• Key concepts
• The state of the environment
• Measures to ensure sustainability

Environmental sustainability relates to the ability of the environment to survive its use for economic activity. The environment is not an unlimited resource and it is important that we sustain the environment so that it can be used by future generations.

Overview

14.1 Key concepts

These definitions will help you understand the meaning of key Economics concepts that are used in this study guide. Understand these concepts well. Use mobile notes to help you study them.

Use mobile notes to help you learn these key concepts. Learn more about mobile notes on page xiv in the introduction.

14.2 The state of the environment

The state of the environment is very important for environmental sustainability. If the environment is damaged, it will become more difficult to sustain life on earth. The environment can be damaged by excessive (too much) mining; by farming without allowing the soil to recover; by excess fishing without allowing the fishing stocks to build up again; and by not controlling the release of pollution.
14.2.1 Pollution
Pollution relates to the introduction of contaminants (poisons) that damage the natural environment. Pollution can come from chemical substances released by factories, as well as from household and business waste and rubbish. Pollution policy is difficult to apply in practice. The following are 3 ways of dealing with pollution:

• Technology and control: New technology is cleaner and has less impact on the environment. The government controls pollution by limiting the use of older technologies that pollute the environment.
• Marginal decisions: These are decisions made by government on what acceptable levels of pollution are. If the government is too tolerant, or makes its decisions in the interest of expanding business rather than sustaining the environment, then pollution levels can rise to the point where they damage the environment.
• Self-interest: For example, keeping a beach litter-free. People use dustbins on the beach because they want to use a beach that is clean.

14.2.2 Conservation
Conservation relates to the preservation (looking after) of natural resources to ensure they are not completely used up and disappear from the environment. Conservation is necessary due to pollution and the overutilisation (using too much) of resources:
The conservation of stocks (resources):

• Conservation is needed when stocks are utilised (used) more than they can reproduce to replace what has been used.
• This leads to a search for substitutes.
• Conservation policies help to conserve renewable stocks (e.g. trees) and non-renewable stocks (e.g. fossil fuels).

Maintaining renewable stocks:

• A market economy has an interest in conservation as it helps maintain renewable stocks, e.g. timber and fishing. Conservation is achieved through the force of demand and supply which helps to sustain these kinds of industries.
• Direct controls: The government maintains the stock levels of environmental resources through the issuing of permits and quotas. For example, the government sets quotas for fishing to stop catches being so large that they exceed (are bigger than) the growth of the fish population. It also sets quotas for cutting down trees to ensure deforestation does not exceed the rate of renewal.

14.2.3 Preservation
Preservation is linked to conservation. It is about preserving existing assets to ensure they do not get used in a way that is destructive to the environment.

• Private property: A game reserve may be sold to a businessman to be used for farming. But the government can intervene and stop the sale because they recognise the importance to the environment of preserving game reserves.
• Preservation requires compromise (give and take): Farmers may develop their river mouth as a holiday resort. If this is not controlled, and too many other farmers do the same, the entire ecosystem will be damaged, and animal and plant life will be negatively affected.
• Government policy: Government intervenes to preserve environmental assets by:
  
  • Buying, confiscating, expropriating (taking ownership) or nationalising resources, e.g. indigenous forests.
  • Subsidising key resources, e.g. privately owned ecosystems.

14.2.4 Externalities
Externalities imply costs and benefits that were not planned for.

• The extra costs and benefits of externalities are not factors when the state of the environment is assessed.
• Goods that have negative externalities such as air and water pollution are generally oversupplied in the market.
• When businesses are expected to bear the cost of equipment to reduce pollution, it could have a positive externality on others. Businesses tend to spend little on pollution abatement equipment due to its limited marginal private benefit. The major role of government, regarding the environment, is to correct inefficiencies arising from externalities.

