Ecological economics

Ecological economics

Overview

Image:Sustainable development.svg|right|The three pillars of sustainability. Clickable.|275px|thumb
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Environment (biophysical)
The biophysical environment is the combined modeling of the physical environment and the biological life forms within the environment, and includes all variables, parameters as well as conditions and modes inside the Earth's biosphere. The biophysical environment can be divided into two categories:...


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Equity (economics)
Equity is the concept or idea of fairness in economics, particularly as to taxation or welfare economics. More specifically it may refer to equal life chances regardless of identity, to provide all citizens with a basic minimum of income/goods/services or to increase funds and commitment for...


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Sustainable development
Sustainable development is a pattern of resource use, that aims to meet human needs while preserving the environment so that these needs can be met not only in the present, but also for generations to come...


poly 142 192 167 188 185 187 211 187 235 190 263 196 286 203 304 212 316 219 305 227 295 236 285 246 276 259 269 272 264 287 249 284 229 277 208 268 190 256 172 242 158 226 149 212 Bearable (Social ecology)
Social ecology
Social ecology is a philosophy developed by Murray Bookchin in the 1960s.It holds that present ecological problems are rooted in deep-seated social problems, particularly in dominatory hierarchical political and social systems. These have resulted in an uncritical acceptance of an overly...


poly 267 291 265 304 267 320 275 345 284 360 293 371 304 381 319 392 332 384 343 374 354 362 364 347 371 332 373 317 374 305 372 292 362 293 344 295 323 296 301 296 286 294 Viable (Environmental economics)
Environmental economics
Environmental economics is a subfield of economics concerned with environmental issues. Quoting from the National Bureau of Economic Research Environmental Economics program:...


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Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...


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Society
A society, or a human society, is a group of people related to each other through persistent relations, or a large social grouping sharing the same geographical or virtual territory, subject to the same political authority and dominant cultural expectations...



Ecological economics is a transdisciplinary field of academic research that aims to address the interdependence and coevolution of human economies
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...

 and natural ecosystem
Ecosystem
An ecosystem is a biological environment consisting of all the organisms living in a particular area, as well as all the nonliving , physical components of the environment with which the organisms interact, such as air, soil, water and sunlight....

s over time and space.
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Encyclopedia

Image:Sustainable development.svg|right|The three pillars of sustainability. Clickable.|275px|thumb
poly 138 194 148 219 164 240 182 257 219 277 263 291 261 311 264 331 272 351 283 366 300 383 316 394 287 408 261 417 224 424 182 426 154 423 119 415 87 403 58 385 40 368 24 347 17 328 13 309 16 286 26 263 43 240 64 224 84 212 107 202 Environment
Environment (biophysical)
The biophysical environment is the combined modeling of the physical environment and the biological life forms within the environment, and includes all variables, parameters as well as conditions and modes inside the Earth's biosphere. The biophysical environment can be divided into two categories:...


poly 324 219 334 226 343 234 351 242 359 251 366 263 371 276 375 287 400 279 417 272 438 263 453 252 466 241 477 229 488 214 497 193 482 189 463 188 423 188 398 191 376 196 352 204 Equitable
Equity (economics)
Equity is the concept or idea of fairness in economics, particularly as to taxation or welfare economics. More specifically it may refer to equal life chances regardless of identity, to provide all citizens with a basic minimum of income/goods/services or to increase funds and commitment for...


poly 319 221 330 229 337 235 347 244 357 258 365 270 371 287 358 289 344 291 321 292 303 292 284 290 268 288 272 275 278 261 287 249 297 239 Sustainable
Sustainable development
Sustainable development is a pattern of resource use, that aims to meet human needs while preserving the environment so that these needs can be met not only in the present, but also for generations to come...


poly 142 192 167 188 185 187 211 187 235 190 263 196 286 203 304 212 316 219 305 227 295 236 285 246 276 259 269 272 264 287 249 284 229 277 208 268 190 256 172 242 158 226 149 212 Bearable (Social ecology)
Social ecology
Social ecology is a philosophy developed by Murray Bookchin in the 1960s.It holds that present ecological problems are rooted in deep-seated social problems, particularly in dominatory hierarchical political and social systems. These have resulted in an uncritical acceptance of an overly...


poly 267 291 265 304 267 320 275 345 284 360 293 371 304 381 319 392 332 384 343 374 354 362 364 347 371 332 373 317 374 305 372 292 362 293 344 295 323 296 301 296 286 294 Viable (Environmental economics)
Environmental economics
Environmental economics is a subfield of economics concerned with environmental issues. Quoting from the National Bureau of Economic Research Environmental Economics program:...


poly 501 193 519 197 541 205 561 215 582 228 604 248 616 267 623 286 626 305 623 326 617 343 607 359 596 373 580 386 563 397 538 409 517 417 494 422 468 425 432 426 413 424 396 421 375 416 353 409 335 401 323 394 335 386 349 372 360 359 374 331 377 313 377 299 376 290 388 288 410 280 458 256 481 233 Economic
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...


poly 141 188 139 173 143 147 152 126 169 107 191 88 216 75 242 65 280 55 310 53 352 54 379 60 415 71 447 88 461 99 475 112 488 128 496 147 500 162 500 176 500 189 471 185 452 183 410 185 369 194 337 206 319 216 305 208 279 197 257 191 230 185 199 183 199 182 199 183 Social
Society
A society, or a human society, is a group of people related to each other through persistent relations, or a large social grouping sharing the same geographical or virtual territory, subject to the same political authority and dominant cultural expectations...



Ecological economics is a transdisciplinary field of academic research that aims to address the interdependence and coevolution of human economies
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...

 and natural ecosystem
Ecosystem
An ecosystem is a biological environment consisting of all the organisms living in a particular area, as well as all the nonliving , physical components of the environment with which the organisms interact, such as air, soil, water and sunlight....

s over time and space. It is distinguished from environmental economics
Environmental economics
Environmental economics is a subfield of economics concerned with environmental issues. Quoting from the National Bureau of Economic Research Environmental Economics program:...

, which is the mainstream economic
Mainstream economics
Mainstream economics is a loose term used to refer to widely-accepted economics as taught in prominent universities and in contrast to heterodox economics...

 analysis of the environment, by its treatment of the economy as a subsystem of the ecosystem and its emphasis upon preserving natural capital
Natural capital
Natural capital is the extension of the economic notion of capital to goods and services relating to the natural environment. Natural capital is thus the stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future...

. One survey of German economists found that ecological and environmental economics are different schools of economic thought, with ecological economists emphasizing "strong" sustainability
Sustainability
Sustainability is the capacity to endure. For humans, sustainability is the long-term maintenance of well being, which has environmental, economic, and social dimensions, and encompasses the concept of union, an interdependent relationship and mutual responsible position with all living and non...

 and rejecting the proposition that natural capital can be substituted by human-made capital.

