Ecological economics, bioeconomics, ecolonomy, eco-economics, or ecol-econ is both a

transdisciplinary Transdisciplinarity is an approach that iteratively interweaves knowledge systems, skills, methodologies, values and fields of expertise within inclusive and innovative collaborations that bridge academic disciplines and community perspectives, ...

and an

interdisciplinary Interdisciplinarity or interdisciplinary studies involves the combination of multiple academic disciplines into one activity (e.g., a research project). It draws knowledge from several fields such as sociology, anthropology, psychology, economi ...

field of academic research addressing the interdependence and

coevolution In biology, coevolution occurs when two or more species reciprocally affect each other's evolution through the process of natural selection. The term sometimes is used for two traits in the same species affecting each other's evolution, as well a ...

of human

economies An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with ...

and natural

ecosystem An ecosystem (or ecological system) is a system formed by Organism, organisms in interaction with their Biophysical environment, environment. The Biotic material, biotic and abiotic components are linked together through nutrient cycles and en ...

s, both intertemporally and spatially. By treating the economy as a subsystem of Earth's larger ecosystem, and by emphasizing the preservation of natural capital, the field of ecological economics is differentiated from

environmental economics Environmental economics is a sub-field of economics concerned with environmental issues. It has become a widely studied subject due to growing environmental concerns in the twenty-first century. Environmental economics "undertakes theoretical ...

, which is the mainstream economic analysis of the environment. One survey of German economists found that ecological and environmental economics are different

schools of economic thought In the history of economic thought, a school of economic thought is a group of economic thinkers who share or shared a mutual perspective on the way economies function. While economists do not always fit within particular schools, particularly in ...

, with ecological economists emphasizing strong

sustainability Sustainability is a social goal for people to co-exist on Earth over a long period of time. Definitions of this term are disputed and have varied with literature, context, and time. Sustainability usually has three dimensions (or pillars): env ...

and rejecting the proposition that physical (human-made) capital can substitute for natural capital (see the section on weak versus strong sustainability below). Ecological economics was founded in the 1980s as a modern discipline on the works of and interactions between various European and American academics (see the section on History and development below). The related field of green economics is in general a more politically applied form of the subject. According to ecological economist , ecological economics is defined by its focus on nature, justice, and time. Issues of

intergenerational equity Intergenerational equity in economic, psychological, and sociological contexts, is the idea of Social justice, fairness or justice between generations. The concept can be applied to fairness in dynamics between children, youth, adults, and Old a ...

irreversibility In thermodynamics, an irreversible process is a process that cannot be undone. All complex natural processes are irreversible, although a phase transition at the coexistence temperature (e.g. melting of ice cubes in water) is well approximated a ...

of environmental change,

uncertainty Uncertainty or incertitude refers to situations involving imperfect or unknown information. It applies to predictions of future events, to physical measurements that are already made, or to the unknown, and is particularly relevant for decision ...

of long-term outcomes, and

sustainable development Sustainable development is an approach to growth and Human development (economics), human development that aims to meet the needs of the present without compromising the ability of future generations to meet their own needs.United Nations General ...

guide ecological economic analysis and valuation.Malte Faber. (2008). How to be an ecological economist. ''Ecological Economics'' 66(1):1-7
Preprint
Ecological economists have questioned fundamental mainstream economic approaches such as cost-benefit analysis, and the separability of economic values from scientific research, contending that economics is unavoidably

normative Normativity is the phenomenon in human societies of designating some actions or outcomes as good, desirable, or permissible, and others as bad, undesirable, or impermissible. A Norm (philosophy), norm in this sense means a standard for evaluatin ...

, i.e. prescriptive, rather than positive or descriptive. Positional analysis, which attempts to incorporate time and justice issues, is proposed as an alternative. Ecological economics shares several of its perspectives with

feminist economics Feminist economics is the critical study of economics and economies, with a focus on gender-aware and inclusive economic inquiry and policy analysis. Feminist economic researchers include academics, activists, policy theorists, and practitio ...

, including the focus on sustainability, nature, justice and care values.

Karl Marx Karl Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, political theorist, economist, journalist, and revolutionary socialist. He is best-known for the 1848 pamphlet '' The Communist Manifesto'' (written with Friedrich Engels) ...

also commented on relationship between capital and ecology, what is now known as ecosocialism.

History and development

The antecedents of ecological economics can be traced back to the Romantics of the 19th century as well as some Enlightenment political economists of that era. Concerns over population were expressed by

Thomas Malthus Thomas Robert Malthus (; 13/14 February 1766 – 29 December 1834) was an English economist, cleric, and scholar influential in the fields of political economy and demography. In his 1798 book ''An Essay on the Principle of Population'', Mal ...

, while

John Stuart Mill John Stuart Mill (20 May 1806 – 7 May 1873) was an English philosopher, political economist, politician and civil servant. One of the most influential thinkers in the history of liberalism and social liberalism, he contributed widely to s ...

predicted the desirability of the ''stationary state'' of an economy. Mill thereby anticipated later insights of modern ecological economists, but without having had their experience of the social and ecological costs of the

Post–World War II economic expansion The post–World War II economic expansion, also known as the postwar economic boom or the Golden Age of Capitalism, was a broad period of worldwide economic expansion beginning with the aftermath of World War II and ending with the 1973–1975 r ...

. In 1880, Marxian economist Sergei Podolinsky attempted to theorize a

labor theory of value The labor theory of value (LTV) is a theory of value that argues that the exchange value of a good or service is determined by the total amount of " socially necessary labor" required to produce it. The contrasting system is typically known as ...

based on

embodied energy Embodied energy is the sum of all the energy required to produce any goods or services, considered as if that energy were incorporated or 'embodied' in the product itself. The concept can help determine the effectiveness of energy-producing or ...

; his work was read and critiqued by

Marx Karl Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, political theorist, economist, journalist, and revolutionary socialist. He is best-known for the 1848 pamphlet '' The Communist Manifesto'' (written with Friedrich Engels) ...

and

Engels Friedrich Engels ( ;"Engels"
''

Otto Neurath developed an ecological approach based on a natural economy whilst employed by the

Bavarian Soviet Republic The Bavarian Soviet Republic (or Bavarian Council Republic), also known as the Munich Soviet Republic (), was a short-lived unrecognised socialist state in Bavaria during the German revolution of 1918–1919. A group of communists and anarchist ...

in 1919. He argued that a

market system A market system (or market ecosystem) is any systematic process enabling many market players to offer and demand: helping buyers and sellers interact and make deals. It is not just the price mechanism but the entire system of regulation, qualif ...

failed to take into account the needs of future generations, and that a socialist economy required

calculation in kind Calculation in kind or calculation in-natura is a way of valuating resources and a system of accounting that uses disaggregated physical magnitudes as opposed to a common unit of calculation. As the basis for a socialist economy, it was proposed ...

