CHAPTER 7
The Environment
Learning Objectives
After completing this chapter students should be able to:
Examine business’s posture toward the environment especially with regard to its role in
protecting and preserving the ecosystem.
Study methods by which business could internalize the social costs of depleting natural resources
Glossary
1. cost–benefit analysis: When making decisions, we often consider the costs and benefits of each
of our options to see which one will be best. The cost–benefit analysis often leaves out harm done
to the environment and nonhuman animals, but environmentalists would like us to take those
things into consideration.
Chapter Summary Points
1. Business functions within a global ecological system. Because of the interrelated nature of
ecosystems, and because intrusion into ecosystems frequently creates unfavorable effects,
business must be sensitive to its impact on the physical environment.
2. Traditionally, business has regarded the natural world as a free and unlimited good. Pollution and
resource depletion are examples of situations in which each person’s pursuit of self-interest can
make everyone worse off (the “tragedy of the commons”). Business must be sensitive to possible
disparities between its private economic costs and the social costs of its activities (the problem of
externalities or spillovers).
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Teaching Suggestions
Many students will find it helpful to closely examine the assumptions, examples, arguments, and theories
of this chapter before turning to a class discussion. I will present some examination of my own here as an
example.
1. One assumption behind chapter 7 is that it’s not wrong to harm the environment in all contexts, but that
it is wrong in at least some contexts. We think it’s morally permissible to take resources from the Earth to
attain food, clothing, homes, and other resources needed for our survival, even though that almost always
causes some harm the environment and nonhuman animals. Additionally, it seems unreasonable to make it
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This raises the following questions: Does the tragedy of the commons give us a good reason to reject
Adam Smith’s argument? If so, what implications does that have for the moral legitimacy of capitalism? If
not, should people be compensated for being harmed by environmental damage, and how can they be
fairly compensated? After all, it is very difficult to prove that pollution causes any particular illness and
several companies could contribute to the pollution.
Questions for Discussion
Introduction
Given the problems of environmental degradation, of resource depletion, and of the abuse of animals for
commercial purposes, what are business’s responsibilities?
Obligations to Future Generations
Even though most of us agree that it would be immoral to make the world uninhabitable for future people,
can we talk meaningfully of those future generations having a right that we not do this. After all, our
Libertarianism and the Environment
Students should be encouraged to consider if each normative theory can justify the principles we need to
protect the environment. In particular, it‘s not clear if Nozick’s libertarianism is compatible with the
Additional Resources for Exploring Chapter Content
Further Reading
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