Sustainable Consumption

• Sustainable consumption


  Relates to sustainability, how to live on the Earth in the long run
• Consumption


  Using resources/products/services to satisfy our needs and wants-maximize your profit
• Sustainability


  The development that meets the needs of the present without compromising the ability of future generations to meet their own needs
• 3 perspectives on sustainable consumption

  • Sustainability
  • Economics
  • Social science
• Sustainable consumption relates to sustainability, how to live on the Earth in the long run
• Sustainable consumption is a normative concept - what is desirable
• Doughnut model


  The outside layer represents environmental boundaries, the inside layer represents meeting everyone's economic and social needs
• We should stay within the 'just space' of sustainability
• Resource constraints


  • Combining demographic/economic growth and resource scarcity, a long-standing concern
  • The 'organic regime of growth' - from agricultural structure to material exchanges, the availability of resources are central
  • Population increases exponentially, agricultural yield arithmetically
  • Productivity gains are not compensated (Jevon's paradox)
  • Exhaustion from coal mines (but then...oil)
• After World War II, Meadows and the Club of Rome sparked a new debate on the availability of resources
• Climate change


  Link between greenhouse gas emissions and temperature increase - hypothesis in the 19th century, definite proof
• Global greenhouse gas emissions come from energy (transport, buildings, industry) and agriculture (livestock)
• Diverse pressures on resources

  • Decreasing concentration in mines, costly extraction, increasing demand
  • Uneven geographical distribution - e.g. China produces more rare earth elements, over half of lithium reserves are in Chile and Australia
  • Economic concentration - Glencore produces 27% of cobalt
  • Degraded access from environmental degradation - vulnerable forests, polluted water
• Economics


  The science of 'the nature and causes of the wealth of nations' during the classical period, later the science of human behavior in the context of scarce resources
• Central to economics are the formation of economic quantities like prices, income, value, employment rate, GDP
• The simple world according to economists

  • Households-supply/demand of goods and services-firms
  • Labor and wages can help with labor supply
• Consumption is our biggest problem - of energy, but mostly 'stuff'
• There are differences in consumption between countries and people
• Classical conditioning


  A response that builds up through repeated exposure and reinforcement
• Operant conditioning


  Associating a voluntary behavior with a consequence, using rewards and punishments
• Learning


  The acquisition of knowledge and its implementation, when experience or practice results in a relatively permanent change in behaviour
• Other types of learning

  • Modelling (celebrity endorsements)
  • Mimicry - humans automatically mimic other people, facilitating social interactions and interpersonal bonding
  • Mirror neurons - neurons that fire both when a person acts and when they observe the same action performed by another
• Pareto efficiency


  When everything works effectively in the economy, and there is no other resource allocation with all agents better off
• Efficiency in economics does not mean equity
• Externalities


  Production/consumption by some agent directly impacts another agent, without payment. This interdependency is not accounted for by the market.
• Negative externalities decrease welfare, positive externalities increase welfare
• Private goods


  Owned by businesses and people themselves
• Public goods


  Owned by governments and nature itself
• Tragedy of the commons

  Markets work well with private goods, but not with public goods, because there is no incentive to ration the use of public resources
• Free riding


  For a public good, someone else pays for it rather than you
• Solutions to the tragedy of the commons


  • Enforcing common pool management at the community level with credible enforcement
  • Efficient for small communities but not for large ones
• Price instruments


  Tools like carbon taxes, standards, and fleet-wide targets used to address externalities
• Marginal abatement cost (MAC)


  The cost for each additional unit of pollution that is reduced
• Marginal damage cost (MDC)


  The benefit for each additional unit of pollution that is reduced
• Pigouvian taxation


  Taxing polluters based on the marginal damage cost, to reset the optimum to the first-best solution
• Rarely is the optimal Pigouvian tax implemented, due to issues like lack of acceptability, regressiveness, and uncertainty
• Other price instruments for cars

  • Little or no carbon tax
  • Feebates (tax on dirty cars, subsidy on clean cars)
  • Standards on emissions
  • Low emissions zones
• Issues with price instruments for cars include lack of incentive on usage, rebound effects, and information asymmetry
• Needs


  Something necessary for an organism to survive and live a healthy life, a deficiency causes a clear adverse outcome
• Wants


  A desire, wish or aspiration