14.3 Measures to ensure sustainability

It is important for governments to take steps to ensure sustainability. Sometimes, businesses are driven by self-interest, and they see nothing wrong with using all available resources if they can make a profit from them. There are 5 controlling mechanisms to ensure sustainability:

Use this mnemonic to help you remember the 5 controlling mechanisms
M – Market – Make
I – Intervention – It
C – Control – Count
M – Measures – More
A – Agreements – Always

14.3.1 The market
The market is driven by self-interest. The market considers the environment as an asset to be used for its own benefit. Sustainability is achieved in the free market only to the extent that resource prices rise as they become scarce (less available), and through the development of environmentfriendly technology.
There is a social interest in using the environment, not only to the direct producer/consumer, but also to people in general, now and in the future.
This means we all have an interest in preserving the environment.
Reasons why the market fails to ensure sustainability:

• The market sees the environment as a common resource.
• Externalities such as air pollution caused by factories cannot be stopped without restrictive policies.
• Lack of knowledge: Businesses cause damage without realising it, e.g. companies making aerosol cans (such as spray-on deodorants) and did not know the damaging effect they had on the ozone layer.
• Carelessness: People continue with harmful practices and leave future generations to worry about the consequences.

Optimum market decisions

• Market mechanisms have failed when market forces fail to produce the desired result of environmental sustainability.
• All costs and benefits are not captured in the market price. The future cost of the resource disappearing is not often considered.

14.3.2 Public sector intervention
Public sector intervention aims to achieve social efficiency. This occurs through:
Granting property rights:

• The conservationist effect: People care for things that belong to them.
• To prevent fauna and flora species from becoming extinct, people are granted property rights if they agree to preserve the flora and fauna.
• Property rights can be expanded to common goods such as clean air.
• The Kyoto Protocol is an international agreement whereby developed countries pay developing countries for their right to pollute.

Charging for the use of the environment:

• Price the environment: The government levies fees for waste produced and dumped in the environment.
• In South Africa, local authorities levy charges on rubbish collection and sewage disposal.
• The best results are achieved when charges are proportional (related to) to waste produced.

Environmental taxes:

• Environmental taxes are taxes imposed on the output of goods that generate external environmental costs (pollution). These are called green taxes.
• Carbon dioxide emissions from wineries and vehicle tyres are taxed. The tax rate is equal to the marginal external cost.

Environmental subsidies:

• Subsidies are granted to businesses to reduce environmental damage, e.g. the government subsidises new technology that saves energy, such as energy-saving light bulbs or solar geysers.

Marketable permits:

• The government gives each business a licence to pollute to a certain degree.
• Businesses sell their licences to other businesses.
• In South Africa, marketable permits are granted by the Department of Minerals and Energy.

14.3.3 Public sector control
When government environmental policies don’t produce positive results, the government takes direct control through Command and Control (CAC) systems:
Command and Control (CAC):

• The government enforces policy by setting maximum levels of the emission of pollution.
• Most developed countries have regulations that control air and water pollution.

There are 3 approaches in CAC systems:

• Quantity standards: These focus on the amount of pollution emitted.
• Quality standards: These focus on the environmental impact of the pollution emitted.
• Social impact standards: These focus on the effect on people of the pollution emitted.

Voluntary agreements:

• The government concludes agreements with businesses on a voluntary basis to cut pollution.

Education:

• Education is used to try to change people’s attitudes towards the environment.
• Innovative approaches have been tried in the developing world to educate people, e.g. setting up community wildlife reserves.

14.3.4 International measures
Environmental problems are global problems. For example, pollution from motor vehicles and the greenhouse effect have an impact on the entire world. Polluted air and water moves from one country to another, and if the ocean is polluted in America, it can affect beaches in Australia. International measures have been implemented to deal with the following 5 environmental problems:
Biodiversity loss:

• If species become extinct (die out completely), this cannot be reversed.
• Modern techniques such as gene transplants can limit the loss of species.
• The Convention on International Trade in Endangered Species (CITES) sets many policies to deal with species loss.

