Ecological Economics

views updated

Ecological economics

Conventional and ecological economics

Economics is conventionally considered to be a social science that examines the allocation of scarce resources among various potential uses that are in competition with each other. As such, economics attempts to predict and understand the patterns of consumption of goods and services by individuals and society. A core assumption of conventional economics is that individuals and corporations seek to maximize their profit within the marketplace.

In conventional economics, the worth of goods or services are judged on the basis of their direct or indirect utility to humans. In almost all cases, the goods and services are assigned value (that is, they are valuated) in units of tradable currency, such as dollars. This is true of: (1) manufactured goods such as televisions, automobiles, and buildings, (2) the services provided by people like farmers, doctors, teachers, and baseball players, and (3) all natural resources that are harvested and processed for use by humans, including nonrenewable resources such as metals and fossil fuels , and renewable resources such as agricultural products, fish , and wood .

Ecological economics differs from conventional economics in attempting to value goods and services in ways that are not only based on their usefulness to humans, that is, in a non-anthropocentric fashion. This means that ecological economics attempts to take into account the many environmental and social costs associated with the depletion of natural resources, as well as the degradation of ecological systems through pollution , extinction , and other environmental damages. Many of these important problems are associated with the diverse economic activities of humans, but the degradation is often not accounted for by conventional economics. From the environmental perspective, the most important problem with conventional economics has been that the marketplace has not recognized the value of important ecological goods and services. Therefore, their degradation has not been considered a cost of doing business. Ecological economics attempts to find ways to consider and account for the real costs of environmental damage.

Ecological goods and services

Humans have an absolute dependence on a continuous flow of natural resources to sustain their economic systems. There are two basic types of natural resources: nonrenewable and renewable. By definition, sustainable economic systems and sustainable human societies cannot be based on the use of nonrenewable resources, because these are always depleted by usage, a process referred to as "mining." Ultimately, sustainable systems can only be supported by the use of renewable resources, which if harvested and managed wisely, can be available forever. Because most renewable resources are the goods and services of ecosystems, economic and ecological systems are highly interdependent.

Potentially, renewable natural resources can sustain harvesting indefinitely. However, to achieve a condition of sustainable usage, the rate of harvesting must be smaller than the rate of renewal of the resource. For example, flowing water can be sustainably used to produce hydroelectricity or for irrigation , as long as the usage does not exceed the capacity of the landscape to yield water. Similarly, biological natural resources such as trees and hunted fish, waterfowl, and deer can be sustainably harvested to yield valuable products, as long as the rate of cropping does not exceed the renewal of the resource. These are familiar examples of renewable resources, partly because they all represent ecological goods and services that are directly important to human welfare, and can be easily valuated in terms of dollars.

Unlike conventional economics, ecological economics also considers other types of ecological resources to be important, even though they may not have direct usefulness to humans, and they are not valuated in dollars. Because the marketplace does not assign value to these resources, they can be degraded without conventional economic cost even though this results in ecological damage and ultimately harms society. Some examples of ecological resources that markets consider to be "free" goods and services include:

non-exploited species of plants and animals that are not utilized as an economic resource, but are nevertheless important because they may have undiscovered uses to humans (perhaps as new medicines or foods), or are part of the aesthetic environment, or they have intrinsic value which exists even if they are not useful to humans;
ecological services such as control over erosion , provision of water and nutrient cycling, and cleansing of pollutants emitted into the environment by humans, as occurs when growing vegetation removes carbon dioxide from the atmosphere and when microorganisms detoxify chemicals such as pesticides .

Use of renewable resources by humans

As noted above, sustainable economic systems can only be based on the wise use of renewable resources. However, the most common way in which humans have used potentially renewable resources is by "overharvesting," that is, exploitation that exceeds the capacity for renewal so that the stock is degraded and sometimes made extinct. In other words, most use of potentially renewable resources has been by mining , or use as if it were a nonrenewable resource.

There are many cases of the mining and degradation of potentially renewable resources, from all parts of the world and from all human cultures. In a broad sense, this syndrome is represented by extensive deforestation , collapses of wild fisheries, declines of agricultural soil capability, and other resource degradations. The extinctions of the dodo, great auk, Steller's sea cow, and passenger pigeon all represent overhunting so extreme that it took potentially renewable resources beyond the brink of biological extinction. The overhunting of the American bison and various species of seals and whales all represent biological mining that took potentially renewable resources beyond the brink of economic extinction, so that it was no longer profitable to exploit the resource.

These and many other cases of the degradation of renewable resources occurred because conventional economics did not value resource degradation properly. Consequently, profit was only determined on the basis of costs directly associated with catching and processing the resource, and not on the costs of renewal and depletion. Similarly, conventional economics considers non-valuated goods and services such as biodiversity , soil conservation , erosion control, water and nutrient cycling, and cleansing air and water of pollutants to be free resources so that no costs are associated with their degradation.

Ecologically sustainable systems

The challenge of ecological economics is to design systems of resource harvesting and management that are sustainable, so that human society can be supported forever without degrading the essential, ecological base of support.

Ecologically sustainable systems must sustain two clusters of values: (1) the health of economically valuated, renewable resources, such as trees, fish, and agricultural soil capability, and (2) acceptable levels of ecological goods and services that are not conventionally valuated. Therefore, a truly sustainable system must be able to yield natural resources that humans need, and to provide that sustenance forever. However, the system must also provide services related to clean air and water and nutrient cycling, while also sustaining habitat for native species and their natural ecological communities.

To achieve this goal, ecologically sustainable systems will have to be based on two ways of managing ecosystems: (1) as working ecosystems, and (2) as ecological reserves (or protected areas). The "working ecosystems" will be harvested and managed to yield sustainable flows of valuated resources, such as forest products, hunted animals, fish, and agricultural commodities. However, some environmental costs will be associated with these uses of ecosystems. For example, although many species will find habitats available on working lands to be acceptable to their purposes, other native species and most natural communities will be at risk on working landscapes. To sustain the ecological values that cannot be accommodated by working ecosystems, a system of ecological reserves will have to be developed. These reserves must be designed to ensure that all native species are sustained at viable population levels, that there are viable areas of natural ecosystems, and that ecosystems will be able to supply acceptable levels of important services, such as control of erosion, nutrient cycling, and cleansing the environment of pollution.

So far, ecologically sustainable systems of the sort described above are no more than a concept. None exist today. In fact, humans mostly exploit the potentially renewable goods and services of ecosystems in an nonsustainable fashion. Clearly this is a problem, because humans rely on these resources to sustain their economy. Ecological economics provides a framework for the design of better, ecologically sustainable systems of resource use. However, it remains to be seen whether human society will be wise enough to adopt these sustainable methods of organizing their economy and their interactions with ecosystems.

Resources

books

Costanza, R. Ecological Economics: The Science and Management of Sustainability. New York: Columbia University Press, 1991.

Freedman, B. Environmental Ecology. 2nd ed. San Diego: Academic Press, 1995.

Jansson, A.M., M. Hammer, C. Folke, and R. Costanza, eds. Investing in Natural Capital: The Ecological Economics Approach to Sustainability. Washington, DC: Island Press, 1994.

Shortle, J. S., and Ronald C. Griffin, eds. Irrigated Agriculture and the Environment. Northampton, MA: Edward Elgar, 2001.