ECO424-Ch1-Reading
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2. Natural capital (From Wikipedia)
Natural capital is the extension of the economic notion of capital (manufactured means of production) to goods and services relating to the natural environment. Natural capital is thus the stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future. For example, a stock of trees or fish provides a flow of new trees or fish, a flow which can be indefinitely sustainable. Other examples: oil deposits, minerals, coal, etc. Natural capital may also provide services like recycling wastes or water catchment and erosion control. Since the flow of services from ecosystems requires that they function as whole systems, the structure and diversity of the system are important components of natural capital.
3. Please read Exhibit 1-4 on page 16, Barry Field’s text.
4. Please read Exhibit 1-6 on page 20, Barry Field’s text.
5. Resource rent (From Wikipedia)
In economics, rent is a surplus value after all costs and normal returns have been accounted for, i.e. the difference between the price at which an output from a resource can be sold and its respective extraction and production costs, including normal return.[1] This concept is usually termed economic rent but when referring to rent in natural resources such as coastal space or minerals, it is commonly called resource rent. It can also be conceptualised as abnormal or supernormal profit.
In practice, identifying and measuring (or collecting) resource rent is not straightforward. At any point in time, rent depends on the availability of information, market conditions, technology and the system of property rights used to govern access to and management of resources.
Categories of rent
Rent can be categorised into different kinds depending on how it is created. In general one can distinguish three different kinds of rent, which can also occur together: differential, scarcity, and entrepreneurial rent.
· Differential rent (also called quality or Ricardian rent) arises because of differences in the quality of similar goods or inputs (e.g. production sites). Consider two companies that extract coal of identical quality. The market price of coal is $50/t. Company X operates at a production site where it is very easy to extract coal. Its costs (including normal returns) amount to $20/t. Company Y operates at a site where it is relatively difficult to extract coal. Its costs (including normal returns) amount to $30/t. Company X will ‘create’ more resource rent because of the more accessible resource.
· Scarcity rent emanates from excess demand for (or restricted supply of) the good or resource. Consider the “production” of rock lobster where the costs to produce one rock lobster (i.e. paying for labour, the nets, and the like, and including normal profit) amount to $3. Assume the rock lobster is sold for $5 on the market. Resource rent here amounts to $2. However, assume the demand for rock lobster has gone up, so the price for rock lobster on the market has increased. As a consequence, the rock lobster may be sold for a higher price at $6. But the costs of the fisher to catch one rock lobster remain the same at $3. Resource rent increases to $3.
· Entrepreneurial rent (also called quasi-rent) can accrue due to entrepreneurial skills or managerial investments. A company may invest in advertising, training of employees, and so forth. These investments can result in a higher price (brand) or lower costs (better technology). Consider the “production” of rock lobster where the costs to produce one rock lobster (i.e. paying for labour, the nets, and the like, and including normal profit) amount to $3. Assume the rock lobster is sold for $5 on the market. Resource rent here amounts to $2. However, assume the fisher has managed to decrease the costs for catching rock lobster from $3 to $2. This could be due to his/her entrepreneurial skills and more efficient use of labour and capital. Resource rent increases from $2 to $3.
Henry George, best known for his proposal for a single tax on land, defined rent as "the part of the produce that accrues to the owners of land (or other natural capabilities) by virtue of ownership" and as "the share of wealth given to landowners because they have an exclusive right to the use of those natural capabilities."
George, Henry (1880). "Chapter 11 The Law of Rent". Progress and Poverty (4 ed.). Robert Schalkenbach Foundation 2006. ISBN 0-665-09522-8
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For Ch1-Slide 8: ECO424
1. "The power of population is indefinitely greater than the power in the earth to produce subsistence for man."
Source: Malthus T.R. 1798. An essay on the principle of population. Chapter 1, p 13 in Oxford World's Classics reprint.
2. Malthus argued that two types of checks hold population within resource limits:
--positive checks, which raise the death rate; include hunger, disease and war
--preventive ones, which lower the birth rate; abortion, birth control, postponement of marriage……
3. The exponential nature of population growth is today known as the Malthusian growth model.
Where
P0 = initial population
r = growth rate, also called Malthusian parameter
t = time
e ≈ 2.71828
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It is clear that the discrete Logistic growth model follows the U.S. census data better than the Malthusian growth model, but not as well as the non-autonomous growth model.
5. The Costs of Economic Growth: Sacrifice of Other Social Goals—a cleaner environment (economic growth generates pollution)……
For Ch1-Slide18:
1. Physical capital stock—a stock variable; Planned investment spending—a flow variable
A bathtub being filled with water: the water in the tub—stock; the water flowing into the tub—flow.
http://www.seed.slb.com/flash/science/features/earth/climate/en/bathtub/index.htm?width=569&height=383&popup=true
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