APEC 3611w: Environmental and Natural Resource Economics
  • Course Site
  • Canvas
  1. Appendices
  2. Appendix 01
  • Home
  • Syllabus
  • Assignments
    • Assigment 01
    • Assigment 02
    • Weekly Questions 01
    • Weekly Questions 02
    • Weekly Questions 03
    • Weekly Questions 04
    • Weekly Questions 05
  • Midterm Exam
  • Final Exam
  • 1. Global Context
    • 1. Introduction
    • 2. The Doughnut
  • 2. Micro Foundations
    • 3. The Microfilling
    • 4. Supply and Demand
    • 5. Surplus and Welfare in Equilibrium
    • 6. Optimal Pollution
  • 3. Market Failure
    • 7. Market Failure
    • 8. Externalities
    • 9. Commons
  • 4. Macro Goals
    • 10. The Whole Economy
    • 11. Sustainable Development
    • 12. GDP and Discounting
    • 13. Inclusive Wealth
    • 14. Fisheries
  • 5. Climate Change
    • 15. Climate Change
    • 16. Social Cost of Carbon
    • 17. Climate IAMs
    • 18. Air Pollution
    • 19. Water Pollution
  • 6. Natural Resources
    • 20. Non-renewables
    • 21. Will we run out?
    • 22. Fisheries
    • 23. Forestry
    • 24. Land as a resource
    • 25. Land-use change
  • 7. Natural Capital
    • 26. Ecosystem Services
    • 27. Valuing Nature
    • 28. Biodiversity
    • 29. GIS and Carbon
    • 30. Sediment Retention
    • 31. Ecosystem Tradeoffs
  • 8. Future Scenarios
    • 32. Uncertainty
    • 33. Possible Futures
    • 34. Positive Visions
  • 9. Policy Options
    • 35. Policy Analysis
    • 36. Market Policies
    • 37. Real World Policies
  • 10. Earth Economy Modeling
    • 38. Earth Economy Models
    • 39. Gridded Models
    • 40. EE in Practice
  • 11. Conclusion
    • 41. What Next?
  • Games and Apps
  • Appendices
    • Appendix 01
    • Appendix 02
    • Appendix 03
    • Appendix 04
    • Appendix 05
    • Appendix 06
    • Appendix 07
    • Appendix 08
    • Appendix 09
    • Appendix 10
    • Appendix 11
    • Appendix 12

On this page

  • 1 Purpose of this appendix
  • 2 Stocks and flows in symbols
  • 3 Growth functions
  • 4 Harvest and decision rules
  • 5 Prices and behavior
  • 6 Inclusive wealth in symbols
  • 7 Why math matters—and why it is not enough
  • 8 Exercises
  1. Appendices
  2. Appendix 01

Appendix A: A Gentle Mathematical Lens

1 Purpose of this appendix

Everything in this book can be understood without calculus.

This appendix exists for readers who want:

  • a slightly more formal lens,
  • a bridge to advanced modeling,
  • or a preview of how these ideas look in equations.

Nothing here is required for the main text.

Think of it as a translation guide between:

  • verbal system thinking, and
  • the language used inside Earth–economy models.

2 Stocks and flows in symbols

Throughout the book we used the idea:

Next period’s stock = current stock + inflows − outflows

In symbols:

S_{t+1} = S_t + I_t − O_t

Where:

  • S_t is the stock at time t,
  • I_t is the inflow,
  • O_t is the outflow.

Examples:

  • Carbon:

C_{t+1} = C_t + Emissions_t − NaturalRemoval_t

  • Forest:

F_{t+1} = F_t + Growth(F_t) − Harvest_t − Conversion_t

This is the backbone of every Earth–economy model.


3 Growth functions

A renewable resource often follows a curve like:

G(S) = r S (1 − S/K)

You do not need to memorize this.

It simply says:

  • small stocks grow slowly,
  • medium stocks grow quickly,
  • large stocks slow as they approach a limit K.

Graphically, this produces a “hill” shape.

The key insight is qualitative:

Regeneration is not constant.
It depends on the state of the system.

That is why thresholds and tipping points exist.


4 Harvest and decision rules

A simple behavioral rule might be:

H_t = h · S_t

Where:

  • h is the harvest rate.

Then:

S_{t+1} = S_t + G(S_t) − h S_t

You can see immediately:

  • if h is too large,
  • the stock declines,
  • even if growth is positive.

Policy acts on h.

Institutions decide:

  • who sets it,
  • how it is enforced,
  • and whose interests it reflects.

5 Prices and behavior

In economic models, behavior often takes the form:

Quantity = f(Price, Income, Technology, Rules)

For example:

EnergyUse = a − b·Price + c·Income

This is not a claim about reality.

It is a machine:

  • change a price,
  • observe how use responds,
  • propagate the effect through the system.

Earth–economy models connect many such machines:

  • production,
  • consumption,
  • land allocation,
  • emissions,
  • and ecosystem change.

6 Inclusive wealth in symbols

In simplified form:

W = p_K K + p_H H + p_N N

Where:

  • K = produced capital
  • H = human capital
  • N = natural capital
  • p_* = shadow prices

Sustainability asks:

W_{t+1} / Population_{t+1} ≥ W_t / Population_t

This is the formal version of:

Wealth per person should not decline.

Every integrated model is, in some sense, an engine for computing W_t under different futures.


7 Why math matters—and why it is not enough

Equations:

  • enforce consistency,
  • expose assumptions,
  • and allow simulation.

They do not:

  • choose values,
  • define justice,
  • or resolve conflict.

They answer:

If the world works this way, what follows?

Earth–economy modeling is not about worshiping equations.

It is about using them as:

  • microscopes for feedback,
  • stress-tests for futures,
  • and bridges between disciplines.

The math is a language.

The system is the story.


8 Exercises

  1. Translate.
    Take this sentence and rewrite it in stock–flow form:
    “Overfishing today reduces tomorrow’s catch.”

  2. Interpret.
    If:

C_{t+1} = C_t + E_t − R_t

explain what happens if E_t > R_t for many periods.

  1. Reflect.
    Why is it dangerous to use equations without making assumptions visible?

This appendix completes the book’s arc:

  • from intuition,
  • to systems,
  • to models,
  • to equations—
  • and back to judgment.

Earth–economy modeling is not about replacing thinking.

It is about giving thinking a scaffold.

This appendix gives mathematically inclined students a bridge into formal modeling without breaking the book’s accessible, systems-first ethos.