, the tracking of all the different materials, rather than synthesising them into money as a general equivalent. In this he was criticised by neo-liberal economists such as

Ludwig von Mises Ludwig Heinrich Edler von Mises (; ; September 29, 1881 – October 10, 1973) was an Austrian-American political economist and philosopher of the Austrian school. Mises wrote and lectured extensively on the social contributions of classical l ...

and Freidrich Hayek in what became known as the socialist calculation debate. Cartwright Nancy, J. Cat, L. Fleck, and T. Uebel, 1996. Otto Neurath: philosophy between science and politics.

Cambridge University Press Cambridge University Press was the university press of the University of Cambridge. Granted a letters patent by King Henry VIII in 1534, it was the oldest university press in the world. Cambridge University Press merged with Cambridge Assessme ...

The debate on energy in economic systems can also be traced back to

Nobel prize The Nobel Prizes ( ; ; ) are awards administered by the Nobel Foundation and granted in accordance with the principle of "for the greatest benefit to humankind". The prizes were first awarded in 1901, marking the fifth anniversary of Alfred N ...

-winning radiochemist Frederick Soddy (1877–1956). In his book '' Wealth, Virtual Wealth and Debt'' (1926), Soddy criticized the prevailing belief of the economy as a perpetual motion machine, capable of generating infinite wealth—a criticism expanded upon by later ecological economists such as Nicholas Georgescu-Roegen and Herman Daly. European predecessors of ecological economics include K. William Kapp (1950)

Karl Polanyi Karl Paul Polanyi (; ; 25 October 1886 – 23 April 1964)''Encyclopædia Britannica'' (Chicago: Encyclopædia Britannica Inc. 2003) vol 9. p. 554 was an Austro-Hungarian economic anthropologist, economic sociologist, and politician, best kno ...

(1944), and

Romania Romania is a country located at the crossroads of Central Europe, Central, Eastern Europe, Eastern and Southeast Europe. It borders Ukraine to the north and east, Hungary to the west, Serbia to the southwest, Bulgaria to the south, Moldova to ...

n economist

Nicholas Georgescu-Roegen Nicholas Georgescu-Roegen (born Nicolae Georgescu, 4 February 1906 – 30 October 1994) was a Romanian mathematician, statistician and economist. He is best known today for his 1971 Masterpiece, magnum opus ''The Entropy Law and the Economic Pr ...

(1971). Georgescu-Roegen, who would later mentor Herman Daly at

Vanderbilt University Vanderbilt University (informally Vandy or VU) is a private university, private research university in Nashville, Tennessee, United States. Founded in 1873, it was named in honor of shipping and railroad magnate Cornelius Vanderbilt, who provide ...

, provided ecological economics with a modern conceptual framework based on the material and energy flows of economic production and consumption. His ''magnum opus'', '' The Entropy Law and the Economic Process'' (1971), is credited by Daly as a fundamental text of the field, alongside Soddy's ''Wealth, Virtual Wealth and Debt''. Some key concepts of what is now ecological economics are evident in the writings of Kenneth Boulding and

E. F. Schumacher Ernst Friedrich Schumacher (16 August 1911 – 4 September 1977) was a German-born British statistician and economist who is best known for his proposals for human-scale, decentralised and appropriate technologies.Biography on the inner dust ...

, whose book ''

Small Is Beautiful ''Small Is Beautiful: A Study of Economics As If People Mattered'' is a collection of essays published in 1973 by German-born British economist E. F. Schumacher. The title "Small Is Beautiful" came from a principle espoused by Schumache ...

– A Study of Economics as if People Mattered'' (1973) was published just a few years before the first edition of Herman Daly's comprehensive and persuasive '' Steady-State Economics'' (1977).Schumacher, E.F. 1973. ''Small Is Beautiful: A Study of Economics as if People Mattered''. London: Blond and Briggs. The first organized meetings of ecological economists occurred in the 1980s. These began in 1982, at the instigation of Lois Banner, with a meeting held in Sweden (including

Robert Costanza Robert Costanza (born September 14, 1950) is an American/Australian ecological economist and Professor at the UCL Institute for Global Prosperity, University College London. He is a Fellow of the Academy of the Social Sciences in Australia a ...

, Herman Daly, Charles Hall, Bruce Hannon, H.T. Odum, and David Pimentel). Most were ecosystem ecologists or mainstream environmental economists, with the exception of Daly. In 1987, Daly and Costanza edited an issue of ''Ecological Modeling'' to test the waters. A book entitled ''Ecological Economics'', by Joan Martinez Alier, was published later that year.Costanza R. (2003)
Early History of Ecological Economics and ISEE
Internet Encyclopaedia of Ecological Economics. Alier renewed interest in the approach developed by Otto Neurath during the

interwar period In the history of the 20th century, the interwar period, also known as the interbellum (), lasted from 11 November 1918 to 1 September 1939 (20 years, 9 months, 21 days) – from the end of World War I (WWI) to the beginning of World War II ( ...

.Martinez-Alier J. (1987)''Ecological economics: energy, environment and society'' The year 1989 saw the foundation of the International Society for Ecological Economics and publication of its journal, ''

Ecological Economics Ecological economics, bioeconomics, ecolonomy, eco-economics, or ecol-econ is both a transdisciplinary and an interdisciplinary field of academic research addressing the interdependence and coevolution of human economy, economies and natural ec ...

'', by

Elsevier Elsevier ( ) is a Dutch academic publishing company specializing in scientific, technical, and medical content. Its products include journals such as ''The Lancet'', ''Cell (journal), Cell'', the ScienceDirect collection of electronic journals, ...

was the first president of the society and first editor of the journal, which is currently edited by Richard Howarth. Other figures include ecologists C.S. Holling and H.T. Odum, biologist Gretchen Daily, and physicist Robert Ayres. In the Marxian tradition, sociologist

John Bellamy Foster John Bellamy Foster (born August 19, 1953) is an American professor of sociology at the University of Oregon and editor of the ''Monthly Review''. He writes about political economy of capitalism and economic crisis, ecology and ecological crisis, ...

and CUNY geography professor David Harvey explicitly center ecological concerns in

political economy Political or comparative economy is a branch of political science and economics studying economic systems (e.g. Marketplace, markets and national economies) and their governance by political systems (e.g. law, institutions, and government). Wi ...

. Articles by Inge Ropke (2004, 2005) and Clive Spash (1999) cover the development and modern history of ecological economics and explain its differentiation from resource and environmental economics, as well as some of the controversy between American and European schools of thought. An article by

, David Stern, Lining He, and Chunbo Ma responded to a call by Mick Common to determine the foundational literature of ecological economics by using citation analysis to examine which books and articles have had the most influence on the development of the field. However, citations analysis has itself proven controversial and similar work has been criticized by Clive Spash for attempting to pre-determine what is regarded as influential in ecological economics through study design and data manipulation. In addition, the journal ''Ecological Economics'' has itself been criticized for swamping the field with mainstream economics.

