Ecological Economics
What is the intended contribution of Ecological Economics, and How well does it succeed in delivering on it?
Introduction
Ecological economics is raised as one of the most controversial new interdiscipline in the era of environmental studies. However, at the same time, it is still very indistinguishable from agricultural, resource or environmental economics for the most of the people (Spash, 1999).
Ecological economics takes the knowledge and background of economics and change the framework towards an approach take as benchmark the physical limits of growth, the depletion of natural resources and the global environmental problems (as climate change and population growth).
Ecological economics born try to take in charge and solve some basic problems related to economics and other disciplines and issues. Gowdy & Erickson (2005) explains that neoclassical economics give bad answers to the most of environmental and social problems, especially in growing income disparity, global climate change and biodiversity loss, this is the principal cause of the rise of ecological economics. Mainstream economics in the words of Faber (2007) have three mainly deficits: (i) inadequate conceptualization of nature, (ii) fail in handle the justice issue, and (iii) doesn't take charge of the dynamics of time.
Ecological economics is a interdiscipline that is new, formally have around 25 years, and therefore it is still a long way to run in order to have more clear outcome as a post-normal science1, taking in account all it means.
Since the first steps in the developing of the field until these days, it is possible understand the contribution of ecological economics as separate in three different components: (i) contribution in new approach, (ii) contribution in methodologies, and (iii) contribution in innovative results.
In the first part of this paper, I describe each one of these three kinds of areas of innovation of the understanding and approach to the knowledge. In each section, first I present the innovative contributions of ecological economics in a theoretical way; and second, I explain briefly some of the most important issues of each area of contribution. In the second part of the paper, I describe if the interdiscipline has been successful in achieve the contribution of ecological economics. Finally, I discuss the new areas developed in ecological economics and the implications of the deeper develop of the field.
I. Components of Contribution
As it is stated above, it is possible to divide in three different components the contribution of ecological economics as a new discipline: (i) approach, (ii) methodologies, and (iii) results. For each one of these components, there are main examples of the contribution of ecological economics.
* Contribution in Approach: different view of economic system (for example as an open system with exchange of energy and materials).
* Contribution in Methodology: interdisciplinary studies taking in account depletion of resources in physical units more than money.
* Contribution in Results: more wide and realistic outcomes, with less theoretical and unlikely assumptions.
I see the ecological economics as so many others sciences, where we have: one or a few paradigms, which are shaped by particular approaches in the field, these approaches are researched by a specific methodologies and finally, after the application of these methods to the reality the researchers found results, which are also unique in the field. The approach in the field influence to the methodology used in the field and also to the results, due to similar outcomes with a different conceptual framework for interpretation, it is possible to arrive to different results. These relations among these components are showed in Figure 1.
1. New conceptual framework contribution
Neoclassical economics was unsuccessful in tackle the environmental issues and problems of the XX century. Two sub-fields were formed in this context: the environmental economics (study the pollution market based control and cost-benefit analysis) and resources economics (study of abstract models describing the efficient and optimal use of fisheries, forests and minerals). However, the ability of these to develop a critique was restricted because they remained within the neoclassical framework (Spash, 1999).
The first and the biggest contribution of ecological economics is that Norgaard2 (1989) call pluralism of approaches or Spash (1999) open model of pluralism to economic theory and policy.
The innovation of ecological economics is possible to understand as an approach to resolve environmental problems from the point of view of economics. This new interdiscipline had developed new concepts and notions in order to approach to old, known or unresolved problems given the old economics framework.
Spash (1999) explains that the European ecological economists tends to focus more on socio-economics and political economy3, whereas the U.S. approach can be characterized as more basic-science based (Van den Bergh, 2000).
The European approach for the ecological economics can be explored through three important journals: Environmental Ethics, Environmental Politics, and Environmental Values, (Van den Bergh, 2000). While it is possible to take a look of the U.S. approach to the ecological economics mainly in the journal Ecological Economics, and also in the following: Economic Systems Research, Journal of Industrial Ecology, Journal of Cleaner Production, and Environmental Science and Technology, among others.