Chemical waste:

• Chemical waste is toxic (it has a negative effect on living beings and can cause infertility or death).
• Chemical waste needs to be carefully managed to ensure it does not seep into the ground water.
• The Stockholm Protocol is a United Nations agreement to limit chemical waste.

Hazardous waste:

• Hazardous waste is highly toxic. It has a slow decomposition rate (it stays poisonous for a very long time).
• The most hazardous (dangerous) waste is radioactive waste from nuclear power.
• The Basel Convention is an international agreement to manage nuclear waste. South Africa is a signatory to the agreement.

Climate change:

• Global warming primarily causes climate change.
• Climate change can be reversed through widespread international co-operation, e.g. sharing weather information and weather patterns; agreeing to limit pollution; and banning chemical products such as greenhouse gases that damage the ozone layer.
• The Kyoto Protocol of 1997 is an international agreement to limit the production of greenhouse gases, because voluntary reductions of carbon dioxide levels did not succeed.

Loss of indigenous knowledge:

• Indigenous people have a lot of knowledge about the natural environment, which they use to make a living.
• Indigenous people traditionally used organic methods and natural processes.
• As indigenous people lose their habitats or are urbanised, this knowledge is disappearing and is being lost to the world forever.
• Local capacity-building is very important for the environmental sustainability of indigenous people, i.e. finding a way for them to earn a living in their traditional environment.

14.3.5 Major international agreements
Since the 1990’s the United Nations has convened various meetings with all countries worldwide on issues affecting them. They should take responsibility for the management of these issues.

• Rio de Janeiro summit (UNCED): This summit took place in 1992 with the objective of sustainable development. Envisaged outcomes included: environmental protection as an integral part of development, cooperation to conserve, protect and restore the health of the ecosystem, prevent environmental degradation where the polluter should bear the cost of pollution and assess the environmental impact.
• Johannesburg summit (WSSD): Hosted in 2002 in Johannesburg on Sustainable Development. Envisaged outcome of the programme includes: poverty eradication, changing unsustainable patterns of consumption, globalisation, health and the environment.
• Rio +20 summit: Also known as die United Nations Conference on Sustainable Development took place in Brazil. The main issue was sustainable growth and poverty eradication without damaging the environment. It was agreed that a green economy would be one of the tools for sustainable development. Sustainable development goals covering economic, social and environmental aspects will replace the MDG from 2013.
• Kyoto-protocol: This conference held in 1997 in Kyoto, established legally binding obligations whereby industrialised countries agreed to reduce their emission of six greenhouse gases.
• Millennium Development Goals: Communities depend on healthy ecosystems to survive and prosper. Some of the MDGs are:
  eradication of extreme poverty and hunger, achieve universal primary education, gender equality, reducing child mortality rates, improve maternal health, combat HIV/Aids and other diseases and create a global partnership for development.
• United Nations Framework Convention on Climate Change (COP 17):
  The 17th Conference of the Parties was held in Durban where the following decisions were taken:
  
  • Commitment to the Kyoto Protocol and reducing pollution by greenhouse gases.
  • A Green Climate Fund to help developing countries to establish cleaner sources of energy and to adapt to climate change.
  • An Adaptation committee of 16 members to report to COP 18 on the improvement of the ability of the poorest and most vulnerable countries to adapt to climate change, better protection and help against losses and damage related to climate change.

The Kyoto conference was held in Japan in 1997 and focused specifically on climate change. It resulted in the Kyoto Protocol which attempted to get the developed countries to commit to reducing their emission of greenhouse gases.

Activity 1
Study the following sign and answer the questions that follow:

1. What environmental hazard is depicted in the above logo? (1)
2. Explain in your own words how the above can threaten the environment. (3)
3. Name an international protocol which addresses this hazard. (2)
   [6]

Answers to activity 1

1. Chemical waste  (1)
2. Pollution of water resources which can be very harmful to humans plants and animals  (3)
3. The Stockholm Protocol  (2)