Ecological Economics

What are ecological economics?

Ecological economics is a trans-disciplinary field. It’s not trying to be a subdiscipline of economics or a subdiscipline of ecology, but really it’s a bridge across not only ecology and economics but also psychology, anthropology, archaeology, and history. That’s what’s necessary to get a more integrated picture of how humans have interacted with their environment in the past and how they might interact in the future. It’s an attempt to look at humans embedded in their ecological life-support system, not separate from the environment. It also has some design elements, in the sense of how do we design a sustainable future.? It’s not just analysis of the past but applies that analysis to create something new and better.

Mainstream economics is focused largely on markets and while it recognizes that there are externalities, they are external. Ecological economics tries to study everything outside the market as well as everything inside the market and bring the two together.

Conventional economics doesn’t really recognize the importance of scale—the fact that we live on a finite planet, or that the economy, as a subsystem, cannot grow indefinitely into this larger, containing system. There are some biophysical limits there. The mainstream view doesn’t recognize those limits or thinks that technology can solve any resource constraint problems. It’s not that we can’t continue to improve the human situation. But we have to recognize that the environment creates certain limits and constraints on that, and we can define a safe operating space within which we can do the best we can.

How does ecological economics differ from environmental economics?

Environmental economics is a subdiscipline of economics, so it’s applying standard economic thinking to the environment. Ecological economics is a separate, multi-disciplinary approach. [1]

Ecological economics and sustainability

Ecological economics reminds us that “sustainability” is a multi-faceted goal by focusing on the complex interrelationship between different elements of sustainability: ecological sustainability, social sustainability and economic sustainability. It reminds us of the complexity of the many interacting systems that make up the biosphere and the uncertainty that is a fundamental characteristic of all complex systems. Ecological economics is concerned with the problem of assuring sustainability in the face of uncertainty, and aims to maintain the resilience of ecological
and socioeconomic systems by conserving and investing in natural, social and human assets. Ecological economics also seeks true economic efficiency. Economic efficiency and good economic decision making are not possible if all of the costs and benefits are not considered or included in prices. Often current market prices do not capture the full costs of an economic activity that depletes resources or damages natural systems (natural capital); or inflicts costs to human health and well-being (social and human capitals) caused by pollution or other side effects of
the activity. These excluded costs are called “externalities“, defined as costs that are not included in the price of the product but are shouldered by a third party, outside the producer/seller and
buyer/consumer. Capture of these costs in the market would provide a powerful incentive to move towards sustainability.[2]

References

[1] Robert Costanza, Yale Insights, https://insights.som.yale.edu/insights/what-is-ecological-economics

[2] Gund Institute for Ecological Economics at www.uvm.edu/giee/?Page=default.html