Schools of thought

Various competing schools of thought exist in the field. Some are close to resource and environmental economics while others are far more heterodox in outlook. An example of the latter is the ''European Society for Ecological Economics''. An example of the former is the Swedish ''Beijer International Institute of Ecological Economics.'' Clive Spash has argued for the classification of the ecological economics movement, and more generally work by different economic schools on the environment, into three main categories. These are the mainstream new resource economists, the new environmental pragmatists, and the more radical social ecological economists. International survey work comparing the relevance of the categories for mainstream and heterodox economists shows some clear divisions between environmental and ecological economists. A growing field of radical social-ecological theory is degrowth economics.

Degrowth Degrowth is an Academic research, academic and social Social movement, movement critical of the concept of economic growth, growth in Real gross domestic product, gross domestic product as a measure of Human development (economics), human and econ ...

addresses both biophysical limits and global inequality while rejecting neoliberal economics. Degrowth prioritizes grassroots initiatives in progressive socio-ecological goals, adhering to ecological limits by shrinking the human ecological footprint (See Differences from Mainstream Economics Below). It involves an equitable downscale in both production and consumption of resources in order to adhere to biophysical limits. Degrowth draws from

Marxian economics Marxian economics, or the Marxian school of economics, is a heterodox school of political economic thought. Its foundations can be traced back to Karl Marx's critique of political economy. However, unlike critics of political economy, Marxian ...

, citing the growth of efficient systems as the alienation of nature and man. Economic movements like degrowth reject the idea of growth itself. Some degrowth theorists call for an "exit of the economy". Critics of the degrowth movement include new resource economists, who point to the gaining momentum of sustainable development. These economists highlight the positive aspects of a green economy, which include equitable access to renewable energy and a commitment to eradicate global inequality through sustainable development (See Green Economics). Examples of heterodox ecological economic experiments include the Catalan Integral Cooperative and the Solidarity Economy Networks in Italy. Both of these grassroots movements use communitarian based economies and consciously reduce their ecological footprint by limiting material growth and adapting to regenerative agriculture.

Non-traditional approaches to ecological economics

Cultural and heterodox applications of economic interaction around the world have begun to be included as ecological economic practices. E.F. Schumacher introduced examples of non-western economic ideas to mainstream thought in his book, ''Small is Beautiful'', where he addresses neoliberal economics through the lens of natural harmony in

Buddhist economics Buddhist economics is a spiritual and philosophical approach to the study of economics. It examines the psychology of the human mind and the emotions that direct economic activity, in particular concepts such as anxiety, aspirations and self ...

. This emphasis on natural harmony is witnessed in diverse cultures across the globe. ''Buen Vivir'' is a traditional socio-economic movement in South America that rejects the western development model of economics. Meaning G''ood Life'', ''Buen Vivir'' emphasizes harmony with nature, diverse pluralculturism, coexistence, and inseparability of nature and material. Value is not attributed to material accumulation, and it instead takes a more spiritual and communitarian approach to economic activity. Ecological Swaraj originated out of India, and is an evolving world view of human interactions within the ecosystem. This train of thought respects physical bio-limits and non-human species, pursuing equity and social justice through direct democracy and grassroots leadership. Social well-being is paired with spiritual, physical, and material well-being. These movements are unique to their region, but the values can be seen across the globe in indigenous traditions, such as the

Ubuntu Philosophy Ubuntu (; meaning in some Bantu languages, such as Zulu language, Zulu) describes a set of closely related Bantu African-origin value systems that emphasize the interconnectedness of individuals with their surrounding societal and physical world ...

in South Africa.

Differences from mainstream economics

Ecological economics differs from mainstream economics in that it heavily reflects on the ecological footprint of human interactions in the economy. This footprint is measured by the impact of human activities on natural resources and the waste generated in the process. Ecological economists aim to minimize the ecological footprint, taking into account the scarcity of global and regional resources and their accessibility to an economy. Some ecological economists prioritise adding natural capital to the typical

capital asset A capital asset is defined as property of any kind held by an assessee. It need not be connected to the assesse’s business or profession. The term encompasses all kinds of property, movable or immovable, tangible or intangible, fixed or circula ...

analysis of land, labor, and financial capital. These ecological economists use tools from

mathematical economics Mathematical economics is the application of Mathematics, mathematical methods to represent theories and analyze problems in economics. Often, these Applied mathematics#Economics, applied methods are beyond simple geometry, and may include diff ...

, as in mainstream economics, but may apply them more closely to the natural world. Whereas mainstream economists tend to be technological optimists, ecological economists are inclined to be technological sceptics. They reason that the natural world has a limited

carrying capacity The carrying capacity of an ecosystem is the maximum population size of a biological species that can be sustained by that specific environment, given the food, habitat, water, and other resources available. The carrying capacity is defined as the ...

and that its resources may run out. Since destruction of important environmental resources could be practically irreversible and catastrophic, ecological economists are inclined to justify cautionary measures based on the

precautionary principle The precautionary principle (or precautionary approach) is a broad epistemological, philosophical and legal approach to innovations with potential for causing harm when extensive scientific knowledge on the matter is lacking. It emphasizes cautio ...

. As ecological economists try to minimize these potential disasters, calculating the fallout of environmental destruction becomes a humanitarian issue as well. Already, the Global South has seen trends of mass migration due to environmental changes. Climate refugees from the

Global South Global North and Global South are terms that denote a method of grouping countries based on their defining characteristics with regard to socioeconomics and politics. According to UN Trade and Development (UNCTAD), the Global South broadly com ...

are adversely affected by changes in the environment, and some scholars point to global wealth inequality within the current

neoliberal Neoliberalism is a political and economic ideology that advocates for free-market capitalism, which became dominant in policy-making from the late 20th century onward. The term has multiple, competing definitions, and is most often used pej ...

economic system as a source of this issue. The most cogent example of how the different theories treat similar assets is

tropical rainforest Tropical rainforests are dense and warm rainforests with high rainfall typically found between 10° north and south of the Equator. They are a subset of the tropical forest biome that occurs roughly within the 28° latitudes (in the torrid zo ...

ecosystems, most obviously the Yasuni region of

Ecuador Ecuador, officially the Republic of Ecuador, is a country in northwestern South America, bordered by Colombia on the north, Peru on the east and south, and the Pacific Ocean on the west. It also includes the Galápagos Province which contain ...

. While this area has substantial deposits of

bitumen Bitumen ( , ) is an immensely viscosity, viscous constituent of petroleum. Depending on its exact composition, it can be a sticky, black liquid or an apparently solid mass that behaves as a liquid over very large time scales. In American Engl ...

it is also one of the most diverse ecosystems on Earth and some estimates establish it has over 200 undiscovered medical substances in its genomes – most of which would be destroyed by logging the forest or mining the bitumen. Effectively, the instructional capital of the genomes is undervalued by analyses that view the rainforest primarily as a source of wood, oil/tar and perhaps food. Increasingly the

carbon credit Carbon offsetting is a carbon trading mechanism that enables entities to compensate for offset greenhouse gas emissions by investing in projects that reduce, avoid, or remove emissions elsewhere. When an entity invests in a carbon offsetting p ...

for leaving the extremely carbon-intensive ("dirty") bitumen in the ground is also valued – the government of Ecuador set a price of US$350M for an oil lease with the intent of selling it to someone committed to never exercising it at all and instead preserving the rainforest. While this natural capital and ecosystems services approach has proven popular amongst many it has also been contested as failing to address the underlying problems with mainstream economics, growth, market capitalism and monetary valuation of the environment. Critiques concern the need to create a more meaningful relationship with Nature and the non-human world than evident in the instrumentalism of shallow ecology and the environmental economists

commodification Commodification is the process of transforming inalienable, free, or gifted things (objects, services, ideas, nature, personal information, people or animals) into commodities, or objects for sale.For animals"United Nations Commodity Trade Stati ...

of everything external to the market system.

