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Economics of Sustainable Technologies: Private and Public Costs and Benefits
This article is focused on the economics of sustainable technologies. Economics is a social science. Its primary purpose is to support the decision making involved in the transformation of environmental qualities (space, nature, energy, minerals, and others) into man-made resources (material, capital, labor, and knowledge); all of which ultimately satisfy human needs. Such transformations have negative environmental impacts that degrade environmental qualities and subsequently undermine welfare; for example, squandering of minerals, biodiversity loss, and pollution.
The environmental qualities are considered common goods. While they serve individuals and society, the ownership of the environmental qualities is difficult to distribute among individuals, for various uses, without losing their specific qualities. The environmental qualities are usually defined in physical terms, such as mass, power, or other related units. Welfare, considered in a broad sense of wealth, capabilities and well-being, is commonly indicated by income, though other indicators such as human development and satisfaction are increasingly used. Efforts and sacrifices made toward welfare creation are considered costs, and their results are benefits, though many relevant activities are not monetized.
The resource allocations that satisfy human needs can save costs and add value to benefits; net benefit occurs when the benefits exceed the costs. The degradation of environmental qualities is a cost, as is preventing this degradation. Welfare grows when the net benefit attained has taken into consideration all costs of environmental protection and degradation. Throughout the last two centuries, it has been a subject of considerable debate whether the availability of environmental qualities can be maintained along with welfare growth. In theory, this possibility is underpinned by the condition that the development and uses of the impacts-preventing technologies evolve faster than the potential negative environmental impacts caused by unregulated income growth (Kuipers and Nentjes, 1973). Technologies, herewith, are considered tools for resource allocation which can save the costs of resource use, while simultaneously increasing the value of products in a business or society. If the total of products achieve greater value when compared with the costs it is considered productivity, which is the yardstick for economic growth. When the income-generating technologies aim to reduce environmental impacts, they can contribute to sustainable development as defined by the United Nations World Commission on Environment and Development in “Our Common Future,” 1987 (“development that meets the needs of the present without compromising the ability of future generations to meet their own needs,” p. 43). Such technologies are called sustainable technologies. Continue reading the chapter by clicking the link below…
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