Ecological Economics

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Ecological Economics (EE) is a science of sustainability that views the economy as embedded in the greater biophysical ecosystem. Through a trans-disciplinary approach, it emphasizes the social, economic, biophysical, cultural and ethical issues at stake in the management of human economies and their interactions with the natural world. EE provides tools and methods with a potential for wide impact in environmental policy-making at a European and global level.

Areas of study include: ecological distribution conflicts and their link with the social metabolism of societies, the development of physical indicators and indices, the multiplicity of languages of valuation at stake in resource management, multi-criteria evaluation methods and environmental policy instruments to improve sustainability.

Broad definition

Ecological economics has been compared to human ecology (Martinez-Alier, 1998), which instead of resorting to a single unit of account – money – includes the biophysical aspects of economic processes. Ecological economists look at economic processes in a way similar to the way ecologists examine ecosystems: their approach is fundamentally metabolic, meaning that the economy is seen as a subsystem of a larger finite global ecosystem. More specifically, the economy is regarded as open to the entry/exit of materials and energy, for instance in the form of raw materials (entry) and pollution (exit), and economic processes are regarded as entropic and thus irreversible. It is in this sense that ecological economics can be seen not as a branch of economics but rather as similar to ―human ecology‖ or to ―oikonomia‖, to use Aristotle‘s term. Aristotle famously distinguished ―oikonomia‖, the art and science of the material provision of the ―oikos‖ or home, from ―chrematistics‖ which we now call economics and which is the study of market price formation for the purpose of making money.

A note on paradigm shift

Ecological economics has evolved in a different paradigm than that of conventional (neoclassical) economics, which is still largely based on mechanistic principles. Following from this, neoclassical economics remains for the most part ahistorical, universalist in its explanatory ambitions, and specialised in abstract mathematical formalism. Its portrayal of human beings as utility-maximizing agents whose aggregated behaviours lead under certain conditions to equilibrium is also rooted in the mechanistic paradigm, the ideological consequences of which are the promotion of self-regulated markets, economic growth and ―technical progress‖. Quite the opposite, ecological economics was founded on an epistemological revolution stimulated by the birth of thermodynamics, and is associated with notions such as entropy, order parameters, complexity, irreversibility and evolution. This approach represents a clear departure from the mechanistic paradigm with far-reaching implications. Notably it implies the uncomfortable acknowledgment that scientists can only work with system-dependent and context-dependent definitions of entities (Georgescu-Roegen, 1971). Reductionist models and their predictions lose much of their relevance, the corresponding image of human being becomes bio-psycho-socio-cultural, and the ideological implications are markedly different.

Some key concepts

The central concept of ecological economics is sustainability, which is approached both qualitatively and empirically, with particular attention paid to spatial scales (ranging from local to global) and biophysical indicators (see below). On the contrary, standard environmental economics usually regards sustainable development as being synonymous with sustainable growth, measured in monetary indicators and studied with general models that avoid any reference to historical and spatial aspects.

Ecological economics emphasizes the incommensurability of values (i.e. different value systems cannot be expressed in the same units). It champions therefore multi-criteria evaluation methods based on explicit value premises and on different socio-cultural and biophysical indicators. Examples of the latter are HANPP (human appropriation of net primary production), the GDP of the poor, the material intensity of consumption based on the study of material flows, EROI (energy return on energy input), MIPS (material input per unit service), the ecological footprint, and so on. These indicators are measured in units which are different to conventional economic accounting. How should a situation be judged in which, for instance, HANPP, EROI and GDP generate contradicting results? Ecological economists believe that it is not necessary to reach an encompassing "super-value" (as implied by the notion of commensurability), but rather, the goal is to reach reasonable judgements by employing a multi-criteria evaluation or an integrated assessment.

Ecological economics generally assumes a longer time horizon than environmental economics and therefore it disputes the notion that the future should be discounted). It pays more attention to cause-effect chains, interactions and feedback between natural and human-economic systems. The concept of "co-evolution" is in this respect relevant, reflecting a mutual influence of economic and environmental systems. Ecological economists see systems, including markets, as adaptive rather than optimal in the neoclassical sense. In this sense, ecological economics inherently entails an evolutionary dimension, taking the view that markets cannot sufficiently meet the needs of the poor, nor can they produce the "optimal" technologies and production activities necessary from a long-term, ecologically sound perspective.

Ecological economics is not a "technocratic" or "scientistic" project. On the contrary, as explained by Funtowicz, Ravetz and others, in many current problems of importance and urgency, where values are in dispute and uncertainties are high, "certified experts" are often challenged by citizens from environmental groups – for instance, "popular epidemiology" activists, opponents to nuclear energy or GMOs, or proponents of the practical knowledge of indigenous and peasant populations. This is "post-normal science", leading toward democratic/participatory methods of conflict resolution and decision-making, notions which are dear to ecological economists.

Final remarks

Ecological economics is based on methodological pluralism. It therefore does not follow the reductionist road but rather a kind of "orchestration of the sciences" (Otto Neurath), acknowledging and trying to reconcile the contradictions arising between the different disciplines which deal with issues of sustainability (Martinez-Alier, 1998). For instance, how can we take into account the opposite viewpoints of conventional agricultural economics (technical progress, growth of productivity) and of agro-ecology (loss of biodiversity, decreased energy efficiency)? The image of the "orchestration of the sciences" fits well with the ideas of "co-evolution" and of "value pluralism" implying the study of the human dimensions of ecological change and therefore the study of human environmental perceptions. Ecological economics as an "orchestration of the sciences" also highlights the limits of the authoritative judgements of any particular expert in a particular discipline. It is a field that has evolved in response to the nature of existing problems, to their interdisciplinary aspects, to their urgency, and to their uncertainty, and one that requires the democratisation of science as a precondition for their resolution.

References

  • Funtowicz, S. & Ravetz, J., 1994. The worth of a songbird: ecological economics as a post-normal science. Ecological Economics, 10: 189-96.
  • Martinez-Alier, J., 1998. Ecological economics as human ecology. Lanzarote: Fundacion Cesar Manrique.
  • Georgescu-Roegen, N., 1971. The entropy law and the economic process. Cambridge, MA: Harvard University Press.

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