Economic Growth and Valuation of the Environment

Economic Growth and Valuation of the Environment

A Debate

Edited by Ekko C. Van Ierland, Jan van der Straaten and Herman Vollebergh

The debate on the valuation of nature and the environment, sustainable national income and economic growth is one of prime importance in environmental economics. Economic Growth and Valuation of the Environment deals with the fundamental approaches to calculating sustainable national income and their implications for the valuation of the environment.

Chapter 3: Three persistent myths in the environmental debate

Roefie Hueting

Subjects: economics and finance, environmental economics, environment, environmental economics

Extract

1 Roefie Hueting 1 MYTH 1: ENVIRONMENT CONFLICTS WITH EMPLOYMENT The proposition that to preserve the environment we must sacrifice employment is probably the major obstacle standing in the way of a sound environmental policy. This is because the proposition overlooks the simple fact that the possible uses or functions of the environment (including natural resources) are scarce goods which require the use of production factors for their restoration, preservation and substitution. Of these, labour is the most important. For example, in the Netherlands more than 80 per cent of the net domestic product is labour income (including mixed income – that is income of industries that goes to private households). In macroeconomic terms, labour is the dominant cost factor. A given amount of production and consumption requires more labour with environmental conservation than without. The extra labour required is used to maintain scarce environmental functions.2 This conclusion can be elucidated as follows: Human beings ultimately depend on three factors for survival and for the level of consumption that they want to attain: G G G the possible uses, or functions, of their physical surroundings, the environment: water, air, soil, plant and animal species, space, and natural resources, including energy resources; ‘hands and brains’ – in other words, labour. And because the brain steers the hands, it is ultimately human ingenuity that counts; time. Of course, capital is also a production factor. But capital goods are manufactured by labour, using elements of our physical surroundings: the environment. Ultimately, the environment,...

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