Ecological economics was founded in the works of Kenneth E. Boulding
Kenneth E. Boulding
Kenneth Ewart Boulding was an economist, educator, peace activist, poet, religious mystic, devoted Quaker, systems scientist, and interdisciplinary philosopher. He was cofounder of General Systems Theory and founder of numerous ongoing intellectual projects in economics and social science. He was...

, Nicholas Georgescu-Roegen
Nicholas Georgescu-Roegen
Nicholas Georgescu-Roegen, born Nicolae Georgescu was a Romanian mathematician, statistician and economist, best known for his 1971 magnum opus The Entropy Law and the Economic Process, which situated the view that the second law of thermodynamics, i.e., that usable "free energy" tends to disperse...

, Herman Daly
Herman Daly
Herman Daly is an American ecological economist and professor at the School of Public Policy of University of Maryland, College Park in the United States....

, Robert Costanza
Robert Costanza
Robert Costanza is an American ecological economist is a University Professor of Sustainability at Portland State University in Oregon.- Biography :Robert Costanza was born in Pittsburgh, Pennsylvania....

, and others. The related field of green economics
Green economy
A green economy is one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities - United Nations Environment Programme...

 is, in general, a more politically applied form of the subject.

According to ecological economist Malte Faber, ecological economics is defined by its focus on nature, justice, and time. Issues of intergenerational equity
Intergenerational equity
Intergenerational equity in economic, psychological, and sociological contexts, is the concept or idea of fairness or justice in relationships between children, youth, adults and seniors, particularly in terms of treatment and interactions. It has been studied in environmental and sociological...

, irreversibility
Irreversibility
In science, a process that is not reversible is called irreversible. This concept arises most frequently in thermodynamics, as applied to processes....

 of environmental change, uncertainty
Uncertainty
Uncertainty is a term used in subtly different ways in a number of fields, including physics, philosophy, statistics, economics, finance, insurance, psychology, sociology, engineering, and information science...

 of long-term outcomes, and sustainable development
Sustainable development
Sustainable development is a pattern of resource use, that aims to meet human needs while preserving the environment so that these needs can be met not only in the present, but also for generations to come...

 guide ecological economic analysis and valuation. Ecological economists have questioned fundamental mainstream economic approaches such as cost-benefit analysis
Cost-benefit analysis
Cost–benefit analysis , sometimes called benefit–cost analysis , is a systematic process for calculating and comparing benefits and costs of a project for two purposes: to determine if it is a sound investment , to see how it compares with alternate projects...

, and the separability of economic values from scientific research, contending that economics is unavoidably normative
Normative ethics
Normative ethics is the study of ethical action. It is the branch of philosophical ethics that investigates the set of questions that arise when considering how one ought to act, morally speaking...

 rather than positive
Positive economics
Positive economics is the branch of economics that concerns the description and explanation of economic phenomena. It focuses on facts and cause-and-effect behavioral relationships and includes the development and testing of economics theories...

 (empirical). Positional analysis, which attempts to incorporate time and justice issues, is proposed as an alternative.

Ecological economics includes the study of the metabolism of society, that is, the study of the flows of energy and materials that enter and exit the economic system. This subfield may also be referred to as biophysical economics, bioeconomics
Bioeconomics
Bioeconomics is closely related to the early development of theories in fisheries economics, initially in the mid 1950s by Canadian economists Scott Gordon and Anthony Scott...

, and has links with the applied science of industrial symbiosis
Industrial symbiosis
Industrial symbiosis can be defined as sharing of services, utility, and by-product resources among diverse industrial actors in order to add value, reduce costs and improve the environment. Industrial symbiosis is a subset of industrial ecology, with a particular focus on material and energy...

. Ecological economics is based on a conceptual model of the economy connected to, and sustained by, a flow of energy, materials, and ecosystem services. Analysts from a variety of disciplines have conducted research on the economy-environment relationship, with concern for energy and material flows and sustainability, environmental quality
Environmental quality
Environmental quality is a set of properties and characteristics of the environment, either generalized or local, as they impinge on human beings and other organisms...

, and economic development.

Nature and ecology



A simple circular flow of income
Circular flow of income
In economics, the terms circular flow of income or circular flow refer to a simple economic model which describes the reciprocal circulation of income between producers and consumers...

 diagram is replaced in ecological economics by a more complex flow diagram reflecting the input of solar energy, which sustains natural inputs and environmental services which are then used as units of production
Production, costs, and pricing
The following outline is provided as an overview of and topical guide to industrial organization:Industrial organization – describes the behavior of firms in the marketplace with regard to production, pricing, employment and other decisions...

. Once consumed, natural inputs pass out of the economy as pollution and waste. The potential of an environment to provide services and materials is referred to as an "environment's source function", and this function is depleted as resources are consumed or pollution contaminates the resources. The "sink function" describes an environment's ability to absorb and render harmless waste and pollution: when waste output exceeds the limit of the sink function, long-term damage occurs. Some persistent pollutants, such as some organic pollutants and nuclear waste are absorbed very slowly or not at all; ecological economists emphasize minimizing "cumulative pollutants". Pollutants affect human health and the health of the climate.

The economic value of natural capital and ecosystem services
Ecosystem services
Humankind benefits from a multitude of resources and processes that are supplied by natural ecosystems. Collectively, these benefits are known as ecosystem services and include products like clean drinking water and processes such as the decomposition of wastes...

 is accepted by mainstream environmental economics, but is emphasized as especially important in ecological economics. Ecological economists may begin by estimating how to maintain a stable environment before assessing the cost in dollar terms. Ecological economist Robert Costanza
Robert Costanza
Robert Costanza is an American ecological economist is a University Professor of Sustainability at Portland State University in Oregon.- Biography :Robert Costanza was born in Pittsburgh, Pennsylvania....

 led an attempted valuation of the global ecosystem in 1997. Initially published in Nature, the article concluded on $33 trillion with a range from $16 trillion to $54 trillion (in 1997, total global GDP was $27 trillion). Half of the value went to nutrient cycling. The open oceans, continental shelves, and estuaries had the highest total value, and the highest per-hectare values went to estuaries, swamps/floodplains, and seagrass/algae beds. The work was criticized by articles in Ecological Economics Volume 25, Issue 1, but the critics acknowledged the positive potential for economic valuation of the global ecosystem.

The Earth's carrying capacity
Carrying capacity
The carrying capacity of a biological species in an environment is the maximum population size of the species that the environment can sustain indefinitely, given the food, habitat, water and other necessities available in the environment...

 is a central issue in ecological economics. Early economists such as Thomas Malthus
Thomas Malthus
The Reverend Thomas Robert Malthus FRS was an English scholar, influential in political economy and demography. Malthus popularized the economic theory of rent....

 pointed out the finite carrying capacity of the earth, which was also central to the MIT study Limits to Growth
Limits to Growth
The Limits to Growth is a 1972 book modeling the consequences of a rapidly growing world population and finite resource supplies, commissioned by the Club of Rome. Its authors were Donella H. Meadows, Dennis L. Meadows, Jørgen Randers, and William W. Behrens III. The book used the World3 model to...

