33
economic or social institutions). In that way, institutions need to be set up to structure the incentives that lead people to make decisions in a more desirable direction.
Interestingly, Field (1994) argues that it is a simplistic incentive-type statement
that pollution is a result of the profit motive, which is seen in market-driven economies of industrialized western nations. He gives an example of environmental degradation and heavily polluted air and water resources in the former USSR and other
former communist regime countries. Here, economics had been centralised and the
profit motive entirely lacking. He argues that the profit motive is not the main cause
of environmental destruction.
3.2.2 Environment and Mainstream Economics
In his book Environmental and Resource Economics (1988), Michael Common
describes how mainstream economics perceive three functions that the natural environment serves in relation to economic activity: S stands for sink (waste products),
R for resources and A for amenity (recently recognised as ecosystem services). He
outlines that production and consumption generate waste products (residuals), for
which the natural environment is the ultimate dumping place or sink. It is also the
source of inputs to production – natural resources (mineral deposits, forests, animal
populations). Amenity relates to services flowing from the environment (living
space, natural beauty, recreational space, etc.). These three economic functions of
the natural environment are not necessarily mutually exclusive but may be, at a
certain level, of use to the economic system. High levels of pollution will reduce the
production of inputs (supply of natural resources) and/or the flow of amenity services even to zero. Going deeper, indefinitely prolonged economic growth may be
impossible due to the finite nature of resource stock. Common pointed out that pollution and resource extraction are reducing the natural environment’s contribution
to the quality of life. Also, the process of economic growth gives rise to — and is
affected by — environmental problems. Mainstream economists (since the period
of the 1970s when an attack on the growth objective appeared by a number of noneconomists) took position that a growing economic system need not run out of natural resources and that economic growth need not reduce the quality of life. The
argument was that a properly functioning price system will accommodate higher
levels of production and consumption to preserve the natural environment in a satisfactory state. This price mechanism operates on scarcity – if anything, i.e. natural
resources, become scarce, then less of it is used. This argument could be applied to
the environmental functions. In the case where economic growth has impaired these
functions, waste disposal would become a costlier activity; hence, the price of amenity services would increase. In this way, an economic system reduces the demand
for the mentioned environmental functions. An obvious solution to the increasing
number of residuals was/is recycling, in which case, residuals return to production
as inputs instead of disposal into environment, with the amount of resources used
3 Economic Dimensions of Environmental Citizenship
economic or social institutions). In that way, institutions need to be set up to structure the incentives that lead people to make decisions in a more desirable direction.
Interestingly, Field (1994) argues that it is a simplistic incentive-type statement
that pollution is a result of the profit motive, which is seen in market-driven economies of industrialized western nations. He gives an example of environmental degradation and heavily polluted air and water resources in the former USSR and other
former communist regime countries. Here, economics had been centralised and the
profit motive entirely lacking. He argues that the profit motive is not the main cause
of environmental destruction.
3.2.2 Environment and Mainstream Economics
In his book Environmental and Resource Economics (1988), Michael Common
describes how mainstream economics perceive three functions that the natural environment serves in relation to economic activity: S stands for sink (waste products),
R for resources and A for amenity (recently recognised as ecosystem services). He
outlines that production and consumption generate waste products (residuals), for
which the natural environment is the ultimate dumping place or sink. It is also the
source of inputs to production – natural resources (mineral deposits, forests, animal
populations). Amenity relates to services flowing from the environment (living
space, natural beauty, recreational space, etc.). These three economic functions of
the natural environment are not necessarily mutually exclusive but may be, at a
certain level, of use to the economic system. High levels of pollution will reduce the
production of inputs (supply of natural resources) and/or the flow of amenity services even to zero. Going deeper, indefinitely prolonged economic growth may be
impossible due to the finite nature of resource stock. Common pointed out that pollution and resource extraction are reducing the natural environment’s contribution
to the quality of life. Also, the process of economic growth gives rise to — and is
affected by — environmental problems. Mainstream economists (since the period
of the 1970s when an attack on the growth objective appeared by a number of noneconomists) took position that a growing economic system need not run out of natural resources and that economic growth need not reduce the quality of life. The
argument was that a properly functioning price system will accommodate higher
levels of production and consumption to preserve the natural environment in a satisfactory state. This price mechanism operates on scarcity – if anything, i.e. natural
resources, become scarce, then less of it is used. This argument could be applied to
the environmental functions. In the case where economic growth has impaired these
functions, waste disposal would become a costlier activity; hence, the price of amenity services would increase. In this way, an economic system reduces the demand
for the mentioned environmental functions. An obvious solution to the increasing
number of residuals was/is recycling, in which case, residuals return to production
as inputs instead of disposal into environment, with the amount of resources used
3 Economic Dimensions of Environmental Citizenship