Economics & Business

From an economics and business perspective, global warming, climate change, and other sustainability concerns raise questions about the way our systems function. On the microeconomic level, many individual commercial and financial transactions affect—and are affected by—global phenomena, including global warming and climate change. On a global scale, decisions and actions by large corporations and nations have profound impacts on global warming and climate change. Some industries have direct impacts on GHG emissions, such as those involved in fossil fuel extraction, processing, and distribution, in industrial agriculture, or in manufacturing vehicles. Renewable energy providers, holistic organic agriculture, and developers of mass transit systems also have significant impacts on reducing GHG emissions

Following are a few sample areas as a starting point for exploration. Would these help initiate or deepen exploration and discussion in your classes?

  • What might be the effect on GHG of community-owned local energy utilities or purchasing preferences for local products?
  • How do market forces, regulatory agencies, taxes, and tax credits help resolve climate and emissions problems?
  • How does global warming impact the economy and business?
    • What are the economic impacts of changing temperatures and increased flooding and drought?
    • What are the economic impacts of extreme weather events (storms, drought, flooding, heat, wildfires, …)?
    • What are the economic impacts of mass migration and security threats?
  • How do the production and distribution of goods and services influence global warming?
  • How do subsidies and accounting practices affect global warming?
  • How do externalities encourage companies to ignore global warming and therefore tend to increase greenhouse gas emissions (GHG)
    • How do subsidies for oil and other fossil-fuel industries tend to increase fossil fuel use?
    • Do subsidies encourage large-scale farming and chemical- and machine-intensive farming at the expense of small farms?
  • How long does it takes to recover an investment in energy-saving measures or devices?
    • If you replace an incandescent lamp with an LED lamp, how long will it take for the savings in electricity to repay the cost of the new lamp? (Assume the LED bulb costs $10, that it uses 85% less electricity, and that the price of electricity is $0.10/kWh.)
    • Suppose it costs $500 to rewire the lights to make it easier to switch off some of them. What do we need to know to calculate how long will it take to recover this cost through reduced electric bills?
  • What is the relationship between ‘return on investment’ and ‘payback period’?
  • What is the impact of subsidies and incentives? (Can you and students develop some testable hypotheses on these subjects?) How would these actions affect corporate decision-making and consumer demand?
    • Moving subsidies from fossil fuels to renewable energy?
    • Establishing a carbon tax?
    • Moving subsidies from industrialized farming to sustainable methods? (For example, organic growing sequesters carbon into the soil, reducing net GHG emissions)
  • What is our responsibility if an action is expected to be desirable and profitable, but may be harmful to the economy, climate, environment, human health, and other areas?
  • To what extent is it desirable to explore possible unforeseen effects (unintended consequences) that a proposed or planned project or action may produce?
  • To what extent should the Precautionary Principle be applied?
  • What is our responsibility if the possibility of harmful consequences is discovered after an action or product is introduced?

Since continual growth on a finite planet seems by definition to be unsustainable, what other ways can you and students develop to explore the idea of steady-state economies and qualitative growth and its compatibility with systems thinking?

Big Ideas

  • Economic decisions affect global warming and climate change; these, in turn, affect individual businesses and the economy as a whole.
  • Decisions by governments and multinational corporations affect global warming and climate change; these, in turn, affect individual businesses and the economy as a whole.
  • Alternative approaches involving the public and community can change the focus to sustainability, instead of just profitability.

Additional Resources for Economics & Business

Also see Resources That Apply To Many Subject Areas and Teacher-Recommended Readings for Students.