Ecological economics is synthesizing of different perspectives and is rising issues which environmental and resources economics has been able to address (Spash, 1999). In his words, ecological economics is a new paradigm that should have, as the main issues: recognition of ecosystems constrains, concern about equity and fairness, effectiveness and efficiency in economics systems, regard for moral standings of others humans (currents and futures generations). However, all the above stated should be reached in an interdisciplinary4 approach (and not multidisciplinary5 as had been until now).
The aspirations of ecological economics are far greater than just give “fresh air for the mainstream economics, ecological economics is about the development of new ideas and real interdisciplinary research agenda (for first time in the history of economics) to explore alternative paradigms (Spash, 1999).
In addition, Spash (1999) states that ecological economics moves away from the engineering approach to the ethical side of the economics, and therefore the subject of ecological economics is moving also towards a new political economy.
Munda6 (1997) give some key concepts of ecological economics, these are, (i) concerned about policy consequences, (ii) openly claim ethical positions rather than neutrality, (iii) values can be disputed and incommensurable, (iv) the importance of distributional issues, and (v) the scale of the global system as an economic growth constrain.
Ecological economics have 4 main focuses, which are related and interconnected in the process of develop and interdisciplinary study field, these focus are economics, ecology, ethics and policy. Each one of these focuses imply some disciplines sub-disciplines or interdisciplines than interact with the others focuses and produce the issues developed by the ecological economics. This complex relation is observed in the Figure 2.
Neoclassical economics was unsuccessful in tackle the environmental issues and problems of the XX century. Two sub-fields were formed in this context: the environmental economics (study the pollution market based control and cost-benefit analysis) and resources economics (study of abstract models describing the efficient and optimal use of fisheries, forests and minerals). However, the ability of these to develop a critique was restricted because they remained within the neoclassical framework (Spash, 1999).
The first and the biggest contribution of ecological economics is that Norgaard2 (1989) call pluralism of approaches or Spash (1999) open model of pluralism to economic theory and policy.
The innovation of ecological economics is possible to understand as an approach to resolve environmental problems from the point of view of economics. This new interdiscipline had developed new concepts and notions in order to approach to old, known or unresolved problems given the old economics framework.
Spash (1999) explains that the European ecological economists tends to focus more on socio-economics and political economy3, whereas the U.S. approach can be characterized as more basic-science based (Van den Bergh, 2000).
The European approach for the ecological economics can be explored through three important journals: Environmental Ethics, Environmental Politics, and Environmental Values, (Van den Bergh, 2000). While it is possible to take a look of the U.S. approach to the ecological economics mainly in the journal Ecological Economics, and also in the following: Economic Systems Research, Journal of Industrial Ecology, Journal of Cleaner Production, and Environmental Science and Technology, among others.
Ecological economics is synthesizing of different perspectives and is rising issues which environmental and resources economics has been able to address (Spash, 1999). In his words, ecological economics is a new paradigm that should have, as the main issues: recognition of ecosystems constrains, concern about equity and fairness, effectiveness and efficiency in economics systems, regard for moral standings of others humans (currents and futures generations). However, all the above stated should be reached in an interdisciplinary4 approach (and not multidisciplinary5 as had been until now).
The aspirations of ecological economics are far greater than just give “fresh air for the mainstream economics, ecological economics is about the development of new ideas and real interdisciplinary research agenda (for first time in the history of economics) to explore alternative paradigms (Spash, 1999).
In addition, Spash (1999) states that ecological economics moves away from the engineering approach to the ethical side of the economics, and therefore the subject of ecological economics is moving also towards a new political economy.
