Why Ecological Economics? - University of Vermont

Why Ecological Economics? - University of Vermont

Announcements Bookstore has ordered more copies of blue book (F&B) Two copies available on reserve later today (different cover, same content) E-mails to me must have cdae 61 in subject, not cdae 061, cdae61, etc. etc. The only HW to be turned in via e-mail is

biographical statement, sent to me. Too many students in class to make exceptions. I won't reply to e-mails asking questions on syllabus Why Ecological Economics?

Back to the roots Oikos the household Study of natures household = ecology Managing the human household = economics Production of real goods and services: bounded and natural

Ecological economics = management of human household based on knowledge of nature Chrematistik- study of numbers Retail trade, finance, speculation, how money begets money Not bounded or natural

E.g. International financial flows dwarf the trade in real goods and services 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 Ecological economics Driven by the growing scarcity of natural capital

From Empty World to Full World What is scarce? In agriculture?

Not enough tractors and pesticides, or not enough water, arable land, and climate stability? In natural resources? Not enough boats, or not enough fish? Not enough chain saws, or not enough forests? In community development?

Too few roads and houses, or too few social connections? Too little food, or inadequate distribution? So what distinguishes ecological economics from conventional (neoclassical) economics?

Pre-analytic vision, Physics, Ecology, Ethics and Practice The pre-analytic vision of ecological economics The sustaining and containing system

The Ecological-Economic System is Extremely Complex

Feedback loops Highly non-linear change Emergent phenomena Surprise Chaotic behavior Uncertainty and ignorance more common than risk

Negative Feedback Loops The Pre-analytic Vision of Neoclassical Economics The Economic System is Simple Human behavior is very simple

The market system is simple We can model the system mathematically, and solve for an optimal equilibrium Risk dominates uncertainty and ignorance Physics: The Laws of Thermodynamics

1rst Law: Matter energy cannot be created or destroyed We cant make something from nothing, and we cant make nothing from something Natural resources are essential to economic production Natural resources also provide vital economics services

The opportunity cost of economic growth is a reduction in the flow of goods and services from nature 2nd Law: Entropy increases in the universe All economic production becomes waste One way flow from natural resource-> human

made economic service-> waste IRREVERSIBILITY Economic production degrades the environment Opportunity cost of economic growth: waste emissions further reduce the flow of goods and services from nature Throughputs, not inputs

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

Ethics: the desirable ends 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

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 level opportunity costs of economic growth do not provide economic signals Just Distribution Ethical assumption: current 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 Earths resources? Is depleting the earths resources fair to future

generations? How do we decide on a Just distribution? Efficient Allocation Instrumental ends, not an end in itself

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