Feb. 7, 2012 ENV222 Institutions
. complete Feb. 2 technology lecture (see those notes)
. introduction of new technologies
. the special case of nuclear power to generate electricity: problem or solution?
1. Defining the term
. used in social sciences differently from general use which defines “institution” as an
“organization”; eg, the university
. social sciences define as “rule or norm” (treated here as synonymous) which influences
. can be codified (formalized, written down) eg a law or not (eg, dress code for attending
a university lecture)
2. Ways institutions influence behaviour of individuals or organizations
. because the rule has been internalized; eg I obey the rule because I thinks I should
. because the rule is actively enforced; eg police enforce speed-limit laws
Note the relationship to power – the most effective form of power comes from internalization,
when active enforcement is not needed. Power comes from the barrel of a gun, but even more
from the minds of the powerless.
3. Institutions and environment
Our interest is in rules which do or do not influence behaviour which is environmentally
destructive. In large part, this means we are interested in rules governing market behaviour –
extraction of raw materials, production, transport and sale of goods (reader p. 165 top “rules of
property, exchange and regulation”). That in turn brings us back to state-market interdependence
(Jan. 26 lecture notes) and the fact that the market needs the state to solve its collective-action
problems (tragedy of the commons – reader pp. 167-68 and also pp. 357-358), by putting in
place rules respecting common-property resource extraction and externalities. “Market failure”
(reader p. 165 bottom) is the term applied to the need for such rules.
4. Neoclassical economics and environment
Economics is the discipline which studies the market. However, the charge is made that it leaves
out nature, other than as valued by humans (reader p. 165). Economics takes human wants as
givens, and looks to maximize efficiency in achieving those wants, usually through reliance on
decentralized market exchange, which is seen as more efficient than administrative decision-
making. As noted in the reading, economics pays less attention to distributive issues and equity
(p. 170) - amongst humans living now; humans now and those in the future; and between human
and nonhuman worlds. Some see the ideas of economics itself, beyond those of capitalism and
per capita consumption, as another cause of the environmental problem.
Environmental economics uses the methods of neoclassical economics to address issues of
resource extraction and generation of pollution. See Pearce, David W. and R. Kerry Turner
1 (1990). Economics of Natural Resources and the Environment. Baltimore: The Johns Hopkins
Ecological economics, on the other hand, is highly critical of neoclassical and environmental
economics, because they leave out the moral dimension and works to combine economic analysis
with ecological health, philosophy and other disciplines. See Costanza, Robert ed. (1991).
Ecological Economics: The Science and Management of Sustainability. New York: Columbia
University Press and Victor, Peter A. (2008). Managing Without Growth: Slower by Design, Not
Disaster. Cheltenham, UK: Edward Elgar (April 5 class).
. defined as an effect which is outside the buy-sell contract, and so not included in the price,
which means the market cannot address the problem; eg, smoke from the factory dirties the
laundry next door, but the cost of recleaning is not included in the price of the good sold by the
factory, so there is no incentive for the factory to reduce the smoke – market exchange between
the factory and