The economics of environment

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The cost of food and energy may provide a clue for how economics affects the environment.

Carey King, assistant director of the UT Energy Institute and geosciences researcher, gave a talk discussing the impact that food and energy costs have on stopping climate change, as well as how scientists can measure the “finiteness” of Earth’s resources on March 1. The UT chapter of the Society of Petroleum Resources Economists organized the presentation.

Although scientists agree that Earth’s resources are limited and many place importance on environmental conservation and fighting climate change, measuring the limitations of these resources has been difficult, King said. He added that there is a disconnect between evaluating resources from an environmental or an economic perspective.

“They went out into space with a camera, took a picture of Earth, and if it fit in the frame, it was a finite resource,” King said. “The more I look at it, there’s not a good linkage between the financial side of the world and the physical science of the world. They’re trying to understand the same question: ‘How do things around the world work?’”

Models on Earth’s resources assume that resources are nonrenewable and finite, King said. 

King, who investigates how energy interacts with the economy and the environment, said the price of food and energy can be used to determine how Earth’s limited amount of resources affects the economy. Economic indicators include debt, interest rates and an aging population that is no longer part of the workforce.

Changes in economic growth can affect climate change efforts, King said, because changing energy infrastructure requires money. After an initial drop in the 1900s, the price of food and energy production is dropping at a lower rate, hindering economic growth and change, according to King. For example, an aging population after World War II requires healthcare and no longer pays taxes, making healthcare more expensive for everyone. Rising interest rates and inflation have also contributed to a slowing economy, King added.

James Jang, vice president of the Society of Petroleum Resource Economists’ UT chapter and energy and earth resources graduate student, said he hoped students would take a new perspective on the energy sector away from the talk.

“The theme was a little bit unconventional,” Jang said. “It’s not a usual way to approach the energy issues at the moment, but it was interesting, approaching the current economic situations in terms of food costs and energy costs. I hope it makes (the students) think about the economy and the energy world in general.”