Chapter 20 Sustainability, Economics, and Equity


This story centers around Mexican power plants, called maquiladoras. Although maquiladoras create jobs, take up 80% of the economy in the Northern border region, and constitutes 25% of Mexico's GDP, they prove to be extremely harmful to the environment. Not to mention, these plants have had many harmful consequences such as child labor, poor working conditions, and discrimination.

Through these plants' controversies, we learn the importance the balance between environmental systems, economic systems, and well-being. In Chapter 20, we learn just how these factors balance within our everyday lives.

sustainability-living on Earth in a way that allows humans to use its resources without depriving future generations of those resources.


Humans and the concept of sustainability often clash, most of the time, it seems almost impossible to cater to people's necessities without doing just a little bit of damage to our earth and its array of ecosystems. The need for urbanization results in deforestation, and the need for energy often results in pollution of our air and water, both necessary resources for humans to live.

These environmental systems are needed for our well-being; we need access to food, water, shelter, education, and a healthy, disease free existence. We need the ecosystem services that provide us with drinkable water, clean air, and productive land.

In order to truly understand the concept of sustainability, humans must understand where we are in the conflict. And in order to achieve this, we must begin to understand economics: economic analysis, ecological economics and ecosystem services, and the role of regulatory agencies that protect and regulate the environment.

economics-the study of how humans allocate scarce resources in production, distribution, and consumption of goods/services


Most economies in the world today are considered "market economies", meaning the cost of a good is determined by supply and demand.

Supply is the the amount of product the supplier has, whereas the demand is how much consumers want the product in question. When supply rises, the demand lowers; and as the supply decreases, the demand of that product becomes more intense and rises. The point where supply and demand meet is the equilibrium point.

However, the market doesn't always take all costs of production into account. Evidence of this is shown in instances of land degradation-or pollution-of an area. This also happens when a natural resource is damaged or depleted. These actions bear no direct cost. When we, or the government, use a resource that is not reflected in the purchase price, it's considered an externality. Therefore, degrading and/or polluting land, air, or water without directly paying for it is in fact an externality. If the cost were included, it would change the price of the product, therefore affecting the supply and demand.

When the cost of production rises because of taxes, the supply curve shifts, and the new equilibrium is at a higher cost. And because of this, fewer items are both manufactured and purchased. So, basically, externalities make the price rise and the demand lower. And if externalities are included in the price of a product, it reflects its true cost.

Measuring Wealth and Productivity


Wealth and productivity is measured in a ton of ways, yet the biggest and most commonly used way is the GDP (Gross Domestic Product). This refers to the value of all products and services produced within a year in a given country.

GDP envelopes four different types of spending: consumer spending, investments, government spending, and exports minus imports.

GDP, however, has been criticized for a variety of reasons. Costs for health care contribute to a greater GDP. Because of this, a society that has more illness than another equivalent society, has a higher GDP as well. This doesn't reflect the "wealth" or "well-being" of a society. And since externalities aren't reflected in the GDP, the measurement of GDP does not reflect the real cost of production.

In order to improve our world's environment, we must increase the GDP in less developed nations. As income rises and the rate of birth falls, the GDP increases and population growth slows, resulting in a reduction anthropogenic (derived from humans) environmental degradation. Developed nations, however, are able to purchase products that better the environment, like catalytic converters that control pollution. This helps to use their resources in a more efficient and regulatory way. Yet, developed countries have been shown to use more resources than developing countries. And this leads to an increase in environmental degradation.


Although GDP is the most common way of measuring wealth in a country, researchers are attempting to use another method of measurement, the GPI (Genuine Progress Indicator). The GPI is a measurement of economic status that includes personal consumption, income distribution, levels of higher education, resource depletion, pollution, and the health of a population. While the GDP within the US has been shown to increase steadily from 1950 to 2004, the calculated GPI remained level. In many European nations, they use the GPI in order to calculate their GDP. In these calculations, the country's overall wealth-including human and environmental welfare-has decreased steadily over the past 30 years.

Kuznets Curve

The Kuznets Curve is a model used to demonstrate that as per capita income increases, environmental degradition increases, then decreases. Yet, this model is very controversial due to the fact that it cannot be applied to every single situation. An example of this would be that despite the increasing wealth of developed countries, carbon dioxide emission and other harmful pollution causing substances are on the rise as well. Because of this, there is speculation to if developed countries are really wealthy enough to solve environmental problems. But, not every environmental issue can be solved with the monetary.

Technology Transfer and Leapfrogging

In addition, Kuznets Curve has been shown to aid developing countries. Technology transfer is when less developed countries are exposed and adopt technological innovations and advancements formerly developed in more developed countries. An example of this is the simple concept of the cell phone. In developed countries, cellular phones are a basic and everyday necessity. This device is so widely used, that a lot of the population barely uses a landline anymore. But when developed countries use a technological device without any prior knowledge/precursor technology, it is called leapfrogging. This occurs whenever a new technology develops to essentially throw out the old. Because of this, developing countries can take developed nations as a precedent and take advantage of wealthier nation's research, development, and experience.