Nature and ecology

A simple

circular flow of income The circular flow of income or circular flow is a economic model, model of the economy in which the major exchanges are represented as flows of money, Good (economics), goods and Service (economics), services, etc. between economic agents. The f ...

diagram is replaced in ecological economics by a more complex flow diagram reflecting the input of solar energy, which sustains natural inputs and environmental services which are then used as units of production. Once consumed, natural inputs pass out of the economy as pollution and waste. The potential of an environment to provide services and materials is referred to as an "environment's source function", and this function is depleted as resources are consumed or pollution contaminates the resources. The "sink function" describes an environment's ability to absorb and render harmless waste and pollution: when waste output exceeds the limit of the sink function, long-term damage occurs.Harris J. (2006). ''Environmental and Natural Resource Economics: A Contemporary Approach''. Houghton Mifflin Company. Some persistent pollutants, such as some organic pollutants and nuclear waste are absorbed very slowly or not at all; ecological economists emphasize minimizing "cumulative pollutants". Pollutants affect human health and the health of the ecosystem. The economic value of natural capital and

ecosystem services Ecosystem services are the various benefits that humans derive from Ecosystem, ecosystems. The interconnected Biotic_material, living and Abiotic, non-living components of the natural environment offer benefits such as pollination of crops, clean ...

is accepted by mainstream environmental economics, but is emphasized as especially important in ecological economics. Ecological economists may begin by estimating how to maintain a stable environment before assessing the cost in dollar terms. Ecological economist

led an attempted valuation of the global ecosystem in 1997. Initially published in ''Nature'', the article concluded on $33 trillion with a range from $16 trillion to $54 trillion (in 1997, total global GDP was $27 trillion). Half of the value went to

nutrient cycling A nutrient cycle (or ecological recycling) is the movement and exchange of inorganic and organic matter back into the production of matter. Energy flow is a unidirectional and noncyclic pathway, whereas the movement of mineral nutrients is cyc ...

. The open oceans, continental shelves, and estuaries had the highest total value, and the highest per-hectare values went to estuaries, swamps/floodplains, and seagrass/algae beds. The work was criticized by articles in ''Ecological Economics'' Volume 25, Issue 1, but the critics acknowledged the positive potential for economic valuation of the global ecosystem. The Earth's

is a central issue in ecological economics. Early economists such as

pointed out the finite carrying capacity of the earth, which was also central to the MIT study '' Limits to Growth''.

Diminishing returns In economics, diminishing returns means the decrease in marginal (incremental) output of a production process as the amount of a single factor of production is incrementally increased, holding all other factors of production equal ('' ceter ...

suggest that productivity increases will slow if major technological progress is not made. Food production may become a problem, as

erosion Erosion is the action of surface processes (such as Surface runoff, water flow or wind) that removes soil, Rock (geology), rock, or dissolved material from one location on the Earth's crust#Crust, Earth's crust and then sediment transport, tran ...

, an impending

water crisis Water crisis could refer to: *Water security, a goal of water management and policy *Water scarcity, a shortage of water in a specific geography, such as the Cape Town water crisis *Drought, the meteorological conditions created by lack of precipi ...

, and

soil salinity Soil salinity is the salt (chemistry), salt content in the soil; the process of increasing the salt content is known as salinization (also called salination in American and British English spelling differences, American English). Salts occur nat ...

(from

irrigation Irrigation (also referred to as watering of plants) is the practice of applying controlled amounts of water to land to help grow crops, landscape plants, and lawns. Irrigation has been a key aspect of agriculture for over 5,000 years and has bee ...

) reduce the productivity of agriculture. Ecological economists argue that

industrial agriculture Industrial agriculture is a form of modern farming that refers to the industrialized production of crops and animals and animal products like eggs or milk. The methods of industrial agriculture include innovation in agricultural machinery and ...

, which exacerbates these problems, is not

sustainable agriculture Sustainable agriculture is agriculture, farming in sustainability, sustainable ways meeting society's present food and textile needs, without compromising the ability for current or future generations to meet their needs. It can be based on an ...

, and are generally inclined favorably to

organic farming Organic farming, also known as organic agriculture or ecological farming or biological farming,Labelling, article 30 o''Regulation (EU) 2018/848 of the European Parliament and of the Council of 30 May 2024 on organic production and labelling of ...

, which also reduces the output of carbon. Global

wild fisheries A wild fishery is a natural body of water with a sizeable free-ranging fish or other aquatic animal (crustaceans and molluscs) population that can be harvested for its commercial value. Wild fisheries can be marine ( saltwater) or lacustrine/ ...

are believed to have peaked and begun a decline, with valuable habitat such as estuaries in critical condition. The

aquaculture Aquaculture (less commonly spelled aquiculture), also known as aquafarming, is the controlled cultivation ("farming") of aquatic organisms such as fish, crustaceans, mollusks, algae and other organisms of value such as aquatic plants (e.g. Nelu ...

farming Agriculture encompasses crop and livestock production, aquaculture, and forestry for food and non-food products. Agriculture was a key factor in the rise of sedentary human civilization, whereby farming of domesticated species created ...

piscivorous A piscivore () is a carnivorous animal that primarily eats fish. Fish were the diet of early tetrapod evolution (via water-bound amphibians during the Devonian period); insectivory came next; then in time, the more terrestrially adapted rept ...

fish, like

salmon Salmon (; : salmon) are any of several list of commercially important fish species, commercially important species of euryhaline ray-finned fish from the genera ''Salmo'' and ''Oncorhynchus'' of the family (biology), family Salmonidae, native ...

, does not help solve the problem because they need to be fed products from other fish. Studies have shown that salmon farming has major negative impacts on wild salmon, as well as the

forage fish Forage fish, also called prey fish or bait fish, are small pelagic fish that feed on planktons (i.e. planktivores) and other small aquatic organisms (e.g. krill). They are in turn preyed upon by various predators including larger fish, seabirds ...

that need to be caught to feed them. Knapp G, Roheim CA and Anderson JL (2007
''The Great Salmon Run: Competition Between Wild And Farmed Salmon''

World Wildlife Fund The World Wide Fund for Nature (WWF) is a Swiss-based international non-governmental organization founded in 1961 that works in the field of wilderness preservation and the reduction of human impact on the environment. It was formerly named the ...

