Resource and Environmental Economics

• Humanist moral philosophy: rights and duties are accorded exclusively to human beings
  human beings are the source of values
• Naturalist moral philosophy: extends these moral rights to other creatures (animals, plants)
  values are defined in relation to a natural system, but in the end decisions are taken by humans

• Focus on individual rights and freedom
• Private property is legitimate if acquired under generally accepted rules
• Role of economic policy: guarantee property rights and market access, provide public goods, correct market failure

• Focus on individual utility, welfare and happiness
  narrow form - utility is individual
  extended form - utility includes utility of other individuals and value of nature
• Social welfare is a function of individual utilities
• Government should maximize social welfare
• No concept of justice

• Social welfare: aggregation of individual utilities
• Intertemporal welfare: welfare over the future, discounted with the utiliy's discount rate
  \(\displaystyle{W}=\displaystyle\sum_{t=0}^\infty \frac{U_t}{(1+\rho)^t}\) or \(W=\displaystyle\int_0^\infty U_te^{-\rho t}dt\)
  \(U_t\): utility at time t
  \(\rho\): discount rate of utility

• individual benefits from natural resources
• central ecological functions of natural resources
• costs of utilization and exhaustion of natural resources

Fair distribution is reached by a concensus of free and rational individuals who decide under a veil of ignorance referring to generation, position, attitude etc. A unequal distribution will only occur if:

• it improves everyone's position - e.g. people creating positive externalities will receive more
• it is connected to specific positions - people with high responsibility

• Economic: externalitites, public goods, monopolies
• Non-economic: illegal trade with restricted goods, undermining of governmental or state controls, ethical concerns

Change incentives such that individuals take account for externalities

• taxation of negative externalities
• subsidization of positive externalities
• Industrial policy (e.g. protection of patents)