. Diminishing returns
Diminishing returns
In economics, diminishing returns is the decrease in the marginal output of a production process as the amount of a single factor of production is increased, while the amounts of all other factors of production stay constant.The law of diminishing returns In economics, diminishing returns (also...

 suggest that productivity increases will slow if major technological progress is not made. Food production may become a problem, as erosion
Erosion
Erosion is when materials are removed from the surface and changed into something else. It only works by hydraulic actions and transport of solids in the natural environment, and leads to the deposition of these materials elsewhere...

, an impending water crisis
Water crisis
Water crisis is a general term used to describe a situation where the available water within a region is less than the region's demand. The term has been used to describe the availability of potable water in a variety of regions by the United Nations and other world organizations...

, and soil salinity (from irrigation
Irrigation
Irrigation may be defined as the science of artificial application of water to the land or soil. It is used to assist in the growing of agricultural crops, maintenance of landscapes, and revegetation of disturbed soils in dry areas and during periods of inadequate rainfall...

) reduce the productivity of agriculture. Ecological economists argue that industrial agriculture
Industrial agriculture
Industrial farming is a form of modern farming that refers to the industrialized production of livestock, poultry, fish, and crops. The methods of industrial agriculture are technoscientific, economic, and political...

, which exacerbates these problems, is not sustainable agriculture
Sustainable agriculture
Sustainable agriculture is the practice of farming using principles of ecology, the study of relationships between organisms and their environment...

, and are generally inclined favorably to organic farming
Organic farming
Organic farming is the form of agriculture that relies on techniques such as crop rotation, green manure, compost and biological pest control to maintain soil productivity and control pests on a farm...

, which also reduces the output of carbon.

Global wild fisheries are believed to have peaked and begun a decline, with valuable habitat such as estuaries in critical condition. The aquaculture
Aquaculture
Aquaculture, also known as aquafarming, is the farming of aquatic organisms such as fish, crustaceans, molluscs and aquatic plants. Aquaculture involves cultivating freshwater and saltwater populations under controlled conditions, and can be contrasted with commercial fishing, which is the...

 or farming of piscivorous fish, like salmon
Salmon
Salmon is the common name for several species of fish in the family Salmonidae. Several other fish in the same family are called trout; the difference is often said to be that salmon migrate and trout are resident, but this distinction does not strictly hold true...

, does not help solve the problem because they need to be fed products from other fish. Studies have shown that salmon farming
Aquaculture of salmon
Salmon, along with carp, are the two most important fish groups in aquaculture. In 2007, the aquaculture of salmon and salmon trout was worth US$10.7 billion. The most commonly farmed salmon is the Atlantic salmon. Other commonly farmed fish groups include tilapia, catfish, sea bass, bream and...

 has major negative impacts on wild salmon, as well as the forage fish
Forage fish
Forage fish, also called prey fish or bait fish, are small fish which are preyed on by larger predators for food. Predators include other larger fish, seabirds and marine mammals. Typical ocean forage fish feed near the base of the food chain on plankton, often by filter feeding...

 that need to be caught to feed them.

Since animal
Animal
Animals are a major group of multicellular, eukaryotic organisms of the kingdom Animalia or Metazoa. Their body plan eventually becomes fixed as they develop, although some undergo a process of metamorphosis later on in their life. Most animals are motile, meaning they can move spontaneously and...

s are higher on the trophic level
Trophic level
The trophic level of an organism is the position it occupies in a food chain. The word trophic derives from the Greek τροφή referring to food or feeding. A food chain represents a succession of organisms that eat another organism and are, in turn, eaten themselves. The number of steps an organism...

, they are less efficient sources of food energy. Reduced consumption of meat would reduce the demand for food, but as nations develop, they tend to adopt high-meat diets similar to that of the United States. Genetically modified food
Genetically modified food
Genetically modified foods are foods derived from genetically modified organisms . Genetically modified organisms have had specific changes introduced into their DNA by genetic engineering techniques...

 (GMF) a conventional solution to the problem, presents numerous problems – Bt corn produces its own Bacillus thuringiensis
Bacillus thuringiensis
Bacillus thuringiensis is a Gram-positive, soil-dwelling bacterium, commonly used as a biological pesticide; alternatively, the Cry toxin may be extracted and used as a pesticide. B...

, but the pest resistance is believed to be only a matter of time. The overall effect of GMF on yields is contentious, with the USDA and FAO acknowledging that GMFs do not necessarily have higher yields and may even have reduced yields.

Global warming
Global warming
Global warming refers to the rising average temperature of Earth's atmosphere and oceans and its projected continuation. In the last 100 years, Earth's average surface temperature increased by about with about two thirds of the increase occurring over just the last three decades...

 is now widely acknowledged as a major issue, with all national scientific academies expressing agreement
Scientific opinion on climate change
The predominant scientific opinion on climate change is that the Earth is in an ongoing phase of global warming primarily caused by an enhanced greenhouse effect due to the anthropogenic release of carbon dioxide and other greenhouse gases...

 on the importance of the issue. As the population growth intensifies and energy demand increases, the world faces an energy crisis
Energy crisis
An energy crisis is any great bottleneck in the supply of energy resources to an economy. In popular literature though, it often refers to one of the energy sources used at a certain time and place, particularly those that supply national electricity grids or serve as fuel for vehicles...

. Some economists and scientists forecast a global ecological crisis if energy use is not contained – the Stern report is an example. The disagreement has sparked a vigorous debate on issue of discounting and intergenerational equity.

Ethics


Mainstream economics has attempted to become a value-free 'hard science', but ecological economists argue that value-free economics is generally not realistic. Ecological economics is more willing to entertain alternative conceptions of utility, efficiency, and cost-benefits such as positional analysis or multi-criteria analysis. Ecological economics is typically viewed as economics for sustainable development, and may have goals similar to green politics
Green politics
Green politics is a political ideology that aims for the creation of an ecologically sustainable society rooted in environmentalism, social liberalism, and grassroots democracy...

.

Schools of thought


Various competing schools of thought exist in the field. Some are close to resource and environmental economics while others are far more heterodox in outlook. An example of the latter is the European Society for Ecological Economics. An example of the former is the Swedish Beijer International Institute of Ecological Economics.

Differentiation from mainstream schools


In ecological economics, natural capital is added to the typical capital asset
Capital asset
The term capital asset has three unrelated technical definitions, and is also used in a variety of non-technical ways.*In financial economics, it refers to any asset used to make money, as opposed to assets used for personal enjoyment or consumption...

 analysis of land, labor, and financial capital. Ecological economics uses tools from mathematical economics
Mathematical economics
Mathematical economics is the application of mathematical methods to represent economic theories and analyze problems posed in economics. It allows formulation and derivation of key relationships in a theory with clarity, generality, rigor, and simplicity...