. Since

animal Animals are multicellular, eukaryotic organisms in the Biology, biological Kingdom (biology), kingdom Animalia (). With few exceptions, animals heterotroph, consume organic material, Cellular respiration#Aerobic respiration, breathe oxygen, ...

s are higher on the

trophic level The trophic level of an organism is the position it occupies in a food web. Within a food web, a food chain is a succession of organisms that eat other organisms and may, in turn, be eaten themselves. The trophic level of an organism is the ...

, they are less efficient sources of food energy. Reduced consumption of meat would reduce the demand for food, but as nations develop, they tend to adopt high-meat diets similar to that of the United States.

Genetically modified food Genetically modified foods (GM foods), also known as genetically engineered foods (GE foods), or bioengineered foods are foods produced from organisms that have had changes introduced into their DNA using various methods of genetic engineering. G ...

(GMF) a conventional solution to the problem, presents numerous problems – Bt corn produces its own '' Bacillus thuringiensis'' toxin/protein, but the pest resistance is believed to be only a matter of time.

Global warming Present-day climate change includes both global warming—the ongoing increase in global average temperature—and its wider effects on Earth's climate system. Climate change in a broader sense also includes previous long-term changes ...

is now widely acknowledged as a major issue, with all national scientific academies expressing agreement on the importance of the issue. As the population growth intensifies and energy demand increases, the world faces an

energy crisis An energy crisis or energy shortage is any significant Bottleneck (production), bottleneck in the supply of energy resources to an economy. In literature, it often refers to one of the energy sources used at a certain time and place, in particu ...

. Some economists and scientists forecast a global ecological crisis if energy use is not contained – the Stern report is an example. The disagreement has sparked a vigorous debate on issue of

discounting In finance, discounting is a mechanism in which a debtor obtains the right to delay payments to a creditor, for a defined period of time, in exchange for a charge or fee.See "Time Value", "Discount", "Discount Yield", "Compound Interest", "Effici ...

and intergenerational equity. Image:Nitrogen Cycle.svg,

Nitrogen cycle The nitrogen cycle is the biogeochemical cycle by which nitrogen is converted into multiple chemical forms as it circulates among atmosphere, atmospheric, terrestrial ecosystem, terrestrial, and marine ecosystems. The conversion of nitrogen can ...

Image:Water cycle.png,

Water cycle The water cycle (or hydrologic cycle or hydrological cycle) is a biogeochemical cycle that involves the continuous movement of water on, above and below the surface of the Earth across different reservoirs. The mass of water on Earth remains fai ...

Image:Carbon cycle-cute diagram.svg,

Carbon cycle The carbon cycle is a part of the biogeochemical cycle where carbon is exchanged among the biosphere, pedosphere, geosphere, hydrosphere, and atmosphere of Earth. Other major biogeochemical cycles include the nitrogen cycle and the water cycl ...

Image:Oxygen cycle.svg, Oxygen cycle

Ethics

Mainstream economics Mainstream economics is the body of knowledge, theories, and models of economics, as taught by universities worldwide, that are generally accepted by economists as a basis for discussion. Also known as orthodox economics, it can be contrasted to ...

has attempted to become a value-free ' hard science', but ecological economists argue that value-free economics is generally not realistic. Ecological economics is more willing to entertain alternative conceptions of

utility In economics, utility is a measure of a certain person's satisfaction from a certain state of the world. Over time, the term has been used with at least two meanings. * In a normative context, utility refers to a goal or objective that we wish ...

efficiency Efficiency is the often measurable ability to avoid making mistakes or wasting materials, energy, efforts, money, and time while performing a task. In a more general sense, it is the ability to do things well, successfully, and without waste. ...

, and cost-benefits such as positional analysis or multi-criteria analysis. Ecological economics is typically viewed as economics for

, and may have goals similar to

green politics Green politics, or ecopolitics, is a political ideology that aims to foster an ecologically sustainable society often, but not always, rooted in environmentalism, nonviolence, social justice and grassroots democracy.#Wal10, Wall 2010. p. 12-13. ...

Green economics

In international, regional, and national policy circles, the concept of the ''green economy'' grew in popularity as a response to the financial predicament at first then became a vehicle for growth and development. The

United Nations Environment Programme The United Nations Environment Programme (UNEP) is responsible for coordinating responses to environmental issues within the United Nations system. It was established by Maurice Strong, its first director, after the Declaration of the United Nati ...

(UNEP) defines a 'green economy' as one that focuses on the human aspects and natural influences and an economic order that can generate high-salary jobs. In 2011, its definition was further developed as the word 'green' is made to refer to an economy that is not only resourceful and well-organized but also impartial, guaranteeing an objective shift to a
economy that is low-carbon, resource-efficient, and socially-inclusive
The ideas and studies regarding the green economy denote a fundamental shift for more effective, resourceful, environment-friendly and resource‐saving technologies that could lessen emissions and alleviate the adverse consequences of climate change, at the same time confront issues about resource exhaustion and grave environmental dilapidation. As an indispensable requirement and vital precondition to realizing sustainable development, th
Green Economy
adherents robustly promote good governance. To boost local investments and foreign ventures, it is crucial to have a constant and foreseeable macroeconomic atmosphere. Likewise, such an environment will also need to be transparent and accountable. In the absence of a substantial and solid governance structure, the prospect of shifting towards a sustainable development route would be insignificant. In achieving a green economy, competent institutions and governance systems are vital in guaranteeing the efficient execution of strategies, guidelines, campaigns, and programmes. Shifting to a Green Economy demands a fresh mindset and an innovative outlook of doing business. It likewise necessitates new capacities, skills set from labor and professionals who can competently function across sectors, and able to work as effective components within multi-disciplinary teams. To achieve this goal, vocational training packages must be developed with focus on greening the sectors. Simultaneously, the educational system needs to be assessed as well in order to fit in the environmental and social considerations of various disciplines.

Topics

Among the topics addressed by ecological economics are methodology, allocation of resources, weak versus strong sustainability, energy economics, energy accounting and balance, environmental services, cost shifting, modeling, and monetary policy.

Methodology

A primary objective of ecological economics (EE) is to ground economic thinking and practice in physical reality, especially in the laws of physics (particularly the

laws of thermodynamics The laws of thermodynamics are a set of scientific laws which define a group of physical quantities, such as temperature, energy, and entropy, that characterize thermodynamic systems in thermodynamic equilibrium. The laws also use various param ...

