to Introduction Ecological Economics
November 26, 2007
What is Ecological Economics?
Ecological economics is a transdisciplinary field of academic research that addresses the interdependence between human economies and natural ecosystems. Ecological economics connects different disciplines within the natural and social sciences. Fundamental focus is on the concept of NATURAL CAPITAL. Economic definition of capital: A STOCK of something that yields a FLOW of valuable goods and services.
The Five Forms of Capital
Human Capital physical, intellectual, emotional and spiritual capacities of any individual. Manufactured Capital the built environment, infrastructure, tools, equipment, machinery and technology Social Capital social networks of family and community, the "social glue" that holds society together Financial Capital monetary assets (really a form of social capital) Natural Capital any part of the natural world that humans make use of or benefit from, including resources, waste sinks and ecosystem services
Capital: Stocks and Flows
Human: stock of knowledge and experience yields a flow of work skills Manufactured: stock of circuitry, metals and plastics (computer) yields a flow of computing services Social: stock of family and personal friends yields a flow of support and relationships Financial: stock of monetary assets yields a flow of interest earnings Natural: stock of trees, soil, and microorganisms (forest) yields a flow of timber, non-timber forest products, clean water, oxygen, CO2 sequestration, recreation, aesthetic enjoyment
Linking Capital and Sustainability
Basic economic rule: maintain capital intact in order to maintain the flow (INCOME) of useful goods and services from that capital stock Conventional economics has interpreted this rule to focus mainly on human, manufactured and financial capital; largely ignoring social and natural capital WHY? Marketed vs. non-marketed Historical factors (abundance of natural capital) Assumption of capital substitutability
Why is Natural Capital Overlooked?
Some natural capital is marketed (e.g. oil, lumber, seafood) while much is non-marketed (e.g. waste assimilation, water regulation, pollination) Historically, natural was capital super-abundant Assumed that manufactured and human capital could substitute for the loss of natural capital Most forms of natural capital take the form of PUBLIC GOODS, products and services that are non-exclusive and non-exhaustive
The Result of Ignoring Natural Capital?
Over-investment and over-emphasis on the importance of manufactured and financial capital in particular:
Tax breaks and other policies encourage investment in manufactured, financial and human capital GDP and other indicators focus mainly on manufactured and human capital, and often count the depletion of natural capital as a positive
As a result, natural capital has now become the SCARCE FACTOR of production Economic logic argues for investing in the scarce factor. Historically this has been manufactured and human, today it is natural capital
How do You Invest in Natural Capital?
Start with ecosystem valuation an attempt to measure the monetary value of public good ecosystem services provided by natural capital Follow basic rules for natural capital management:
Rate of harvest of renewable NC should not exceed rate of regeneration Rate of pollution emissions should not exceed rate of assimilation Funds from depletion of non-renewable NC should be used to develop renewable alternatives Technological development should be focused on enh...