, but may apply them more closely to the natural world. Whereas mainstream economists tend to be technological optimists, ecological economists are inclined to be technological pessimists. They reason that the natural world has a limited carrying capacity and that its resources may run out. Since destruction of important environmental resources could be practically irreversible and catastrophic, ecological economists are inclined to justify cautionary measures based on the precautionary principle
Precautionary principle
The precautionary principle or precautionary approach states that if an action or policy has a suspected risk of causing harm to the public or to the environment, in the absence of scientific consensus that the action or policy is harmful, the burden of proof that it is not harmful falls on those...

.

The most cogent example of how the different theories treat similar assets is tropical rainforest
Tropical rainforest
A tropical rainforest is an ecosystem type that occurs roughly within the latitudes 28 degrees north or south of the equator . This ecosystem experiences high average temperatures and a significant amount of rainfall...

 ecosystems, most obviously the Yasuni
Yasuni
Yasuni is an area in Ecuador renowned for its extremely diverse wildlife. It has 616 species of trees, having the most species of tree of any forest in the world....

 region of Ecuador
Ecuador
Ecuador , officially the Republic of Ecuador is a representative democratic republic in South America, bordered by Colombia on the north, Peru on the east and south, and by the Pacific Ocean to the west. It is one of only two countries in South America, along with Chile, that do not have a border...

. While this area has substantial deposits of bitumen it is also one of the most diverse ecosystems on Earth and some estimates establish it has over 200 undiscovered medical substances in its genomes - most of which would be destroyed by logging the forest or mining the bitumen. Effectively, the instructional capital
Instructional capital
Instructional capital is a term used in educational administration after the 1960s, to reflect capital resulting from investment in producing learning materials....

 of the genomes is undervalued by both classical and neoclassical means which would view the rainforest primarily as a source of wood, oil/tar and perhaps food. Increasingly the carbon credit
Carbon credit
A carbon credit is a generic term for any tradable certificate or permit representing the right to emit one tonne of carbon dioxide or the mass of another greenhouse gas with a carbon dioxide equivalent equivalent to one tonne of carbon dioxide....

 for leaving the extremely carbon-intensive ("dirty") bitumen in the ground is also valued - the government of Ecuador set a price of US$350M for an oil lease with the intent of selling it to someone committed to never exercising it at all and instead preserving the rainforest. Bill Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...

, Paul Martin
Paul Martin
Paul Edgar Philippe Martin, PC , also known as Paul Martin, Jr. is a Canadian politician who was the 21st Prime Minister of Canada, as well as leader of the Liberal Party of Canada....

 and other former world leaders have become closely involved in this project which includes lobbying for the issue of International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...

 Special Drawing Rights
Special Drawing Rights
Special Drawing Rights are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund . Not a currency, SDRs instead represent a claim to currency held by IMF member countries for which they may be exchanged...

 to recognize the rainforest's value directly within the framework of the Bretton Woods institutions. If successful this would be a major victory for advocates of ecological economics as the new mainstream form of economics.

History and development


Early interest in ecology and economics dates back to the 1960s and the work by Kenneth Boulding and Herman Daly
Herman Daly
Herman Daly is an American ecological economist and professor at the School of Public Policy of University of Maryland, College Park in the United States....

, but the first meetings occurred in the 1980s. It began with a 1982 symposium in Sweden which was attended by people who would later be instrumental in the field, including Robert Costanza, Herman Daly, Charles Hall, Ann-Mari Jansson, Bruce Hannon, H.T. Odum, and David Pimentel. Most were ecosystem ecologists or mainstream environmental economists, with the exception of Daly. In 1987, Daly and Costanza edited an issue of Ecological Modeling to test the waters. A book titled Ecological Economics by Juan Martinez-Alier was published later that year. 1989 saw the foundation of the International Society for Ecological Economics
International Society for Ecological Economics
The International Society for Ecological Economics was founded in 1989 to promote Ecological Economics and assist ecological economists and related societes...

 and first publication of its journal Ecological Economics
Ecological economics
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by Elsevier
Elsevier
Elsevier is a publishing company which publishes medical and scientific literature. It is a part of the Reed Elsevier group. Based in Amsterdam, the company has operations in the United Kingdom, USA and elsewhere....

. Robert Costanza
Robert Costanza
Robert Costanza is an American ecological economist is a University Professor of Sustainability at Portland State University in Oregon.- Biography :Robert Costanza was born in Pittsburgh, Pennsylvania....

 was the first president of the society and first editor of the journal which is currently edited by Richard Howarth.

European conceptual founders include Nicholas Georgescu-Roegen
Nicholas Georgescu-Roegen
Nicholas Georgescu-Roegen, born Nicolae Georgescu was a Romanian mathematician, statistician and economist, best known for his 1971 magnum opus The Entropy Law and the Economic Process, which situated the view that the second law of thermodynamics, i.e., that usable "free energy" tends to disperse...

 (1971), William Kapp (1944) and Karl Polanyi
Karl Polanyi
Karl Paul Polanyi was a Hungarian philosopher, political economist and economic anthropologist known for his opposition to traditional economic thought and his book The Great Transformation...

 (1950). Some key concepts of what is now ecological economics are evident in the writings of E.F. Schumacher, whose book Small Is Beautiful
Small Is Beautiful
Small Is Beautiful: Economics As If People Mattered is a collection of essays by British economist E. F. Schumacher. The phrase "Small Is Beautiful" came from a phrase by his teacher Leopold Kohr...

 – A Study of Economics as if People Mattered
(1973) was published just a few years before the first edition of Herman Daly
Herman Daly
Herman Daly is an American ecological economist and professor at the School of Public Policy of University of Maryland, College Park in the United States....

's comprehensive and persuasive Steady-State Economics (1977). Other figures include ecologists C.S. Holling, H.T. Odum and Robert Costanza
Robert Costanza
Robert Costanza is an American ecological economist is a University Professor of Sustainability at Portland State University in Oregon.- Biography :Robert Costanza was born in Pittsburgh, Pennsylvania....

, biologist Gretchen Daily and physicist Robert Ayres. CUNY geography professor David Harvey
David Harvey (geographer)
David Harvey is the Distinguished Professor of Anthropology at the Graduate Center of the City University of New York . A leading social theorist of international standing, he received his PhD in Geography from University of Cambridge in 1961. Widely influential, he is among the top 20 most cited...

 explicitly added ecological concerns to political economic literature. This parallel development in political economy
Political economy
Political economy originally was the term for studying production, buying, and selling, and their relations with law, custom, and government, as well as with the distribution of national income and wealth, including through the budget process. Political economy originated in moral philosophy...

 has been continued by analysts such as sociologist John Bellamy Foster
John Bellamy Foster
John Bellamy Foster is a professor of sociology at the University of Oregon and also editor of Monthly Review, an independent socialist magazine. His writings have focused on political economy, environmental sociology, and Marxist theory...