) and in knowledge of biological systems. It accepts as a goal the improvement of human well-being through development, and seeks to ensure achievement of this through planning for the sustainable development of ecosystems and societies. Of course the terms development and sustainable development are far from lacking controversy. Richard B. Norgaard argues traditional economics has hi-jacked the development terminology in his book ''Development Betrayed''. Well-being in ecological economics is also differentiated from welfare as found in mainstream economics and the 'new welfare economics' from the 1930s which informs resource and environmental economics. This entails a limited preference utilitarian conception of value i.e., Nature is valuable to our economies, that is because people will pay for its services such as clean air, clean water, encounters with wilderness, etc. Ecological economics is distinguishable from

neoclassical economics Neoclassical economics is an approach to economics in which the production, consumption, and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a go ...

primarily by its assertion that the economy is embedded within an environmental system. Ecology deals with the energy and matter transactions of life and the Earth, and the human economy is by definition contained within this system. Ecological economists argue that neoclassical economics has ignored the environment, at best considering it to be a subset of the human economy. The neoclassical view ignores much of what the natural sciences have taught us about the contributions of nature to the creation of wealth e.g., the planetary endowment of scarce matter and energy, along with the complex and biologically diverse ecosystems that provide goods and

directly to human communities: micro- and macro-climate regulation, water recycling, water purification, storm water regulation, waste absorption, food and medicine production, pollination, protection from solar and cosmic radiation, the view of a starry night sky, etc. There has then been a move to regard such things as natural capital and ecosystems functions as goods and services. However, this is far from uncontroversial within ecology or ecological economics due to the potential for narrowing down values to those found in mainstream economics and the danger of merely regarding Nature as a commodity. This has been referred to as ecologists 'selling out on Nature'. There is then a concern that ecological economics has failed to learn from the extensive literature in

environmental ethics In environmental philosophy, environmental ethics is an established field of practical philosophy "which reconstructs the essential types of argumentation that can be made for protecting natural entities and the sustainable use of natural resourc ...

about how to structure a plural value system.

Allocation of resources

Resource ''Resource'' refers to all the materials available in our environment which are Technology, technologically accessible, Economics, economically feasible and Culture, culturally Sustainability, sustainable and help us to satisfy our needs and want ...

and neoclassical economics focus primarily on the efficient allocation of resources and less on the two other problems of importance to ecological economics: distribution ( equity), and the scale of the economy relative to the ecosystems upon which it relies.Daly, H. and Farley, J. 2004. ''Ecological Economics: Principles and Applications''. Washington: Island Press. Ecological economics makes a clear distinction between growth (quantitative increase in economic output) and development (qualitative improvement of the

quality of life Quality of life (QOL) is defined by the World Health Organization as "an individual's perception of their position in life in the context of the culture and value systems in which they live and in relation to their goals, expectations, standards ...

), while arguing that neoclassical economics confuses the two. Ecological economists point out that beyond modest levels, increased per-capita consumption (the typical economic measure of "standard of living") may not always lead to improvement in human well-being, but may have harmful effects on the environment and broader societal well-being. This situation is sometimes referred to as uneconomic growth (see diagram above).

Weak versus strong sustainability

File:Nested_sustainability-v2.gif, The three nested systems of

- the economy wholly contained by society, wholly contained by the biophysical environment. Clickable., 275px, thumb poly 123 35 134 30 171 41 196 65 194 98 167 119 121 123 79 101 73 64 101 40

Economic An economy is an area of the Production (economics), production, Distribution (economics), distribution and trade, as well as Consumption (economics), consumption of Goods (economics), goods and Service (economics), services. In general, it is ...

poly 67 52 41 70 41 111 71 150 123 167 169 163 207 147 234 113 239 83 218 49 190 32 204 77 194 111 167 125 115 126 83 110 62 78 64 60

Social Social organisms, including human(s), live collectively in interacting populations. This interaction is considered social whether they are aware of it or not, and whether the exchange is voluntary or not. Etymology The word "social" derives fro ...

poly 243 58 258 83 255 133 230 168 202 185 158 195 114 195 63 181 27 153 10 115 13 78 31 54 46 39 38 71 36 116 66 148 118 169 163 169 209 153 237 118 242 81 Environment Ecological economics challenges the conventional approach towards natural resources, claiming that it undervalues natural capital by considering it as interchangeable with human-made capital—labor and technology. The impending depletion of natural resources and increase of climate-changing greenhouse gasses should motivate us to examine how political, economic and social policies can benefit from alternative energy. Shifting dependence on fossil fuels with specific interest within just one of the above-mentioned factors easily benefits at least one other. For instance, photo voltaic (or solar) panels have a 15% efficiency when absorbing the sun's energy, but its construction demand has increased 120% within both commercial and residential properties. Additionally, this construction has led to a roughly 30% increase in work demands (Chen). The potential for the substitution of man-made capital for natural capital is an important debate in ecological economics and the economics of sustainability. There is a continuum of views among economists between the strongly neoclassical positions of

Robert Solow Robert Merton Solow, GCIH (; August 23, 1924 – December 21, 2023) was an American economist who received the 1987 Nobel Memorial Prize in Economic Sciences, and whose work on the theory of economic growth culminated in the exogenous growth ...

and

Martin Weitzman Martin Lawrence Weitzman (April 1, 1942 – August 27, 2019) was an American economist and a professor of economics at Harvard University. He was among the most influential economists in the world according to Research Papers in Economics (RePEc). ...

, at one extreme and the 'entropy pessimists', notably

and Herman Daly, at the other. Neoclassical economists tend to maintain that man-made capital can, in principle, replace all types of natural capital. This is known as the weak sustainability view, essentially that every technology can be improved upon or replaced by innovation, and that there is a substitute for any and all scarce materials. At the other extreme, the strong sustainability view argues that the stock of natural resources and ecological functions are irreplaceable. From the premises of strong sustainability, it follows that

economic policy ''Economic Policy'' is a quarterly peer-reviewed academic journal published by Oxford University Press, Oxford Academic on behalf of the Centre for Economic Policy Research, the Center for Economic Studies (University of Munich), and the Paris Scho ...

has a

fiduciary A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (legal person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person. One party, ...

responsibility to the greater ecological world, and that sustainable development must therefore take a different approach to valuing natural resources and ecological functions. Recently, Stanislav Shmelev developed a new methodology for the assessment of progress at the macro scale based on multi-criteria methods, which allows consideration of different perspectives, including strong and weak sustainability or conservationists vs industrialists and aims to search for a 'middle way' by providing a strong neo-Keynesian economic push without putting excessive pressure on the natural resources, including water or producing emissions, both directly and indirectly.

Energy economics

Cost and exergy for heating energy in Finland

A key concept of energy economics is net energy gain, which recognizes that all energy sources require an initial energy investment in order to produce energy. To be useful the energy return on energy invested ( EROEI) has to be greater than one. The net energy gain from the production of coal, oil and gas has declined over time as the easiest to produce sources have been most heavily depleted. In traditional energy economics, surplus energy is often seen as something to be capitalized on—either by storing for future use or by converting it into economic growth. Ecological economics generally rejects the view of energy economics that growth in the energy supply is related directly to well-being, focusing instead on

biodiversity Biodiversity is the variability of life, life on Earth. It can be measured on various levels. There is for example genetic variability, species diversity, ecosystem diversity and Phylogenetics, phylogenetic diversity. Diversity is not distribut ...

and

creativity Creativity is the ability to form novel and valuable Idea, ideas or works using one's imagination. Products of creativity may be intangible (e.g. an idea, scientific theory, Literature, literary work, musical composition, or joke), or a physica ...

– or natural capital and

individual capital Individual capital, the economic view of talent, comprises inalienable or personal traits of persons, tied to their bodies and available only through their own free will, such as skill, creativity, enterprise, courage, capacity for moral example ...

