ABSTRACT
Macroeconomics is more than the sum of microeconomic activity and is mainly concerned with the effect of policy actions with consequences on a nation’s product, income, money supply, and interest rates. Other texts cover macroeconomic concepts in detail and, therefore, the reader is referred to them for that background, which will not be covered here except at a higher level (e.g., Samuelson, 1964; Branson and Litvack, 1976; Daly and Farley, 2004). Most nations’ governments focus on macroeconomic policies infl uencing economic growth, ideally unconstrained. This policy perspective suggests that economies should grow without bound. Since unlimited growth in a world with fi nite resources is not possible, such a policy approach has severe constraints. Because the raw materials on which economies depend are extracted from the ecosystem and many of these materials are public goods or have characteristics of public goods, such as groundwater, they will become scarcer, if they are not already. Reliance on the market will undersupply public goods. While public goods are nonmarket goods by defi nition, traditional economic approaches may be inadequate to allocate them, necessitating policy interventions to ensure their supply (Daly and Farley, 2004, p. 224; Common and Stagl, 2005, pp. 308-355). In this context, Daly and Farley (2004, p. 297) indicate that:
In this chapter, we will consider the macroeconomic policy considerations related to groundwater at the national or state level. Previous chapters have focused on decisions and projects at the level of the individual or fi rm. This and the next chapters focus on economy-wide policy goals and their aggregate effects as a way to point toward policies and goals we might desire in a resource limited world. In this resource limited world, ecosystem-balancing feedback has already signaled (through climate change) that the global economies have used up excessive capacity in the atmosphere for waste emissions, and are now looking into disposing of a portion of these emissions underground. This chapter attempts to answer the question “In a macroeconomic context, what is the nature of policies and their consequent projects that may address human needs for groundwater, in this case within currently unknown ecosystem limits?” First, we will cover some key macroeconomic concepts and then reexamine some of the macrophysical aspects of groundwater that affect or could be affected by these policies.