.

The antecedents can be traced back to the Romantics of the 19th century as well as some Enlightenment
Age of Enlightenment
The Age of Enlightenment was an elite cultural movement of intellectuals in 18th century Europe that sought to mobilize the power of reason in order to reform society and advance knowledge. It promoted intellectual interchange and opposed intolerance and abuses in church and state...

 political economists of that era. Concerns over population were expressed by Thomas Malthus
Thomas Malthus
The Reverend Thomas Robert Malthus FRS was an English scholar, influential in political economy and demography. Malthus popularized the economic theory of rent....

, while John Stuart Mill
John Stuart Mill
John Stuart Mill was a British philosopher, economist and civil servant. An influential contributor to social theory, political theory, and political economy, his conception of liberty justified the freedom of the individual in opposition to unlimited state control. He was a proponent of...

 hypothesized that the "stationary state" of an economy was desirable, anticipating later insights of modern ecological economists, without having had their experience of the social and ecological costs of the dramatic post-World War II industrial expansion. As Martinez-Alier explores in his book the debate on energy in economic systems can also be traced into the 19th century e.g. Nobel prize-winning chemist, Frederick Soddy
Frederick Soddy
Frederick Soddy was an English radiochemist who explained, with Ernest Rutherford, that radioactivity is due to the transmutation of elements, now known to involve nuclear reactions. He also proved the existence of isotopes of certain radioactive elements...

 (1877–1956). Soddy criticized the prevailing belief of the economy as a perpetual motion machine, capable of generating infinite wealth — a criticism echoed by his intellectual heirs in the now emergent field of ecological economics.

The Romanian economist Nicholas Georgescu-Roegen
Nicholas Georgescu-Roegen
Nicholas Georgescu-Roegen, born Nicolae Georgescu was a Romanian mathematician, statistician and economist, best known for his 1971 magnum opus The Entropy Law and the Economic Process, which situated the view that the second law of thermodynamics, i.e., that usable "free energy" tends to disperse...

 (1906–1994), who was among Daly's teachers at Vanderbilt University
Vanderbilt University
Vanderbilt University is a private research university located in Nashville, Tennessee, United States. Founded in 1873, the university is named for shipping and rail magnate "Commodore" Cornelius Vanderbilt, who provided Vanderbilt its initial $1 million endowment despite having never been to the...

, provided ecological economics with a modern conceptual framework based on the material and energy flows of economic production and consumption
Consumption (economics)
Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently...

. His magnum opus, The Entropy Law and the Economic Process (1971), has been highly influential.

Articles by Inge Ropke (2004, 2005) and Clive Spash (1999) cover the development and modern history of ecological economics and explain its differentiation from resource and environmental economics, as well as some of the controversy between American and European schools of thought. An article by Robert Costanza
Robert Costanza
Robert Costanza is an American ecological economist is a University Professor of Sustainability at Portland State University in Oregon.- Biography :Robert Costanza was born in Pittsburgh, Pennsylvania....

, David Stern, Lining He, and Chunbo Ma responded to a call by Mick Common to determine the foundational literature of ecological economics by using citation analysis to examine which books and articles have had the most influence on the development of the field.

Methodology



A primary objective of ecological economics (EE) is to ground economic thinking and practice in physical reality, especially in the laws of physics (particularly the laws of thermodynamics
Laws of thermodynamics
The four laws of thermodynamics summarize its most important facts. They define fundamental physical quantities, such as temperature, energy, and entropy, in order to describe thermodynamic systems. They also describe the transfer of energy as heat and work in thermodynamic processes...

) and in knowledge of biological systems. It accepts as a goal the improvement of human well-being through development, and seeks to ensure achievement of this through planning for the sustainable development of ecosystems and societies. Of course the terms development and sustainable development are far from lacking controversy. Richard Norgaard argues traditional economics has hi-jacked the development terminology in his book Development Betrayed.

Well-being in ecological economics is also differentiated from welfare as found in mainstream economics and the 'new welfare economics' from the 1930s which informs resource and environmental economics. This entails a limited preference utilitarian conception of value i.e., Nature is valuable to our economies, that is because people will pay for its services such as clean air, clean water, encounters with wilderness, etc.

Ecological economics is distinguishable from neoclassical economics
Neoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...

 primarily by its assertion that the economy is embedded within an environmental system. Ecology deals with the energy and matter transactions of life and the Earth, and the human economy is by definition contained within this system. Ecological economists argue that neoclassical economics
Neoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...

 has ignored the environment, at best considering it to be a subset of the human economy.

The neoclassical view ignores much of what the natural sciences have taught us about the contributions of nature to the creation of wealth e.g., the planetary endowment of scarce matter and energy, along with the complex and biologically diverse ecosystems that provide goods and ecosystem services
Ecosystem services
Humankind benefits from a multitude of resources and processes that are supplied by natural ecosystems. Collectively, these benefits are known as ecosystem services and include products like clean drinking water and processes such as the decomposition of wastes...

 directly to human communities: micro- and macro-climate regulation, water recycling, water purification, storm water regulation, waste absorption, food and medicine production, pollination, protection from solar and cosmic radiation, the view of a starry night sky, etc.

There has then been a move to regard such things as natural capital
Natural capital
Natural capital is the extension of the economic notion of capital to goods and services relating to the natural environment. Natural capital is thus the stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future...

 and ecosystems functions as goods and services. However, this is far from uncontroversial within ecology or ecological economics due to the potential for narrowing down values to those found in mainstream economics and the danger of merely regarding Nature as a commodity. This has been referred to as ecologists 'selling out on Nature'. There is then a concern that ecological economics has failed to learn from the extensive literature in environmental ethics
Environmental ethics
Environmental ethics is the part of environmental philosophy which considers extending the traditional boundaries of ethics from solely including humans to including the non-human world...

 about how to structure a plural value system.

Allocation of resources


Resource and neoclassical economics
Neoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...

 focus primarily on the efficient allocation of resources, and less on two other fundamental economic problems which are central to ecological economics: distribution
Distribution (economics)
Distribution in economics refers to the way total output, income, or wealth is distributed among individuals or among the factors of production .. In general theory and the national income and product accounts, each unit of output corresponds to a unit of income...

 (equity
Equity (economics)
Equity is the concept or idea of fairness in economics, particularly as to taxation or welfare economics. More specifically it may refer to equal life chances regardless of identity, to provide all citizens with a basic minimum of income/goods/services or to increase funds and commitment for...

) and the scale of the economy relative to the ecosystems upon which it is reliant. Ecological Economics also makes a clear distinction between growth (quantitative increase in economic output) and development (qualitative improvement of the quality of life
Quality of life
The term quality of life is used to evaluate the general well-being of individuals and societies. The term is used in a wide range of contexts, including the fields of international development, healthcare, and politics. Quality of life should not be confused with the concept of standard of...