An example of leapfrogging would be solar energy. In more industrialized nations, solar energy cannot compare economically to gas or coal generated electrical energy. Yet, in countries that are unable to build successful electrical grids, solar energy has been extremely successful. Solar energy gives developing countries the ability to create and distribute their own electricity without the extremely expensive process of building electrical grids.



The totality of our economic assets-referred to as the capital-is usually divided into three different sections; natural capital, human capital, and manufactured capital. Natural capital refers to Earths resources-air, water, and minerals. Human capital applies to human knowledge and abilities. Manufactured capital relates to all the goods and services humans produce.

Environmental and Ecological Economics

A majority of those who are in favor of only free market system typically believe that, if market forces are left alone, its up to humans and our creativity to find solutions to keep our planet sustainable. Yet, there are some major flaws within the concept of a free market.

As said before, externalities, or the cost of environmental degradation, aren't applied into the true cost of the item, and aren't applied appropriately. When the economic system does not take into account all the costs, it is called a market failure. Market failure is a huge flaw in the concept of a free market, since the economy doesn't account for all costs of production.

Upon discussing market failures, the discussion of environmental economics and ecological economics have come up. Environmental economics-a subfield of economics- examines all the costs, and benefits, of policies and regulations set forth to limit pollution and environmental degradation. Ecological economics is the study of economics and ecological systems as one component, rather than two separate fields of study. This creates a method of understanding and management of the economy within a subsystem of natural and human systems. Its goal? To preserve natural capital and the goods and services related to it.


Valuation is the practice of assigning monetary value to intangible benefits and natural capital. An example of this would be how environmental and ecological economists developing methods to assess monetary value-a price- to a nature preserve, a spotted owl, or a scenic view.

One way to calculate valuation is to calculate the revenue generated by those who attend of pay for the benefit, like the amount of tourists that pay to see a nature preserve would accurately represent the dollar amount of the area. Another way of calculating valuations is the use of surveys. Companies may send out a survey to see how many people would be willing to pay for finding out if spotted owls. Then, the company would come up with a cost for doing such action.

What is a Sustainable Economy?

Our modern economy is often critiqued for being based on increasing the use of resources, energy, and human labor. Through this, large amounts of natural resources are being depleted, and it doesn't necessarily have any incentives that would decrease the waste generated. At the rate our system is going, our economy is not and will not be sustainable.

Sustainable economic systems are characterized as relying more on ecosystem services and the reuse of already manufactured products(recycling) and relying less on the extraction of natural resources.


Environmental Worldviews

I should probably explain the actual definition of "worldview" first; a worldview is a particular philosophy of life or conception of the world. With that being said, an environmental worldview is a worldview than encompasses how one thinks the world works, how one views their role on Earth, and what one believes to be proper environmental behavior. There are three different types of worldviews: anthropocentric, biocentric, and ecocentric.

The anthropocentric worldview is a worldview that focuses on the welfare and well being of humans. This basically means that nature plays an influential role in our needs at humans. Stewardship is a subset of this worldview; it is the careful and responsible management and care for Earth and its resources. This principle provides us with the thought of protecting our world as humans, rather than just hoping Earth can take care of itself.

The biocentric worldview is a worldview that sees humans as just another species on Earth, and every species hold essential value. Also, this worldview considers that the ecosystems where humans live to be valued importantly. Within this life-centered worldview, many different positions on how we protect Earth and its species rise. Some believe we should protect and save a specific species over another, while others believe its important to protect every living creature.

The ecocentric worldview is a worldview that places equal value on all living organisms and the ecosystems they reside in. There are many different forms to this worldview, one of which is the environmental wisdom school; this is the belief that Earth's ecosystems are limited and we must adapt to natures changes instead of adapting nature to the needs of the people. Another form is the deep ecology school, which states that humans have no right to intervene with nature and its diversity.

Precautionary Principle

The precautionary principle is the principle that the introduction of a new product/process whose ultimate effects are disputed or unknown should be resisted. It has mainly been used to prohibit the importation of genetically modified organisms and food.

Here's a pretty cool video that shows some examples and explains this principle so please take a gander:

World Agencies

After World War II, the United Nations, a global institution dedicated to promoting peace between countries as well as global peace. Since its start, the UN has created over 40 different agencies. Yet out of these, only 4 relate to the environment: The United Nations Environment Programme (UNEP), World Bank, The World Health Organization (WHO), and the United Nations Development Programme (UNDP).

