Environment & Green Economy

NODE 01

Env & Economy

• Economy operates within natural environment.
• Env → Economic activity → Env impact.

NODE 02

Env Functions

• Resource supply, Sink function.
• Life-support function, Amenity function.

NODE 03

Natural Resources

• Provided by nature, used for econ activity.
• Coal, oil, forests, water, minerals.

NODE 04

Renewable Resources

• Can regenerate naturally over time.
• Renewable ≠ impossible to exhaust (overuse).

NODE 05

Non-Renewable

• Available in finite geological stocks.
• Cannot be replenished on human time scales.

NODE 06

Common-Pool Resources

• Difficult to exclude users, but rival in consumption.
• Fisheries, grazing land, groundwater.

NODE 07

Tragedy of Commons

• Incentive to overuse shared resources.
• Costs shared → Depletion → Everyone worse off.

NODE 08

Property Rights

• Determine who uses/excludes/benefits/costs.
• Can help address resource-management problems.

NODE 09

Externalities

🏭vs🌳

• Activity affects third parties, not in market price.
• Negative (pollution) or Positive (education/trees).

NODE 10

Pollution

• Harmful substances introduced into environment.
• Air, water, soil, noise, plastic.

NODE 11

Negative Externality

→

• Private Cost < Social Cost.
• Leads to overproduction relative to efficient level.

NODE 12

Social Cost

PVT

+

EXT

=

SOC

• Social Cost = Private Cost + External Cost.
• Factory must internalize full cost.

NODE 13

Social Benefit

PVT

+

EXT

=

SOC

• Social Benefit = Private Benefit + External Benefit.
• Social benefit exceeds private benefit.

NODE 14

Internalising Externalities

• Incorporating external cost/benefit into decisions.
• Taxes, subsidies, regulation, permits.

NODE 15

Pigouvian Tax

• Tax designed to reflect an external cost.
• Pollution ↑ → tax burden ↑. Reduces incentive.

NODE 16

Subsidy for Pos Ext

• Govt subsidises activity with third-party benefits.
• Encourages greater consumption/investment.

NODE 17

Regulation

• Direct control: emission standards, zoning.
• Tech requirements, resource-use restrictions.

NODE 18

Cap-and-Trade

↔

• Sets total emissions limit (Cap).
• Creates permits that can be traded.

NODE 19

Carbon Pricing

→

• Gives GHG emissions an explicit economic cost.
• Carbon tax or emissions trading system.

NODE 20

Polluter Pays Principle

• Those responsible bear the costs of managing it.
• Private actor bears cost, not society.

NODE 21

Climate Change

• Long-term changes in climate patterns.
• Involves externalities, risk, intergen effects.

NODE 22

Greenhouse Gases

• CO₂, Methane, Nitrous oxide.
• From energy, industry, transport, agriculture.

NODE 23

Carbon Emissions

→CO₂

• Energy demand → Fossil fuels → CO₂.
• Creates climate externality & social cost.

NODE 24

Climate Externality

• Source of emissions ≠ location of damages.
• Emissions in one country impact worldwide.

NODE 25

Global Public Good

• Stable climate has public-good characteristics.
• Creates a collective-action problem.

NODE 26

Free Rider Problem

?

• Incentive to benefit from global reductions.
• While contributing less themselves.

NODE 27

Mitigation

CO₂→

• Reducing/preventing GHG emissions.
• Renewables, efficiency, EVs, carbon capture.

NODE 28

Adaptation

• Adjusting to actual/expected climate impacts.
• Flood protection, drought crops, water mgmt.

NODE 29

Mitigate vs Adapt

MITREDUCE CAUSE

ADPREDUCE DGM

• Mitigation: Reduce the cause.
• Adaptation: Reduce the damage. Both needed.

NODE 30

Sustainable Dev

ECOSOCENV

• Improve present well-being, preserve future capacity.
• Economic, Social, Environmental pillars.

NODE 31

Intergen Equity

• Fairness between present and future generations.
• Using finite resources today is a future opp cost.

NODE 32

Intragen Equity

• Distribution among people living today.
• Policies affect households unequally based on income.

NODE 33

SDGs

• 17 Sustainable Development Goals.
• Poverty, health, gender, water, climate, oceans.

NODE 34

Green Economy

🌱

• Econ dev reducing environmental risks/damage.
• Improving resource efficiency & social outcomes.

NODE 35

Green Growth

• GDP ↑ while resource/pollution intensity ↓.
• Increasing well-being with less env pressure.

NODE 36

Resource Efficiency

→

• Producing more economic value with fewer natural inputs.

NODE 37

Energy Efficiency

→

• Same useful service with less energy input.
• Increases productivity.

NODE 38

Circular Economy

▶

• Minimize waste, keep materials in productive use.
• Reduce → Reuse → Repair → Refurbish → Recycle.

NODE 39

Linear vs Circular

vs

• Take-Make-Dispose vs Design-Reuse-Recycle.
• Reduces extraction, waste, and pollution.

NODE 40

Recycling

→

• Recovers materials from waste, reprocesses them.
• Requires energy, collection, so not costless.