Munda6 (1997) give some key concepts of ecological economics, these are, (i) concerned about policy consequences, (ii) openly claim ethical positions rather than neutrality, (iii) values can be disputed and incommensurable, (iv) the importance of distributional issues, and (v) the scale of the global system as an economic growth constrain.
Ecological economics have 4 main focuses, which are related and interconnected in the process of develop and interdisciplinary study field, these focus are economics, ecology, ethics and policy. Each one of these focuses imply some disciplines sub-disciplines or interdisciplines than interact with the others focuses and produce the issues developed by the ecological economics. This complex relation is observed in the Figure 2.
Following to Gowdy & Erickson (2005), the main conceptual issues developed by ecological economics with a completely different view than neoclassical economics are: Value monism, the rational actor, marginal analysis, evolutionary change, uncertainty, decision criteria, production process, and discounting. These are the issues taking by the ecological economics in a completely different way because the interaction of the focuses, which influence it.
Two examples specific items produced inside ecological economics thanks to these interdisciplinary interaction are the concepts of intrinsic value on the total economic value and scale of the global system.
2. New and innovative methodological contribution
The methodological contribution are based in the creation of different ways to carry on economics studies, in this effort, had been developed methodologies which pay attention not only to money flows, also to materials and energy flows and stocks and its depletion.
Gowdy & Erickson (2005) point out the leading role which plays ecological economics recasting the methods of economics science, because it is able to model economic behavior including ecological, social and ethical dimensions.
Among these methods, it is possible to find: LCA, VAT (include intrinsic value), etc.
In this section is needed point out how the Structural Economics7 and the Input-Output approach are called to be the main contributions on the methodological innovation of ecological economics. Although Structural Economics and IO have born on in middle of neoclassical economics as part of mainstream economics, in this field have had little attention (Duchin, 1996).
As Duchin (1996) explains, IO economics has the ability to develop operational and dynamics models to represent changes in economy, including changes in capital stocks and stock of resources. It allows constructing scenarios about the things that can change from the past to the future, among other advantages in the methodological component of Ecological Economics.
3. Contribution in the scientific economic results
The sciences look for describe phenomena, trying to explain them and as much as possible predict the occurrence of this phenomena in the future.
In order to describe, in the most of the cases, is wanted to understand the phenomenon in deep and to know the effects of it. This can be made in an analytical approach through descriptive statistic and correlation; or generating descriptive models, through use mathematical models, which describe phenomena showing how the behavior of some variables in a defined situation is.
In the explanation is usual to want to find for the explicative mechanism which produces the phenomenon. To find this explicative mechanism is it not trivial. It is needed to find the cause or causes that generate the phenomenon, and prove that this is the cause usually through experimentation ceteris paribus. In economics, due to the characteristic of social science, in a big amount of cases it is not possible to carry out any kind of experiment. As a result of that, scientists work on data trying to find close ceteris paribus conditions to isolate cause – effect relation.
In the harder work of predictions, it is not only necessary for scientists to understand in deep the phenomena and to know it causes, also in needed to find effects of the phenomenon in the future, or how will be the behavior of the phenomenon in itself in the future.
II. Success in developing of the interdiscipline
Ecological economics is a very new field, therefore, I think it is too early to judge if it had accomplished with the objectives and goals. However, is has been a successful develop and diffusion.
The mainstream economists criticize strongly the field, doing mention ecological economics doesn't resolve any problem that mainstream economics (environmental and renewable resources economics) hasn't already resolved (Turner, Perrings & Folke8, 1997). This is stated because these neoclassical economists reduce all environmental concerns to economic activities constrains.
Conclusions and Discussion
Ecological economics is an interdiscipline with a lot of work for to make, but without a unified theory or method. In the opposite, it had an innumerable amount of
issues that can be and are being addressed under a huge amount of different approaches.
However, ecological economics is the only actual field which is taking on charge about all these challenges and issues, therefore, it is needed to expand its influences
and to develop not a strong framework but a strong network of cooperation of scientists around the world and around the disciplines which are concerned to and
working on ecological economics.