Here's a run down of what each of these agencies do:

  • UNEP- this program is responsible for gathering environmental information, conducting research, and assessing environmental problems. This connects to sustainability for the mere reason that they identify the problems within the environment, along with its general information.
  • World Bank- this program provides technical and financial assistance to developing countries with the objective of reducing poverty and promoting growth, especially in countries that struggle financially. The World Bank has four main goals for economic development: 1) to educate government officials and strengthen the government; 2) to create infrastructure; 3) to develop financial systems, from microcredit to larger; 4) to combat corruption. This relates to sustainability because this agency seeks to eliminate poverty and aid developing countries.
  • WHO- this program is dedicated to the improvement of human health by monitoring and assessing health trends and medical advice to countries. WHO has five major objectives: 1) to promote development which would help lead to improve health of individuals; 2) to foster health security and defend against disease outbreak; 3) to strengthen health care systems; 4) to coordinate health research, information, and evidence; 5) to enhance partnerships with other organizations. This relates to sustainability because this program has incentive to promote the health of mankind and find cures to harmful diseases.
  • UNDP- this program works in 166 countries around the world to promote change that will help people obtain a better life through development. This program ties into sustainability because it advocates change, for not just the population but also our environment.

US Agencies

Its not just the United Nations that have agencies that specialize in monitoring human and environmental health, the United States have a few of their own too: The Environmental Protection Agency, Occupational Safety and Health Administration, and the Department of Energy.

  • EPA- This organization oversees all governmental efforts related to the environment, including science, research, assessment, and education. The EPA connects to sustainability because it involves essentially everything about the environment and its protection.

sorry, i had to.

  • OSHA- this agency is responsible for the enforcement of health and safety regulations. It strives to prevent injuries, illnesses, and deaths within the workplace. This relates to sustainability because it tries to limit the use of chemicals and pollutants in the workplace, thus helping to reduce pollution and protecting the environment.
  • DOE- this organization advances the energy and economic security of the US. Its top goals include scientific discovery, innovation, and environmental responsibility.


In order to measure sustainability on Earth today, there are many indexes and types of measurements to evaluate sustainability. Some, or all, of these indexes are directly involved in the measurement an assessment of sustainability.

Human Development Index

The Human Development Index (HDI) is a measurement index that combines three basic measures of human status: life expectancy; knowledge and education. The HDI was was created in the 1990's from economists in Pakistan, England, and the United States. As an index, the HDI attempts to rank countries in terms of their development, and determine whether or not they are developing, developed, or underdeveloped.

Human Poverty Index

The Human Poverty Index (HPI)is a measurement index developed by the United Nations to investigate the proportion of a population suffering from deprivation in a country with a high HDI. It measures three things: longevity (how many people are expected to live past 40), knowledge (measured by adult illiteracy rate), and standard of living (those who have access to clean water, health services, and have children at a healthy weight).

The Government and the Environment

Policy Process in the United States

In order to actually make sense and be effective, environmental policies must be based on scientific indicators. There are 5 key steps to creating policy:

  • Identify the problem
  • Form the policy
  • Policy adoption
  • Implement the policy
  • Evaluate policy

Yet, when a policy is evaluated, there may be a need for an amendment. When this happens, the amendment goes through the same cycle as policies do.

Legislative Approaches to Encourage Sustainability

The US Government has made many approaches to protect the environment, promote human safety and welfare, and internalize externalities. One of these approaches is the command-and-control approach. This is a strategy to control pollution involving regulations and enforcement mechanisms. The incentive-based approach is a pollution control strategy that constructs financial aid and other incentives for lowering emissions based on profits and benefits.

When a tax is places on activities that harm the environment or emissions, it is called a green tax. Green taxes are put into place in an attempt to internalize the externalities that are potentially a part of the life cycle of those activities or products.


In 2000, the UN offered eight goals for agreeing developing countries for the betterment of the world as a whole. A Nobel Peace Prize Laureate, Dr. Wangari Maathai, came up with an organization to help these rules; thus creating the Green Belt Movement. This movement empowers Kenyan women, and others around the world, by planting trees. This program helps to replant Kenya, along with decreasing erosion, improving soil conditions, and moisture retention.

Environmental Justice

Environmental justice is the idea that all people should feel the consequences of bad environmental behavior equally. Minorities in America are more likely to live in areas of pollution and "dirty" industries. African Americans and Hispanics are often living in areas next to dumps, places there bu the government. This is not environmental justice. Every human should suffer the consequences of bad environmental behavior.

Relating to this is the idea of environmental equity. This is the concept of unequal levels of consumption around the world. For example, how children in Africa eat much less than those in the United States


  • Friedland and Reylea Environmental Science for AP Textbook, pages 700-720
  • Environmental Protection Agency :
  • United Nations:
  • APES Economics Review:


Created with images by Unsplash - "windmills energy alternative" • andrewmalone - "Forest" • fsecart - "money" • SD-Pictures - "industry sunrise sky" • Unsplash - "audience concert music" • Moyan_Brenn - "Nature"

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