Economics in Sustainability

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On March 27th, a talk was held at 12 PM about how economics and the environment connect. Dr. Andy Borchers, a faculty member of the College of Business, led this talk. He began his presentation with a little bit of information about his background. He went to General Motors Institute, now known as Kettering University, and worked in car factories after that. Dr. Borchers talked about the transit plan Nashville has in the end of his presentation, which relates back to his history in car business. His first major point was “What is environmental economics?” He stated that economies receive input from the environment, but they are almost always just focused on “dollar signs.” Dr. Borchers noted that traditional economists ignore the environment. This can lead to externalities, which are extra things that happen that get overlooked. A good example that Dr. Borchers referenced was that a farmer using fertilizer on crops near a river could cause fish to die downstream. The idea pushed for the most is to internalize the externalities. This means that, in the example, either the farmer or the fishermen would pay each other to use less or more fertilizer. Dr. Borchers called to attention that the main problem is figuring out how to internalize the external costs.

He continued his presentation by referencing a line from Naomi Klein’s book, “This Changes Everything.” It states, “’There is still time to avoid catastrophic warming,’ she contends ‘but not within the rules of capitalism as they are currently constructed.” He responded, agreeing, asking “How compatible is capitalism with the planet?” A slide followed this, presenting a large number of questions that have no definite answer, such as “Should the government intervene [in the environment] at all?” and “How clean is clean enough?” Dr. Borchers stated that the marginal benefit needs to equal the marginal cost, yet it is almost impossible to do this when there are things that are tough to put a dollar sign on. From this, he brought up interesting issues, such as the decline in hunting leading to less money for the conservation of the environment.

To close, he presents evidence of progress that has been made. Dr. Borchers noted that, of course, not everyone would be satisfied and that there is still much progress to be made. He showed that wind power is being used much more in Denmark, geothermal power is growing in Iceland, and sugar cane is used to make bio-fuel in Brazil. He also quickly showcased how the transit plan in Nashville will not fix everything, but worse things would happen if it was not implemented. Dr. Borchers stated that the way Nashville is now just means more and more cars in the future. He knows that two options of transport rather than one would be drastically better for so many people.