Comparing Economic Perspectives and Environmental Impact- Classical vs. Neoclassical Economics and Natural Resource Classification

Comparing Economic Perspectives and Environmental Impact- Classical vs. Neoclassical Economics and Natural Resource Classification

Differentiate between classical and neoclassical economics. Shed some light on how each affects the environment.

Classical and neoclassical economics are two distinct philosophical approaches used to analyze the economy. As the name suggests, classical economics came before neoclassical economics, but their difference is not a matter of time. On the one hand, classical economics concentrates on what makes the economy contract or expand. As a result, classical thought focuses on goods and services as two agents with the most significant impact on the economy (Caraman, 2015). The theory states that the value of a product depends on the cost of the product. Hence, capital, cost of labor, and other production factors influence the economy.

On the other hand, neoclassical economics theory views supply and demand as the significant drivers of production, price, and consumption of goods and services (Caraman, 2015). The neoclassical theory came about to challenge prior approaches to economic analysis. Essentially, the customers’ perception of goods and services influences their price.

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The original concept of socialism borrows heavily from classical economics. Here, the government needs to control production factors to avoid market failure. At the core of the neoclassical economic theory is the objective to look at the economy as a commodity. The aim is to identify the likelihood of market failure. Henceforth, the government intervenes to offer optimal protection while leaving private interests.

Renewable and non-renewable natural resources are all around us. Give a short discussion that includes the definition of each and include examples. Remember that there are many outside of the energy sector.

Renewable resources are natural resources with indefinite life as their value is replenished naturally. Examples of renewable resources include energy sources like geothermal energy, wind energy, and solar energy. Although some work is required to renew them, other resources are considered renewable, including fish, wood, and lather. Also, precious metals such as gold are considered renewable resources. Although they do not replenish naturally, such metals can be recycled and are never destroyed at any point.

Non-renewable resources, in contrast, are resources whose stock cannot be replenished naturally. Therefore, their use is finite. People extract renewable resources from the surface in liquid, gas, or solid form before converting them into their final usage. These resources take long to form, and once they are used, they take equally too long to replenish. Non-renewable resources, including aluminum cans, can be recycled, but their supply remains constant.

Environmentalists are advocating for the use of renewable resources in place of non-renewable resources. For instance, the increasing energy needs have put pressure on fossil fuels, whose supply is limited. Non-renewable energy sources are recommended to overcome this.

Describe the main differences between a green tax, a subsidy, and an emissions trading system. Which one do you think works better and why?

A green tax, also referred to as an environmental tax, is imposed on products whose production pollutes the environment. The primary objective is to encourage consumers to adopt ecologically sensitive practices (US EPA, 2018). The green tax is formally charged as a duty on pollution-causing products and services. Consequently, the government uses the money collected to undertake ecologically sensitive projects within a country. For instance, in some regions in India, private and commercial vehicles aged 15 and 8 years respectively are liable to the tax.

A pollution control subsidy, on the other hand, is a reward for not polluting. Instead of punishing a polluter, they are offered incentives for reducing polluting emissions. Examples of subsidies include tax incentives, low-interest loans, and grants (US EPA, 2018). For instance, small-scale farmers can be offered incentives to reduce soil emissions. Subsidies also provide an incentive for market entry apart from helping reduce emissions.

Finally, the emissions trading system is a cost-effective approach to curbing emissions. Here, the government creates the maximum emissions allowable, then uses a permit/licensing system for firms allowed under the scheme. The approach also permits businesses to trade permits among themselves.

The ideal emissions control approach is to combine these standards. In what is referred to as a safety valve, the government balances emissions control and economic costs. In this approach, a uniform tax is applied to all polluters who exceed the standard.

Population is a major issue in Environmental Science. How do birth and death rates affect population dynamics specifically? When do you see stable populations regarding birth and death rates? What about growing and shrinking populations?

Birth rate describes the number of people born in a given population per unit of time, while the death rate is the number of people who die in a given population within a given period. The net difference between death and birth rates translates into either population growth or regression. Population growth occurs when the birth rate exceeds the death rate. For instance, the birth rate in the US in 2005 was 14 births for every 1000 people, whereas the death rate was 8 for every 1000 people. This translates to an additional 1.7 million people that year, termed natural population growth (Rogers et al., 2016).