) while arguing that neoclassical economics
Neoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...

 confuses the two. Ecological economists point out that, beyond modest levels, increased per-capita consumption
Consumption (economics)
Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently...

 (the typical economic measure of "standard of living") does not necessarily lead to improvement in human well-being, while this same consumption can have harmful effects on the environment and broader societal well-being.

Strong versus weak sustainability


Ecological economics challenges the conventional approach towards natural resources, claiming that it undervalues natural capital by considering it as interchangeable with human-made capital—labor and technology.

The potential for the substitution of man-made capital for natural capital is an important debate in ecological economics and the economics of sustainability.
There is a continuum of views among economists between the strongly neoclassical positions of Robert Solow
Robert Solow
Robert Merton Solow is an American economist particularly known for his work on the theory of economic growth that culminated in the exogenous growth model named after him...

 and Martin Weitzman
Martin Weitzman
Martin Lawrence "Marty" Weitzman is a well known-economist and a Professor of Economics at Harvard University. He is among the most influential economists in the world according to IDEAS/RePEc...

, at one extreme and the ‘entropy pessimists’, notably Nicholas Georgescu-Roegen
Nicholas Georgescu-Roegen
Nicholas Georgescu-Roegen, born Nicolae Georgescu was a Romanian mathematician, statistician and economist, best known for his 1971 magnum opus The Entropy Law and the Economic Process, which situated the view that the second law of thermodynamics, i.e., that usable "free energy" tends to disperse...

 and Herman Daly
Herman Daly
Herman Daly is an American ecological economist and professor at the School of Public Policy of University of Maryland, College Park in the United States....

, at the other.

Neoclassical economists tend to maintain that man-made capital can, in principle, replace all types of natural capital. This is known as the weak sustainability view, essentially that every technology can be improved upon or replaced by innovation, and that there is a substitute for any and all scarce materials.

At the other extreme, the strong sustainability view argues that the stock of natural resources and ecological functions are irreplaceable. From the premises of strong sustainability, it follows that economic policy
Economic policy
Economic policy refers to the actions that governments take in the economic field. It covers the systems for setting interest rates and government budget as well as the labor market, national ownership, and many other areas of government interventions into the economy.Such policies are often...

 has a fiduciary responsibility to the greater ecological world, and that sustainable development must therefore take a different approach to valuing natural resources and ecological functions.

Energy economics



A key concept of energy economics is net energy gain
Net energy gain
Net Energy Gain is a concept used in energy economics that refers to the difference between the energy expended to harvest an energy source and the amount of energy gained from that harvest. The net energy gain, which can be expressed in joules, differs from the net financial gain that may result...

, which recognizes that all energy requires energy to produce. To be useful the energy return on energy invested (EROEI
EROEI
In physics, energy economics and ecological energetics, energy returned on energy invested ; or energy return on investment , is the ratio of the amount of usable energy acquired from a particular energy resource to the amount of energy expended to obtain that energy resource...

) has to be greater than one. The net energy gain from production coal, oil and gas has declined over time as the easiest to produce sources have been most heavily depleted.

Ecological economics generally rejects the view of energy economics
Energy economics
Energy economics is a broad scientific subject area which includes topics related to supply and use of energy in societies. Due to diversity of issues and methods applied and shared with a number of academic disciplines, energy economics does not present itself as a self contained academic...

 that growth in the energy supply is related directly to well being, focusing instead on biodiversity
Biodiversity
Biodiversity is the degree of variation of life forms within a given ecosystem, biome, or an entire planet. Biodiversity is a measure of the health of ecosystems. Biodiversity is in part a function of climate. In terrestrial habitats, tropical regions are typically rich whereas polar regions...

 and creativity
Creativity
Creativity refers to the phenomenon whereby a person creates something new that has some kind of value. What counts as "new" may be in reference to the individual creator, or to the society or domain within which the novelty occurs...

 - or natural capital and individual capital
Individual capital
Individual capital, also known as human capital, comprises inalienable or personal traits of persons, tied to their bodies and available only through their own free will, such as skill, creativity, enterprise, courage, capacity for moral example, non-communicable wisdom, invention or empathy,...

, in the terminology sometimes adopted to describe these economically. In practice, ecological economics focuses primarily on the key issues of uneconomic growth
Uneconomic growth
Uneconomic growth, in human development theory, welfare economics , and some forms of ecological economics, is economic growth that reflects or creates a decline in the quality of life. The concept is attributed to the economist Herman Daly, though other theorists can also be credited for the...

 and quality of life
Quality of life
The term quality of life is used to evaluate the general well-being of individuals and societies. The term is used in a wide range of contexts, including the fields of international development, healthcare, and politics. Quality of life should not be confused with the concept of standard of...

. Ecological economists are inclined to acknowledge that much of what is important in human well-being is not analyzable from a strictly economic standpoint and suggests an interdisciplinary approach combining social and natural sciences as a means to address this.

Thermoeconomics is based on the proposition that the role of energy in biological evolution should be defined and understood through the second law of thermodynamics
Second law of thermodynamics
The second law of thermodynamics is an expression of the tendency that over time, differences in temperature, pressure, and chemical potential equilibrate in an isolated physical system. From the state of thermodynamic equilibrium, the law deduced the principle of the increase of entropy and...

, but also in terms of such economic criteria as productivity
Productivity
Productivity is a measure of the efficiency of production. Productivity is a ratio of what is produced to what is required to produce it. Usually this ratio is in the form of an average, expressing the total output divided by the total input...

, efficiency, and especially the costs and benefits (or profitability) of the various mechanisms for capturing and utilizing available energy to build biomass and do work. As a result, thermoeconomics are often discussed in the field of ecological economics, which itself is related to the fields of sustainability and sustainable development.

Exergy
Exergy
In thermodynamics, the exergy of a system is the maximum useful work possible during a process that brings the system into equilibrium with a heat reservoir. When the surroundings are the reservoir, exergy is the potential of a system to cause a change as it achieves equilibrium with its...

 analysis is performed in the field of industrial ecology
Industrial ecology
Industrial Ecology is the study of material and energy flows through industrial systems. The global industrial economy can be modeled as a network of industrial processes that extract resources from the Earth and transform those resources into commodities which can be bought and sold to meet the...

 to use energy more efficiently. The term exergy, was coined by Zoran Rant
Zoran Rant
Zoran Rant was a Slovene mechanical engineer, scientist and professor, associate member of SAZU. He invented terms known today as "exergy and anergy"....

 in 1956, but the concept was developed by J. Willard Gibbs
Josiah Willard Gibbs
Josiah Willard Gibbs was an American theoretical physicist, chemist, and mathematician. He devised much of the theoretical foundation for chemical thermodynamics as well as physical chemistry. As a mathematician, he invented vector analysis . Yale University awarded Gibbs the first American Ph.D...