The implications of the deeper develop of the ecological economics can be outstanding if the field can develop a theoretical unified framework. However, if it does
not occur, the possibility of work with new methodologies on old unsolved problems can define the future of the field.
References
- Duchin, Faye (1996), Ecological Economics: the second stage in Getting Down to Earth: Practical Applications of Ecological Economics, R. Costanza, O. Segura, and J. Martinez-Alier, editors. CA: Island Press 1996.
- Faber, Malte (2007). How to be an Ecological Economist. Discussion Paper Series No. 454. Department of Economics. University of Heidelberg. October 2007.
- Gowdy, John; Erickson, Jon D. (2005). The approach of ecological economics. Cambridge Journal of Economics 2005, 29, 207-222.
- Hall, Charles; Linderberger, Dietmar; Kummel, Reiner; Kroeger, Timm; Eichhorn, Wolfgang (2001). The Need to Reintegrate the Natural Sciences with Economics. BioScience August 2001. Vol. 51 No. 8: 663-673.
- Martinez-Alier Juan and Roca-Jusmet Jordi (2000). Economia Ecologica y Politica Ambiental. PNUMA.
- Spash, Clive. 1999. The Development of Environmental Thinking in Economics. Environmental Values 8 (1999):413-435.
- Stern, David I. (1997). Limits to substitution and irreversibility in production and consumption: A newclassical interpretation of ecological economics. Ecological Economics 21 (1997) 197-215.
- Van den Bergh, Jeroen C.J.M. (2000). Ecological Economics: Themes, Approaches, and Differences with Environmental Economics. Discussion Paper. Tinbergen Institute. TI 2000-080/3
——--
1 Post-normal science can be understood as a methodology of question what approach is more appropriate for cases where there is uncertain, values in dispute, stakes high and urgent decisions.
2 Referenced in Gowdy & Erickson (2005).
3 Including philosophy, environmental ethics, institutional economics, sociology, and political ecology.
4 Integration of different disciplines along all the process of producing new knowledge, in such a way that all the scientists participation can able to talk with other scientists from other disciplines.
5 Making reference to the work together but not on the whole, on environmental issues,
6 Referenced in Spash (1999).
7 It is an area of economics that provides a conceptual model of the independent parts of an economy and a valuation framework in the form of a well formalized mathematical version of the conceptual model (Duchin, 1996).
8 Referenced in Spash (1999).
Two examples specific items produced inside ecological economics thanks to these interdisciplinary interaction are the concepts of intrinsic value on the total economic value and scale of the global system.
2. New and innovative methodological contribution
The methodological contribution are based in the creation of different ways to carry on economics studies, in this effort, had been developed methodologies which pay attention not only to money flows, also to materials and energy flows and stocks and its depletion.
Gowdy & Erickson (2005) point out the leading role which plays ecological economics recasting the methods of economics science, because it is able to model economic behavior including ecological, social and ethical dimensions.
Among these methods, it is possible to find: LCA, VAT (include intrinsic value), etc.
In this section is needed point out how the Structural Economics7 and the Input-Output approach are called to be the main contributions on the methodological innovation of ecological economics. Although Structural Economics and IO have born on in middle of neoclassical economics as part of mainstream economics, in this field have had little attention (Duchin, 1996).
As Duchin (1996) explains, IO economics has the ability to develop operational and dynamics models to represent changes in economy, including changes in capital stocks and stock of resources. It allows constructing scenarios about the things that can change from the past to the future, among other advantages in the methodological component of Ecological Economics.
3. Contribution in the scientific economic results
The sciences look for describe phenomena, trying to explain them and as much as possible predict the occurrence of this phenomena in the future.
In order to describe, in the most of the cases, is wanted to understand the phenomenon in deep and to know the effects of it. This can be made in an analytical approach through descriptive statistic and correlation; or generating descriptive models, through use mathematical models, which describe phenomena showing how the behavior of some variables in a defined situation is.
