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Why Ecological Economics?. Coevolutionary economics Hunter-gatherer economics –Accumulation = death Economics of early agricultural societies –Depended.

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Presentation on theme: "Why Ecological Economics?. Coevolutionary economics Hunter-gatherer economics –Accumulation = death Economics of early agricultural societies –Depended."— Presentation transcript:

1 Why Ecological Economics?

2 Coevolutionary economics Hunter-gatherer economics –Accumulation = death Economics of early agricultural societies –Depended on technological advance –Advent of property rights Industrial market economics –Use of non-renewable resources, fossil fuels Macroeconomics –Response to great depression Ecological economics –Driven by the growing scarcity of natural capital

3 From Empty World to Full World

4 So what distinguishes ecological economics from conventional (neoclassical) economics? Pre-analytic vision, Physics, Ecology, Ethics and Practice

5 The pre-analytic vision of ecological economics

6 The sustaining and containing system

7 The Ecological-Economic System is Extremely Complex Feedback loops Highly non-linear change Emergent phenomena Surprise Chaotic behavior Uncertainty and ignorance

8 The Pre-analytic Vision of Neoclassical Economics

9 The ever-growing circular economy Circulatory system, but no digestive system

10 The Economic System is Simple Human behavior is very simple The market system is simple We can model the system mathematically, and show it moves towards an optimal equilibrium –Empirical examples challenging this assumption? Perfect knowledge dominates uncertainty and ignorance

11 Physics and Ecology: Thermodynamics and Ecosystem Services

12 1rst Law of Thermodynamics Matter energy cannot be created or destroyed –We can’t make something from nothing, and we can’t make nothing from something –Natural resources are essential to economic production –The opportunity cost of economic growth is degradation to ecosystems, i.e. a reduction in the flow of goods and services generated by natural systems: macro opportunity cost

13 2 nd Law of Thermodynamics Entropy increases in the universe –All work (economic production) requires energy –Market economy and fossil fuel economy began at same time –All economic production becomes waste –One way flow from natural resource-> human made economic service-> waste; IRREVERSIBILITY –Think of our digestive system vs. circulatory system Opportunity cost of economic growth: waste emissions further reduce the flow of goods and services from nature Throughputs, not inputs

14 Laws of Physics Can’t make something from nothing or vice versa Can’t do work without energy Disorder increases

15 Laws of ecology Conversion of ecosystem structure into economic products degrades and destroys ecosystem services  e.g. biodiversity Waste emissions degrade and destroy ecosystem services  e.g. climate

16 Economic Implications of the EE vision Diminishing marginal returns, opportunity costs, and uneconomic growth

17 So What? Sustainable growth is an oxymoron Ever continuing growth in material consumption is an impossible goal BUT welfare is a psychic flux, not a physical flux. Economic development is possible, but not continuous economic growth

18 Uneconomic growth is best defined as A. Two consecutive quarters with no increase in GDP B. A situation in which the marginal costs of additional economic production exceed the marginal benefits C. A recession or depression D. A situation in which the total costs of economic production exceed the total benefits E. An oxymoron, because more is always better

19 Ethics: the desirable ends

20 The desirable ends How do we provide a high quality of life for this and future generations? Consumption is only one narrow component of human needs

21 Sustainable Scale Ethical assumption: Future generations matter Scale= the size of the economic system relative to the ecosystem that contains and sustains it There is a finite limit to the physical size of the economic system The limits to economic growth are determined by ecological constraints. Macro opportunity costs of economic growth do not provide economic signals

22 Just Distribution Ethical assumption: future generations matter –Does it make sense to care about the well-being of people not yet born and ignore the well-being of those alive today? Is sustainability possible without more equal distribution? –Do hungry people care about the future? –Can Americans continue to consume 25% of the Earth’s resources? Is depleting the earth’s resources fair to future generations? How do we decide on a ‘Just’ distribution?

23 Efficient Allocation We must use scarce resources to satisfy unmet needs as efficiently as possible –E.g. with the least possibel throughput Instrumental ends, not an end in itself

24 Economics in Practice NCE –Disciplinary: learn disciplinary tools and apply them to problems –Try to force reality to comply with theory EE –Transdisciplinary: focus on problems and use whatever tools are necessary to solve them –Test theories empirically, make theory conform to reality


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