NODE 41

Reuse

• Extends useful life of products.
• Refillable containers, second-hand goods.

NODE 42

Repair

→

• Restores product instead of replacing it.
• Longer product life, lower material consumption.

NODE 43

Natural Capital

• Stocks of natural resources and ecosystems.
• Forests, rivers, soils, wetlands, fisheries.

NODE 44

Ecosystem Services

• Pollination, water purification, flood regulation.
• Carbon storage. Substantial economic value.

NODE 45

Biodiversity

• Variety of species, genes, ecosystems.
• Loss reduces resilience and ecosystem services.

NODE 46

Deforestation

→

🪓

• Affects carbon storage, biodiversity, water cycles.
• Resource extraction → env impact → social cost.

NODE 47

Water Economics

↓

• Important for agriculture, industry, households.
• Scarcity from limited supply, overuse, pollution.

NODE 48

Groundwater

• Can be a common-pool resource.
• Over-extraction → falling tables, higher pumping costs.

NODE 49

Environmental Valuation

=₹?

• Estimating value when no market price exists.
• Willingness to pay, contingent valuation, hedonic.

NODE 50

Cost of Env Damage

→

• Health costs, productivity/agri losses, disasters.
• Env degradation has an economic cost.

NODE 51

Green Accounting

GDP- DEP

• Incorporates env info into econ performance.
• Subtracts natural-resource depletion/degradation.

NODE 52

GDP vs Sust Welfare

vs

• Extracting resources increases GDP but depletes capital.
• GDP ↑ doesn't automatically mean sustainable welfare ↑.

NODE 53

Nat-Capital Depletion

• Selling timber records GDP production.
• But economy loses carbon storage, water regulation.

NODE 54

Env Kuznets Curve

• Env pressures may initially rise with income, then fall.
• Empirical hypothesis, not a universal law.

NODE 55

Tech & Environment

→

• Can increase efficiency, but also consumption/waste.
• Tech is not automatically environmentally beneficial.

NODE 56

Renewable Energy

• Solar, wind, hydro, biomass, geothermal.
• Reduces fossil dependence, but has land/material reqs.

NODE 57

Energy Transition

• Fossil fuels → Efficiency → Renewables.
• Lower emissions intensity. Speed depends on policy.

NODE 58

Just Transition

→

• Considers workers affected by shift from carbon industry.
• Reskilling, regional invest, income support.

NODE 59

Green Jobs

• Renewable energy, env services, waste management.
• Clean transport, ecosystem restoration.

NODE 60

Policy Trade-offs

COST NOW

SAVE LTR

• Higher short-term costs vs lower long-term env damage.
• How much to spend today to avoid tomorrow's costs?

NODE 61

Discounting

→

• Comparing present costs with future benefits.
• Resources today have alternative uses.

NODE 62

Pollution Control

→

• Make private decisions reflect social costs.
• Damage → Econ price → Behavior changes.

NODE 63

Sustainable Agri

• Efficient irrigation, soil conservation, IPM.
• Maintains productivity while protecting resources.

NODE 64

Sustainable Cities

• Public transport, waste mgmt, water efficiency.
• Energy-efficient buildings, green spaces.

NODE 65

Sustainable Consump

↺

• Durable products, repair, reuse, efficient appliances.
• But individual behavior alone cannot solve systemic issues.

NODE 66

Corporate Env Resp

• Business strategy influences outcomes (prod, energy, waste).
• Environmental management integration.

NODE 67

ESG Concept

ESG

• Environmental, Social, Governance factors.
• Used by investors to assess broader risks/practices.

NODE 68

Climate Risk

RISK

• Affects agri, insurance, infra, banks, property.
• A major financial and macroeconomic risk.

NODE 69

Phys vs Trans Risk

PHYSDMG

TRNSECON

• Physical: Damage caused by climate events.
• Transition: Econ losses from shifting to low-carbon.

NODE 70

Env Policy & Gov

• Govt combines regulation, taxes, subsidies.
• Markets for permits, public investment.

NODE 71

Global Cooperation

• Problems cross borders (climate, ocean pollution).
• National policy + international cooperation required.

NODE 72

CBDR

• Common But Differentiated Responsibilities.
• Different historical contributions and capacities.

NODE 73

Climate Finance

→

• Financial resources for mitigation & adaptation.
• Govts, dev institutions, private investors.

NODE 74

Env vs Dev Trade-off

DEVENV

• Higher energy use → faster dev VS lower env pressure.
• Objective: dev + productivity + cleaner tech.

NODE 75

Env-Econ Master

• Nat Capital → Prod/Cons → Waste/Emissions.
• → External Costs → Gov Response → Green Tech.

NODE 76

Climate Econ Master

• Econ Activity → GHGs → Climate Change.
• → Econ Losses → Mitigation/Adaptation → Carbon Pricing.

NODE 77

Green Econ Master

• Extraction → Prod → Cons → Waste.
• Becomes: Efficiency → Reuse/Repair → Recycling.

NODE 78

Realm 18 Master Arch

• Env → Nat Resources → Econ Prod → Ext Costs.
• Env Policy → Green Tech + Circ Economy.
• Green Acc → Sustainable Dev → Intergen Well-being.