Externalities and Non-Renewable Resources - 180405

A Problem Based Learning approach to externalities and non-renewable resources.

Problem Based Learning

Externalities and Non-Renewable Resources: Can the market be relied upon to deliver the solution?

This Problem Based Learning (PBL) exercise focuses on the issue of non-renewable resources and externalities in production. There is conflicting evidence about just how much damage the remorseless progress of production and economic growth is imposing on the Earth's natural resources and arguments about the potential methods to tackle this damage.

A recent report from the Millennium Ecosystem Assessment suggested that the human race is using up resources at an alarming rate and are destroying many others. Can 1,300 experts from 95 countries be wrong and if they are not what can we do to help reverse this trend?

Our Guide for Educators provides advice on how to use this resource with both HE and FE students.

Learning Objectives:

At the end of the PBL exercise, students should understand and have covered:

  • The meaning of the terms 'non-renewable' and 'renewable' resource
  • The meaning of the term 'environmental degradation'
  • The meaning of the term 'externalities' and an ability to explain external costs and benefits using graphical and written means
  • The principles of welfare economics including consumer surplus and producer surplus
  • The effects of economic growth - both positive and negative
  • The commonly suggested solutions for reducing negative externalities:
    • Market methods
      • Taxation
      • Tradable and non tradable permits
    • Regulation
    • Legislation and international agreements
    • Recycling
    • Investment in renewable resources
    • Extension of property rights
    • The difficulties of enforcing such solutions

Resources:

Problem Based Learning

Externalities and Non-Renewable Resources: The Problem

This Problem Based Learning (PBL) exercise focuses on non-renewable and renewable resources and externalities in production. Our Guide for Students explains how to approach the problem and get the most out of the learning process.

The Problem: Can the market be relied upon to deliver the solutions to the environmental damage that is inflicted on the planet by modern production methods and economic growth?

A report conducted by 1,300 experts from 95 countries has presented a stark choice for the planet. The report suggests that as the human race expands beyond the 6 billion mark, the demand that this growing number of people and the economic activities they carry out are placing on nature is outpacing nature's ability to cope. The report suggests that 60% of the ecosystems that support life on Earth are being damaged or used unsustainably. This damage is likely to increase in the next 50 years according to the report.

Such damage is having unpredictable effects on the environment; climate change is clearly at the forefront of the news but there are also other problems such as alien damage to natural life, the emergence of new diseases, the destruction of fisheries, the speeding up of species extinction and a reduction in biodiversity.

Factory chimneys giving out pollution

Image: Economic growth has brought health and wealth to millions over the last 150 years but is the cost of that growth now becoming greater than the benefits? Copyright: Helle Bro, stock.xchng

Such changes, without measures to reverse the effects, threaten to reduce the likelihood of achieving the Millennium Development Goals laid down by the United Nations. However, the report does suggest that the reversal of such changes is within the capacity of humankind to bring about.

Biz/ed has provided a number of references for investigation to help you research this problem.

Problem Based Learning

Externalities and Non-Renewable Resources - References for Investigation

Biz/ed has provided the following references for investigation to help you research the problem. These are suggestions only and are not the only sources you may wish to use, indeed, you are not obliged to use any of them!

Web sites

Textbooks

  • Grundtvig, E. (1973) The Economics of Property Rights, Ballinger
  • Barzel, Y. (1997) Economic Analysis of Property Rights, Second Edition, Cambridge University Press
  • Gowland, P. & Paterson, A. (1993) Microeconomic Analysis (Chapter 12), Hemel Hempstead, Harvester Wheatsheaf
  • Tullock, G., Seldon, A. & Brady, G.L. (2002) Government Failure: A Primer in Public Choice (Chapter 11), Washington, Cato Institute
  • Wilkinson, M. (1993) Equity and Efficiency (Studies in the UK Economy) Oxford, Heinemann Educational