In the explanation is usual to want to find for the explicative mechanism which produces the phenomenon. To find this explicative mechanism is it not trivial. It is needed to find the cause or causes that generate the phenomenon, and prove that this is the cause usually through experimentation ceteris paribus. In economics, due to the characteristic of social science, in a big amount of cases it is not possible to carry out any kind of experiment. As a result of that, scientists work on data trying to find close ceteris paribus conditions to isolate cause – effect relation.
In the harder work of predictions, it is not only necessary for scientists to understand in deep the phenomena and to know it causes, also in needed to find effects of the phenomenon in the future, or how will be the behavior of the phenomenon in itself in the future.
II. Success in developing of the interdiscipline
Ecological economics is a very new field, therefore, I think it is too early to judge if it had accomplished with the objectives and goals. However, is has been a successful develop and diffusion.
The mainstream economists criticize strongly the field, doing mention ecological economics doesn't resolve any problem that mainstream economics (environmental and renewable resources economics) hasn't already resolved (Turner, Perrings & Folke8, 1997). This is stated because these neoclassical economists reduce all environmental concerns to economic activities constrains.
Conclusions and Discussion
Ecological economics is an interdiscipline with a lot of work for to make, but without a unified theory or method. In the opposite, it had an innumerable amount of
issues that can be and are being addressed under a huge amount of different approaches.
However, ecological economics is the only actual field which is taking on charge about all these challenges and issues, therefore, it is needed to expand its influences
and to develop not a strong framework but a strong network of cooperation of scientists around the world and around the disciplines which are concerned to and
working on ecological economics.
The implications of the deeper develop of the ecological economics can be outstanding if the field can develop a theoretical unified framework. However, if it does
not occur, the possibility of work with new methodologies on old unsolved problems can define the future of the field.
References
- Duchin, Faye (1996), Ecological Economics: the second stage in Getting Down to Earth: Practical Applications of Ecological Economics, R. Costanza, O. Segura, and J. Martinez-Alier, editors. CA: Island Press 1996.
- Faber, Malte (2007). How to be an Ecological Economist. Discussion Paper Series No. 454. Department of Economics. University of Heidelberg. October 2007.
- Gowdy, John; Erickson, Jon D. (2005). The approach of ecological economics. Cambridge Journal of Economics 2005, 29, 207-222.
- Hall, Charles; Linderberger, Dietmar; Kummel, Reiner; Kroeger, Timm; Eichhorn, Wolfgang (2001). The Need to Reintegrate the Natural Sciences with Economics. BioScience August 2001. Vol. 51 No. 8: 663-673.
- Martinez-Alier Juan and Roca-Jusmet Jordi (2000). Economia Ecologica y Politica Ambiental. PNUMA.
- Spash, Clive. 1999. The Development of Environmental Thinking in Economics. Environmental Values 8 (1999):413-435.
- Stern, David I. (1997). Limits to substitution and irreversibility in production and consumption: A newclassical interpretation of ecological economics. Ecological Economics 21 (1997) 197-215.
- Van den Bergh, Jeroen C.J.M. (2000). Ecological Economics: Themes, Approaches, and Differences with Environmental Economics. Discussion Paper. Tinbergen Institute. TI 2000-080/3
——--
1 Post-normal science can be understood as a methodology of question what approach is more appropriate for cases where there is uncertain, values in dispute, stakes high and urgent decisions.
2 Referenced in Gowdy & Erickson (2005).
3 Including philosophy, environmental ethics, institutional economics, sociology, and political ecology.
4 Integration of different disciplines along all the process of producing new knowledge, in such a way that all the scientists participation can able to talk with other scientists from other disciplines.