. In recent decades, utilization of exergy has spread outside of physics and engineering to the fields of industrial ecology, ecological economics, systems ecology
Systems ecology
Systems ecology is an interdisciplinary field of ecology, taking a holistic approach to the study of ecological systems, especially ecosystems. Systems ecology can be seen as an application of general systems theory to ecology. Central to the systems ecology approach is the idea that an ecosystem...

, and energetics
Energetics
Energetics is the study of energy under transformation. Because energy flows at all scales, from the quantum level to the biosphere and cosmos, energetics is a very broad discipline, encompassing for example thermodynamics, chemistry, biological energetics, biochemistry and ecological energetics...

.

Energy accounting and balance

Also see:Net energy gain
Net energy gain
Net Energy Gain is a concept used in energy economics that refers to the difference between the energy expended to harvest an energy source and the amount of energy gained from that harvest. The net energy gain, which can be expressed in joules, differs from the net financial gain that may result...


An energy balance
Energy accounting
Energy accounting is a system used within industry, where measuring and analyzing the energy consumption of different activities is done to improve energy efficiency.-Energy management:...

 can be used to track energy through a system, and is a very useful tool for determining resource use and environmental impacts, using the First and Second laws of thermodynamics
Thermodynamics
Thermodynamics is a physical science that studies the effects on material bodies, and on radiation in regions of space, of transfer of heat and of work done on or by the bodies or radiation...

, to determine how much energy is needed at each point in a system, and in what form that energy is a cost in various environmental issues. The energy accounting system keeps track of energy in, energy out, and non-useful energy versus work done, and transformations within the system.

Scientists have written and speculated on different aspects of energy accounting.

Environmental services


A study was carried out by Costanza and colleagues to determine the 'price' of the services provided by the environment. This was determined by averaging values obtained from a range of studies conducted in very specific context and then transferring these without regard to that context. Dollar figures were averaged to a per hectare number for different types of ecosystem e.g. wetlands, oceans. A total was then produced which came out at 33 trillion US dollars (1997 values), more than twice the total GDP of the world at the time of the study. This study was criticized by pre-ecological and even some environmental economists
Environmental economics
Environmental economics is a subfield of economics concerned with environmental issues. Quoting from the National Bureau of Economic Research Environmental Economics program:...

 - for being inconsistent with assumptions of financial capital
Financial capital
Financial capital can refer to money used by entrepreneurs and businesses to buy what they need to make their products or provide their services or to that sector of the economy based on its operation, i.e. retail, corporate, investment banking, etc....

 valuation
Valuation (finance)
In finance, valuation is the process of estimating what something is worth. Items that are usually valued are a financial asset or liability. Valuations can be done on assets or on liabilities...

 - and ecological economists - for being inconsistent with an ecological economics focus on biological and physical indicators. See also ecosystem valuation
Ecosystem valuation
Ecosystem valuation is a widely used tool in determining the impact of human activities on an environmental system, by assigning an economic value to an ecosystem or its ecosystem services.-Value of ecosystem services:...

 and price of life
Price of Life
Price of Life is a short documentary exploring the life of Robert Childs, a former Philadelphia drug dealer and gangster.- Plot outline :Witness the transformation of an ex-convict into a leader of community change in Philadelphia...

.


The whole idea of treating ecosystems as goods and services to be valued in monetary terms remains controversial to some. A common objection is that life is precious or priceless, but this demonstrably degrades to it being worthless under the assumptions of any branch of economics. Reducing human bodies to financial values is a necessary part of every branch of economics and not always in the direct terms of insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...

 or wages. Economics, in principle, assumes that conflict is reduced by agreeing on voluntary contractual relations and prices instead of simply fighting or coercing or tricking others into providing goods or services. In doing so, a provider agrees to surrender time and take bodily risks and other (reputation, financial) risks. Ecosystems are no different than other bodies economically except insofar as they are far less replaceable than typical labour or commodities.

Despite these issues, many ecologists and conservation biologists are pursuing ecosystem valuation
Ecosystem valuation
Ecosystem valuation is a widely used tool in determining the impact of human activities on an environmental system, by assigning an economic value to an ecosystem or its ecosystem services.-Value of ecosystem services:...

. Biodiversity
Biodiversity
Biodiversity is the degree of variation of life forms within a given ecosystem, biome, or an entire planet. Biodiversity is a measure of the health of ecosystems. Biodiversity is in part a function of climate. In terrestrial habitats, tropical regions are typically rich whereas polar regions...

 measures in particular appear to be the most promising way to reconcile financial and ecological values, and there are many active efforts in this regard. The growing field of biodiversity finance began to emerge in 2008 in response to many specific proposals such as the Ecuadoran Yasuni proposal or similar ones in the Congo
Republic of the Congo
The Republic of the Congo , sometimes known locally as Congo-Brazzaville, is a state in Central Africa. It is bordered by Gabon, Cameroon, the Central African Republic, the Democratic Republic of the Congo , the Angolan exclave province of Cabinda, and the Gulf of Guinea.The region was dominated by...

. US news outlets treated the stories as a "threat" to "drill a park" reflecting a previously dominant view that NGOs and governments had the primary responsibility to protect ecosystems. However Peter Barnes
Peter Barnes
Peter Barnes was an English Olivier Award-winning playwright and screenwriter. His most famous work is the play The Ruling Class, which was made into a 1972 film for which Peter O'Toole received an Oscar nomination....

 and other commentators have recently argued that a guardianship/trustee/commons model is far more effective and takes the decisions out of the political realm.

Commodification of other ecological relations as in carbon credit
Carbon credit
A carbon credit is a generic term for any tradable certificate or permit representing the right to emit one tonne of carbon dioxide or the mass of another greenhouse gas with a carbon dioxide equivalent equivalent to one tonne of carbon dioxide....

 and direct payments to farmers to preserve ecosystem services
Ecosystem services
Humankind benefits from a multitude of resources and processes that are supplied by natural ecosystems. Collectively, these benefits are known as ecosystem services and include products like clean drinking water and processes such as the decomposition of wastes...

 are likewise examples that permit private parties to play more direct roles protecting biodiversity. The United Nations
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...

 Food and Agriculture Organization
Food and Agriculture Organization
The Food and Agriculture Organization of the United Nations is a specialised agency of the United Nations that leads international efforts to defeat hunger. Serving both developed and developing countries, FAO acts as a neutral forum where all nations meet as equals to negotiate agreements and...

 achieved near-universal agreement in 2008 that such payments directly valuing ecosystem preservation and encouraging permaculture
Permaculture
Permaculture is an approach to designing human settlements and agricultural systems that is modeled on the relationships found in nature. It is based on the ecology of how things interrelate rather than on the strictly biological concerns that form the foundation of modern agriculture...

 were the only practical way out of a food crisis. The holdouts were all English-speaking countries that export GMO
GMO
A GMO is a genetically modified organism.GMO may also refer to:* Gell-Mann–Okubo mass formula in particle physics* General Medical Officer, a designation for United States Army soldiers* Generalised molecular orbital theory, in chemistry...

s and promote "free trade
Free trade
Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...