, in the terminology sometimes adopted to describe these economically. In practice, ecological economics focuses primarily on the key issues of uneconomic growth and

. Ecological economists are inclined to acknowledge that much of what is important in human well-being is not analyzable from a strictly economic standpoint and suggests an interdisciplinary approach combining social and natural sciences as a means to address this. When considering surplus energy, ecological economists state this could be used for activities that do not directly contribute to economic productivity but instead enhance societal and environmental well-being. This concept of dépense, as developed by

Georges Bataille Georges Albert Maurice Victor Bataille (; ; 10 September 1897 – 8 July 1962) was a French philosopher and intellectual working in philosophy, literature, sociology, anthropology, and history of art. His writing, which included essays, novels, ...

, offers a novel perspective on the management of surplus energy within economies. This concept encourages a shift from growth-centric models to approaches that prioritise sustainable and meaningful expenditures of excess

resources ''Resource'' refers to all the materials available in our environment which are Technology, technologically accessible, Economics, economically feasible and Culture, culturally Sustainability, sustainable and help us to satisfy our needs and want ...

Thermoeconomics Thermoeconomics, also referred to as biophysical economics, is a school of heterodox economics that applies the laws of thermodynamics, laws of statistical mechanics to economic theory. Thermoeconomics can be thought of as the statistical physic ...

is based on the proposition that the role of energy in

biological evolution Evolution is the change in the heritable characteristics of biological populations over successive generations. It occurs when evolutionary processes such as natural selection and genetic drift act on genetic variation, resulting in certai ...

should be defined and understood through the

second law of thermodynamics The second law of thermodynamics is a physical law based on Universal (metaphysics), universal empirical observation concerning heat and Energy transformation, energy interconversions. A simple statement of the law is that heat always flows spont ...

, but also in terms of such economic criteria as

productivity Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proce ...

, and especially the costs and benefits (or profitability) of the various mechanisms for capturing and utilizing available energy to build biomass and do work. As a result, thermoeconomics is often discussed in the field of ecological economics, which itself is related to the fields of sustainability and sustainable development.

Exergy Exergy, often referred to as "available energy" or "useful work potential", is a fundamental concept in the field of thermodynamics and engineering. It plays a crucial role in understanding and quantifying the quality of energy within a system and ...

analysis is performed in the field of

industrial ecology Industrial ecology (IE) is the study of material and energy flows through industrial systems. The global industrial economy can be modelled as a network of industrial processes that extract resources from the Earth and transform those resource ...

to use energy more efficiently. The term ''exergy'', was coined by Zoran Rant in 1956, but the concept was developed by J. Willard Gibbs. In recent decades, utilization of exergy has spread outside of physics and engineering to the fields of industrial ecology, ecological economics,

systems ecology Systems ecology is an interdisciplinary field of ecology, a subset of Earth system science, that takes a holistic approach to the study of ecological systems, especially ecosystems. Systems ecology can be seen as an application of general syste ...

, and energetics.

Energy accounting and balance

An energy balance can be used to track energy through a system, and is a very useful tool for determining resource use and environmental impacts, using the First and Second laws of

thermodynamics Thermodynamics is a branch of physics that deals with heat, Work (thermodynamics), work, and temperature, and their relation to energy, entropy, and the physical properties of matter and radiation. The behavior of these quantities is governed b ...

, to determine how much energy is needed at each point in a system, and in what form that energy is a cost in various environmental issues. The energy accounting system keeps track of energy in, energy out, and non-useful energy versus work done, and transformations within the system. Scientists have written and speculated on different aspects of energy accounting.

Ecosystem services and their valuation

Ecological economists agree that ecosystems produce enormous flows of goods and services to human beings, playing a key role in producing well-being. At the same time, there is intense debate about how and when to place values on these benefits. A study was carried out by Costanza and colleagues to determine the 'value' of the services provided by the environment. This was determined by averaging values obtained from a range of studies conducted in very specific context and then transferring these without regard to that context. Dollar figures were averaged to a per hectare number for different types of ecosystem e.g. wetlands, oceans. A total was then produced which came out at 33 trillion US dollars (1997 values), more than twice the total GDP of the world at the time of the study. This study was criticized by pre-ecological and even some environmental economists – for being inconsistent with assumptions of

financial capital Financial capital (also simply known as capital or equity in finance, accounting and economics) is any Economic resources, economic resource measured in terms of money used by entrepreneurs and businesses to buy what they need to make their prod ...

valuation – and ecological economists – for being inconsistent with an ecological economics focus on biological and physical indicators. The whole idea of treating ecosystems as goods and services to be valued in monetary terms remains controversial. A common objection is that life is precious or priceless, but this demonstrably degrades to it being worthless within cost-benefit analysis and other standard economic methods. Reducing human bodies to financial values is a necessary part of mainstream economics and not always in the direct terms of

insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to protect ...

wages A wage is payment made by an employer to an employee for work done in a specific period of time. Some examples of wage payments include compensatory payments such as ''minimum wage'', '' prevailing wage'', and ''yearly bonuses,'' and remune ...

. One example of this in practice is the value of a statistical life, which is a dollar value assigned to one life used to evaluate the costs of small changes in risk to life–such as exposure to one pollutant. Economics, in principle, assumes that conflict is reduced by agreeing on voluntary contractual relations and prices instead of simply fighting or coercing or tricking others into providing goods or services. In doing so, a provider agrees to surrender time and take bodily risks and other (reputation, financial) risks. Ecosystems are no different from other bodies economically except insofar as they are far less replaceable than typical labour or commodities. Despite these issues, many ecologists and conservation biologists are pursuing ecosystem valuation.

Biodiversity Biodiversity is the variability of life, life on Earth. It can be measured on various levels. There is for example genetic variability, species diversity, ecosystem diversity and Phylogenetics, phylogenetic diversity. Diversity is not distribut ...

measures in particular appear to be the most promising way to reconcile financial and ecological values, and there are many active efforts in this regard. The growing field of biodiversity finance began to emerge in 2008 in response to many specific proposals such as the Ecuadoran Yasuni proposal or similar ones in the Congo. US news outlets treated the stories as a "threat" to "drill a park" reflecting a previously dominant view that NGOs and governments had the primary responsibility to protect ecosystems. However Peter Barnes and other commentators have recently argued that a guardianship/trustee/commons model is far more effective and takes the decisions out of the political realm. Commodification of other ecological relations as in

and direct payments to farmers to preserve

are likewise examples that enable private parties to play more direct roles protecting biodiversity, but is also controversial in ecological economics. The

United Nations The United Nations (UN) is the Earth, global intergovernmental organization established by the signing of the Charter of the United Nations, UN Charter on 26 June 1945 with the stated purpose of maintaining international peace and internationa ...