5 Making reference to the work together but not on the whole, on environmental issues,
6 Referenced in Spash (1999).
7 It is an area of economics that provides a conceptual model of the independent parts of an economy and a valuation framework in the form of a well formalized mathematical version of the conceptual model (Duchin, 1996).
8 Referenced in Spash (1999).
The 10 actions of public policy of Herman Daly needed to reach Sustainable Development with the approach of Ecological Economics
Herman Daly
1. Cap-auction-trade systems for basic resources. Cap limits to biophysical scale according to source or sink constraint, whichever is more stringent. Auction captures scarcity rents for equitable redistribution. Trade allows efficient allocation to highest uses.
2. Ecological tax reform—shift tax base from value added (labor and capital) and on to “that to which value is added”, namely the entropic throughput of resources extracted from nature (depletion), through the economy, and back to nature (pollution). Internalizes external costs as well as raises revenue more equitably. Prices the scarce but previously unpriced contribution of nature.
3. Limit the range of inequality in income distribution—a minimum income and a maximum income. Without aggregate growth poverty reduction requires redistribution. Complete equality is unfair; unlimited inequality is unfair. Seek fair limits to inequality.
4. Free up the length of the working day, week, and year—allow greater option for leisure or personal work. Full-time external employment for all is hard to provide without growth.
5. Re-regulate international commerce—move away from free trade, free capital mobility and globalization, adopt compensating tariffs to protect efficient national policies of cost internalization from standards-lowering competition from other countries.
6. Downgrade the IMF-WB-WTO to something like Keynes’ plan for a multilateral payments clearing union, charging penalty rates on surplus as well as deficit balances—seek balance on current account, avoid large capital transfers and foreign debts.
7. Move to 100% reserve requirements instead of fractional reserve banking. Put control of money supply and seigniorage in hands of the government rather than private banks.
8. Enclose the remaining commons of rival natural capital in public trusts, and price it, while freeing from private enclosure and prices the non rival commonwealth of knowledge and information. Stop treating the scarce as if it were non scarce, and the non scarce as if it were scarce.
9. Stabilize population. Work toward a balance in which births plus immigrants equals deaths plus out-migrants.
10. Reform national accounts—separate GDP into a cost account and a benefits account. Compare them at the margin, stop growing when marginal costs equal marginal benefits. Never add the two accounts.
2. Ecological tax reform—shift tax base from value added (labor and capital) and on to “that to which value is added”, namely the entropic throughput of resources extracted from nature (depletion), through the economy, and back to nature (pollution). Internalizes external costs as well as raises revenue more equitably. Prices the scarce but previously unpriced contribution of nature.
3. Limit the range of inequality in income distribution—a minimum income and a maximum income. Without aggregate growth poverty reduction requires redistribution. Complete equality is unfair; unlimited inequality is unfair. Seek fair limits to inequality.
4. Free up the length of the working day, week, and year—allow greater option for leisure or personal work. Full-time external employment for all is hard to provide without growth.
5. Re-regulate international commerce—move away from free trade, free capital mobility and globalization, adopt compensating tariffs to protect efficient national policies of cost internalization from standards-lowering competition from other countries.
6. Downgrade the IMF-WB-WTO to something like Keynes’ plan for a multilateral payments clearing union, charging penalty rates on surplus as well as deficit balances—seek balance on current account, avoid large capital transfers and foreign debts.
7. Move to 100% reserve requirements instead of fractional reserve banking. Put control of money supply and seigniorage in hands of the government rather than private banks.
8. Enclose the remaining commons of rival natural capital in public trusts, and price it, while freeing from private enclosure and prices the non rival commonwealth of knowledge and information. Stop treating the scarce as if it were non scarce, and the non scarce as if it were scarce.
9. Stabilize population. Work toward a balance in which births plus immigrants equals deaths plus out-migrants.
10. Reform national accounts—separate GDP into a cost account and a benefits account. Compare them at the margin, stop growing when marginal costs equal marginal benefits. Never add the two accounts.