club goods in terms of rivalry and excludability?
- Non-rival in consumption
- Excludable from consumption
- Examples: swimming pools, telephone network, cinemas, unions
Describe collective (public) goods concerning their rivalry and excludability characteristics.
- Non-rival in consumption
- Not excludable from consumption
- Examples: defence, dykes, legal protection, sunshine, search engine
What defines club goods?
- Requirement of a subscription for access.
- Ability to exclude individuals via high subscription prices.
- Equal access to goods and services for members.
What does natural capital consist of?
- Stocks of raw materials and energy reserves.
- Components like biodiversity, water, and air quality.
- Resources processed from the environment.
What is encompassed by physical capital?
- Machinery and equipment.
- Buildings and construction.
- Essential infrastructure for production.
How is human capital defined?
- Level of development within a population.
- Health status of individuals.
- Knowledge and skills contributing to productivity.
What are the elements of social capital?
- Social relations and networks.
- Mutual trust, standards, and shared values.
- Connections facilitating cooperation among individuals.
What does institutional capital measure?
- Quality of formal institutions.
- Reliability of case-law systems.
- Efficiency of governance and legal frameworks.
What are market failures in environmental economics, and what types require intervention?
- Market failures: Situations where markets fail to maximize individual satisfaction.
- Types:
- - Externalities: Unintended effects on third parties. Examples: pollution, smoking.
- - Social costs: Costs not reflected in pricing, leading to underpricing.
- - Free-riding: Using public goods without paying. Examples: fishing, not paying taxes.
Explain externalities and provide examples illustrating this market failure.
- Externalities: Occur when choices affect uninvolved parties.
- Positive or negative impacts: Often unexpected by the decision-maker.
- Examples:
- - Pollution: Production impacts the environment.
- - Smoking: Affects health of non-smokers nearby.
Describe the free-riding problem and give examples of its occurrence.
- Free-riding: Benefiting from public goods without payment.
- Examples:
- - Tragedy of the commons: Over-fishing could deplete oceans.
- - Not paying taxes: Avoidance reduces public resources.
- - Study: Utilizing shared resources without contribution.
How does the concept of social cost relate to pricing in market failures?
- Social cost: Includes external costs ignored in equilibrium pricing.
- Result: Prices are set too low, failing to reflect true cost.
- Implication: Adjusting prices for social costs corrects the market.
What is the main premise of weak sustainability according to neoclassical welfare theory?
- Natural and physical capital can interchange.
- Technology can replace resources.
- Natural resource exhaustion isn’t catastrophic.
What did Robert Solow state about natural resources in his 1974 perspective?
- The world can manage without natural resources.
- Exhaustion is merely an event.
- There's a feasible cost for this transition.
How does weak sustainability perceive the wellbeing of different forms of capital?
- All capital types are viewed as equivalent.
- Focus is on their overall availability and functionality.
- Market mechanisms dictate relative scarcity.
What role do price mechanisms play in weak sustainability?
- Technology and innovation are prioritized for allocation.
- Resources are allocated efficiently based on supply and demand.
- Affects both production and consumption patterns.
How is the hierarchy structured among economy, society, and environment in weak sustainability?
- Economy
- Society
- Environment
- The environment is a subsystem of the economy.
- Human labor acts as an input to the economy.
What is the concept of strong sustainability in ecological economics?
- Limits of nature must be respected.
- No substitution between natural and physical capital.
- Economy exists as a subsystem of nature.
Why is there limited or no compensation/substitution for natural capital?
- Irreversibility of natural capital consumption.
- Multi-dimensional contributions to human well-being.
- Complementary relationship to other capital forms.
What does limited rationality imply in ecological economics?
- Incomplete knowledge of our actions' consequences.
- Challenges in decision-making due to uncertainty.
- Need for caution in managing natural resources.
How is the contribution of natural capital viewed in strong sustainability?
- As providing security and basic materials for life.
- Influencing health and social relations.
- As more than just an input for goods and services.
What are the key concepts related to intergenerational justice and sustainability?
- Intergenerational justice: Fairness across generations.
- Critical natural capital: Essential environmental resources.
- Steady state: Economic balance.
- Cooperation and transdisciplinary approaches are crucial.
- Sustainability spectrum:
- Environmental/institutional economics
- Ecological economics
- Deep Ecology movement (strong)
What are the three interrelated goals of ecological economics?
- Sustainable Scale: Maintain economic activity within planetary boundaries.
- Fair Distribution: Equitable resource flow in goods and services among people.
- Efficient Allocation: Produce necessary goods for satisfaction.
How should economic growth transition according to ecological economics?
- Shift from economic growth to a sustainable steady state.
- Cooperation is prioritized over competition for innovation.
- Embrace regulation for sustainable practices.
What characteristics differentiate weak from strong sustainability?
- Weak Sustainability: Economy prioritized; relies on market mechanisms; high substitutability of resources.
- Strong Sustainability: Environment prioritized; focuses on regulation; low substitutability.
What interdisciplinary approaches are essential in ecological economics?
- Ecological economics is fundamentally trans-disciplinary.
- Utilizes various quantitative and qualitative methods.
- Knowledge of different disciplines is crucial to understanding consequences.
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