A Population is deemed to be stable if the mortality and birth rates do not go beyond the replacement level. Conversely, a growing population occurs when the birth rate exceeds the death rate, holding other factors constant. On the other hand, a shrinking population occurs when other factors such as migration come into play. A net migration loss results in a shrinking population.

Describe an age-class diagram. What predictions can be made about the future of a population that has a V-shaped age-class diagram? What role does women’s empowerment play in population growth?

An age class diagram is a graphic illustration of the age distribution within a given population. The diagram has a distinct graphic representation of males and females. The age class diagram is used by researchers, scientists, and policymakers to make critical decisions relating to people’s welfare. The tool illustrates key trends, just like it is the case for birth and death rates. A V-shaped age class diagram means the age class structure has a broad base and a narrow top. This means that the population is expanding.

Women empowerment is key to controlling the family size and achieving an ideal population. Inequality and women’s discrimination often leads to early and forced marriages and births. However, empowering this population demographic will encourage them to participate in economic activities, reduce family size, and reduce population growth.

Describe two justifications for environmental policy. Identify three problems environmental policy seeks to address.

One of the key justifications for environmental policy is to regulate the use of resources. Environmental policy advocates for the use of sustainable resources without jeopardizing their future availability. Another justification for environmental policy is to avoid pollution (Gurko et al., 2019).

The environmental policy seeks to solve three critical problems. One such problem is the tragedy of the commons, which is the misuse of free resources. People tend to misuse resources for short-term benefits to the detriment of the long-term societal good. A good example of the tragedy of commons is the environmental pollution through wastewater disposal (Gurko et al., 2019). Although people and organizations benefit in the short run by washing away dirt into water, this poses long-term threats to wildlife and people. Another example of the tragedy of the commons is overfishing.

Another problem solved by the environmental policy is the free-rider problem. The free-rider problem is the burden of overusing a resource by individuals who do not pay their fair share or do not pay at all (Gurko et al., 2019). For instance, if an oil spill occurs, an organization may decide to pay the entire cleanup cost. The result is that some other companies may not mind contributing to pollution as long someone will take care of it. Environmental policy comes in to ensure everyone takes responsibility for their mess.

Finally, environmental policy seeks to solve the problem of externalities/external costs. Externalities are the extra costs that come as a result of using a polluting product (Gurko et al., 2019). For instance, if one purchases a car, they only pay for internal costs (cost of production). Environmental policy comes in the form of tax to cover the environmental costs resulting from burning fuel.

References

Caraman), O. S. H. (2015). Classical, Neoclassical and New Classical Theories and Their Impact on Macroeconomic Modelling. Procedia Economics and Finance, 23, 309–312. https://doi.org/10.1016/s2212-5671(15)00506-7

Gurko, A., Oparina, S., Vasyutkina, L., & Potekhina, E. (2019). The environmental investments justification. E3S Web of Conferences, 91, 08029. https://doi.org/10.1051/e3sconf/20199108029

Rogers, L., Borsella, P., & Demographers, S. (2016). Growth or Decline: Understanding How Populations Change. https://www.census.gov/content/dam/Census/newsroom/releases/2016/cb16-cn43_blog.pdf

US EPA. (2018, December 26). Economic Incentives | US EPA. US EPA. https://www.epa.gov/environmental-economics/economic-incentives

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This week, we learned about types of economies, resources, population, and environmental policy. For your Unit 2 Complete assignment, write a narrative essay (minimum 1000 words) in which you address and discuss the questions and statements listed below. Use at least three scholarly sources, and remember to demonstrate a thorough understanding of the READ and ATTEND sections in your essay. Cite your sources in APA format.

Comparing Economic Perspectives and Environmental Impact- Classical vs. Neoclassical Economics and Natural Resource Classification

Differentiate between classical and neoclassical economics. Shed some light on how each affects the environment.
Renewable and nonrenewable natural resources are all around us. Give a short discussion that includes the definition of each and include examples. Remember that there are many outside of the energy sector.
Describe the main differences between a green tax, a subsidy, and an emissions trading system. Which one do you think works better and why?
Population is a major issue in Environmental Science. How do birth and death rates affect population dynamics specifically? When do you see stable populations regarding birth and death rates? What about growing and shrinking populations?
Describe an age-class diagram. What predictions can be made about the future of a population that has a V-shaped age-class diagram? What role does women’s empowerment play in population growth?
Describe two justifications for environmental policy. Identify three problems environmental policy seeks to address.