" agreements that facilitate their own control of the world transport network: The US, UK, Canada and Australia.

Externalities


Ecological economics is founded upon the view that the neoclassical economics (NCE) assumption that environmental and community costs and benefits are mutually canceling "externalities" is not warranted. Juan Martinez Alier, for instance shows that the bulk of consumers are automatically excluded from having an impact upon the prices of commodities, as these consumers are future generations who have not been born yet. The assumptions behind future discounting, which assume that future goods will be cheaper than present goods, has been criticized by Fred Pearce and by the recent Stern Report (although the Stern report itself does employ discounting and has been criticized by ecological economists).

Concerning these externalities, Paul Hawken
Paul Hawken
Paul Hawken is an environmentalist, entrepreneur, and author.-Life:Paul Hawken had a Swedish grandmother and a Scottish grandfather with a farm. His father worked at UC Berkeley...

 argues that the only reason why goods produced unsustainably are usually cheaper than goods produced sustainably is due to a hidden subsidy, paid by the non-monetized human environment, community or future generations. These arguments are developed further by Hawken, Amory and Hunter Lovins in "Natural Capitalism: Creating the Next Industrial Revolution".

Ecological-Economic Modeling


Mathematical modeling is a powerful tool that is used in ecological economic analysis. Various approaches and techniques include : evolutionary, input-output, neo-Austrian modeling, entropy
Entropy
Entropy is a thermodynamic property that can be used to determine the energy available for useful work in a thermodynamic process, such as in energy conversion devices, engines, or machines. Such devices can only be driven by convertible energy, and have a theoretical maximum efficiency when...

 and thermodynamic models, multi-criteria
Multi-Criteria Decision Analysis
Multiple-criteria decision-making or multiple-criteria decision analysis is a sub-discipline of operations research that explicitly considers multiple criteria in decision-making environments. Whether in our daily lives or in professional settings, there are typically multiple conflicting criteria...

, and agent-based modeling, the environmental Kuznets curve
Kuznets curve
A Kuznets curve is the graphical representation of Simon Kuznets' hypothesis that economic inequality increases over time while a country is developing, and then after a certain average income is attained, inequality begins to decrease....

. Systems Dynamics and GIS are tools used in spatial dynamic landscape simulation modeling.

See also


Further reading

  • Common, M. and Stagl, S. 2005. Ecological Economics: An Introduction. New York: Cambridge University Press.
  • Costanza, R., Cumberland, J. H.,Daly, H., Goodland, R., Norgaard, R. B. (1997). An Introduction to Ecological Economics, St. Lucie Press and International Society for Ecological Economics, (e-book at the Encyclopedia of Earth)
  • Costanza, R., Stern, D. I., He, L., Ma, C. (2004). Influential publications in ecological economics: a citation analysis. Ecological Economics 50(3-4): 261-292. - http://econpapers.repec.org/article/eeeecolec/v_3A50_3Ay_3A2004_3Ai_3A3-4_3Ap_3A261-292.htm
  • Daly, H. and Townsend, K. (eds.) 1993. Valuing The Earth: Economics, Ecology, Ethics. Cambridge, Mass.; London, England: MIT Press.
  • Georgescu-Roegen, N. 1975. Energy and economic myths. Southern Economic Journal 41: 347-381.
  • Krishnan R, Harris JM, Goodwin NR. (1995). A Survey of Ecological Economics. Island Press. ISBN 1559634111, 9781559634113.
  • Martinez-Alier, J. (1990) Ecological Economics: Energy, Environment and Society. Oxford, England: Basil Blackwell.
  • Martinez-Alier, J., Ropke, I. eds. (2008). Recent Developments in Ecological Economics, 2 vols., E. Elgar, Cheltenham, UK.
  • Røpke, I. (2004) The early history of modern ecological economics. Ecological Economics 50(3-4): 293-314.
  • Røpke, I. (2005) Trends in the development of ecological economics from the late 1980s to the early 2000s. Ecological Economics 55(2): 262-290.
  • Spash, C. L. (1999) The development of environmental thinking in economics. Environmental Values 8(4): 413-435.
  • Stern, D. I. (1997) Limits to substitution and irreversibility in production and consumption: A neoclassical interpretation of ecological economics. Ecological Economics 21(3): 197-215. - http://econpapers.repec.org/article/eeeecolec/v_3A21_3Ay_3A1997_3Ai_3A3_3Ap_3A197-215.htm
  • Tacconi, L. (2000) Biodiversity and Ecological Economics: Participation, Values, and Resource Management. London, UK: Earthscan Publications.
  • Vatn, A. (2005) Institutions and the Environment. Cheltenham: Edward Elgar.

External links

  • The International Society for Ecological Economics (ISEE) - http://www.ecoeco.org/
  • Earth Economics - http://eartheconomics.org
  • The academic journal, Ecological Economics - http://www.elsevier.com/locate/ecolecon
  • Ecological Economics Encyclopedia - http://www.ecoeco.org/education_encyclopedia.php
  • The US Society of Ecological Economics - http://www.ussee.org/
  • The Brazilian Society for Ecological Economics (ECOECO) - http://www.ecoeco.org.br/


Schools and institute:
  • The Gund Institute of Ecological Economics - http://www.uvm.edu/giee
  • Ecological Economics at Rensselaer Polytechnic Institute - http://www.economics.rpi.edu/ecological.html
  • The Beijer International Institute for Ecological Economics - http://www.beijer.kva.se/
  • The Green Economics Institute- http://www.greeneconomics.org.uk/publishes the

International Journal of Green Economics http://www.inderscience.com/ijge/

Environmental data:
  • EarthTrends World Resources Institute - http://earthtrends.wri.org/index.php
  • Eco-Economy Indicators: http://www.earth-policy.org/Indicators/index.htm
  • NOAA Economics of Ecosystems Data & Products – http://www.economics.noaa.gov/?goal=ecosystems


Miscellaneous:
  • New Economics Foundation(NEF)- http://www.neweconomics.org
  • Green Economist website - http://greeneconomist.org/
  • Sustainable Prosperity - http://sustainableprosperity.ca/
  • World Resources Forum - http://www.worldresourcesforum.org
  • Global Reserve Bank - http://www.grb.net
  • An ecological economics article about reconciling economics and its supporting ecosystem - http://www.fs.fed.us/eco/s21pre.htm
  • "Economics in a Full World", by Herman E. Daly - http://sef.umd.edu/files/ScientificAmerican_Daly_05.pdf
  • Steve Charnovitz, "Living in an Ecolonomy: Environmental Cooperation and the GATT," Kennedy School of Government, April 1994.
  • Global list of Ecological Economics related Organizations on WiserEarth
  • Ecological Economics portal on WiserEarth
  • A NATURE CONGRUENT CURRENCY FOR PEACE