Food and Agriculture Organization The Food and Agriculture Organization of the United Nations; . (FAO) is a specialized agency of the United Nations that leads international efforts to defeat hunger and improve nutrition and food security. Its Latin motto, , translates ...

achieved near-universal agreement in 2008 that such payments directly valuing ecosystem preservation and encouraging

permaculture Permaculture is an approach to land management and settlement design that adopts arrangements observed in flourishing natural ecosystems. It includes a set of design principles derived using Systems theory, whole-systems thinking. It applies t ...

were the only practical way out of a food crisis. The holdouts were all English-speaking countries that export GMOs and promote "

free trade Free trade is a trade policy that does not restrict imports or exports. In government, free trade is predominantly advocated by political parties that hold Economic liberalism, economically liberal positions, while economic nationalist politica ...

" agreements that facilitate their own control of the world transport network: The US, UK, Canada and Australia.

Not 'externalities', but cost shifting

Ecological economics is founded upon the view that the

(NCE) assumption that environmental and community costs and benefits are mutually canceling "

externalities In economics, an externality is an indirect cost (external cost) or indirect benefit (external benefit) to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced ...

" is not warranted. Joan Martinez Alier, for instance shows that the bulk of consumers are automatically excluded from having an impact upon the prices of commodities, as these consumers are future generations who have not been born yet. The assumptions behind future discounting, which assume that future goods will be cheaper than present goods, has been criticized by David Pearce and by the recent Stern Report (although the Stern report itself does employ discounting and has been criticized for this and other reasons by ecological economists such as Clive Spash). Concerning these externalities, some like the eco-businessman Paul Hawken argue an orthodox economic line that the only reason why goods produced unsustainably are usually cheaper than goods produced sustainably is due to a hidden subsidy, paid by the non-monetized human environment, community or future generations. These arguments are developed further by Hawken, Amory and Hunter Lovins to promote their vision of an environmental capitalist utopia in '' Natural Capitalism: Creating the Next Industrial Revolution''. In contrast, ecological economists, like Joan Martinez-Alier, appeal to a different line of reasoning. Rather than assuming some (new) form of capitalism is the best way forward, an older ecological economic critique questions the very idea of internalizing externalities as providing some corrective to the current system. The work by Karl William Kapp explains why the concept of "externality" is a misnomer. In fact the modern business enterprise operates on the basis of shifting costs onto others as normal practice to make

profit Profit may refer to: Business and law * Profit (accounting), the difference between the purchase price and the costs of bringing to market * Profit (economics), normal profit and economic profit * Profit (real property), a nonpossessory inter ...

s. Charles Eisenstein has argued that this method of privatising profits while socialising the costs through externalities, passing the costs to the community, to the natural environment or to future generations is inherently destructive. As social ecological economist Clive Spash has noted, externality theory fallaciously assumes environmental and social problems are minor aberrations in an otherwise perfectly functioning efficient economic system. Internalizing the odd externality does nothing to address the structural systemic problem and fails to recognize the all pervasive nature of these supposed 'externalities'.

Ecological-economic modeling

Mathematical model A mathematical model is an abstract and concrete, abstract description of a concrete system using mathematics, mathematical concepts and language of mathematics, language. The process of developing a mathematical model is termed ''mathematical m ...

ing is a powerful tool that is used in ecological economic analysis. Various approaches and techniques include:

evolutionary Evolution is the change in the heritable characteristics of biological populations over successive generations. It occurs when evolutionary processes such as natural selection and genetic drift act on genetic variation, resulting in certa ...

, input-output, neo-Austrian modeling,

entropy Entropy is a scientific concept, most commonly associated with states of disorder, randomness, or uncertainty. The term and the concept are used in diverse fields, from classical thermodynamics, where it was first recognized, to the micros ...

and

thermodynamic Thermodynamics is a branch of physics that deals with heat, work, and temperature, and their relation to energy, entropy, and the physical properties of matter and radiation. The behavior of these quantities is governed by the four laws of th ...

models, multi-criteria, and agent-based modeling, the environmental Kuznets curve, and Stock-Flow consistent model frameworks. System dynamics and GIS are techniques applied, among other, to spatial dynamic landscape simulation modeling. The Matrix accounting methods of Christian Felber provide a more sophisticated method for identifying "the common good"

Monetary theory and policy

Ecological economics draws upon its work on resource allocation and strong sustainability to address monetary policy. Drawing upon a transdisciplinary literature, ecological economics roots its policy work in monetary theory and its goals of sustainable scale, just distribution, and efficient allocation. Ecological economics' work on monetary theory and policy can be traced to Frederick Soddy's work on money. The field considers questions such as the growth imperative of interest-bearing debt, the nature of money, and alternative policy proposals such as alternative currencies and public banking.

Criticism

Assigning monetary value to natural resources such as

, and the emergent

is often viewed as a key process in influencing economic practices, policy, and decision-making. While this idea is becoming more and more accepted among ecologists and conservationist, some argue that it is inherently false. McCauley argues that ecological economics and the resulting ecosystem service based conservation can be harmful. He describes four main problems with this approach: Firstly, it seems to be assumed that all ecosystem services are financially beneficial. This is undermined by a basic characteristic of ecosystems: they do not act specifically in favour of any single species. While certain services might be very useful to us, such as coastal protection from

hurricanes A tropical cyclone is a rapidly rotating storm system with a low-pressure area, a closed low-level atmospheric circulation, strong winds, and a spiral arrangement of thunderstorms that produce heavy rain and squalls. Depending on its locat ...

mangrove A mangrove is a shrub or tree that grows mainly in coastal saline water, saline or brackish water. Mangroves grow in an equatorial climate, typically along coastlines and tidal rivers. They have particular adaptations to take in extra oxygen a ...

s for example, others might cause financial or personal harm, such as wolves hunting

cattle Cattle (''Bos taurus'') are large, domesticated, bovid ungulates widely kept as livestock. They are prominent modern members of the subfamily Bovinae and the most widespread species of the genus '' Bos''. Mature female cattle are calle ...

. The complexity of Eco-systems makes it challenging to weigh up the value of a given species. Wolves play a critical role in regulating prey populations; the absence of such an apex predator in the Scottish Highlands has caused the over population of deer, preventing afforestation, which increases the risk of flooding and damage to property. Secondly, allocating monetary value to nature would make its conservation reliant on markets that fluctuate. This can lead to

devaluation In macroeconomics and modern monetary policy, a devaluation is an official lowering of the value of a country's currency within a fixed exchange-rate system, in which a monetary authority formally sets a lower exchange rate of the national curre ...

of services that were previously considered financially beneficial. Such is the case of the bees in a forest near former coffee plantations in Finca Santa Fe,

Costa Rica Costa Rica, officially the Republic of Costa Rica, is a country in Central America. It borders Nicaragua to the north, the Caribbean Sea to the northeast, Panama to the southeast, and the Pacific Ocean to the southwest, as well as Maritime bo ...

. The

pollination Pollination is the transfer of pollen from an anther of a plant to the stigma (botany), stigma of a plant, later enabling fertilisation and the production of seeds. Pollinating agents can be animals such as insects, for example bees, beetles or bu ...

services were valued to over US$60,000 a year, but soon after the study, coffee prices dropped and the fields were replanted with pineapple.Ricketts TH, Daily GC, Ehrlich PR, Michener CD. Economic value of tropical forest to coffee production. Proc Natl Acad Sci U S A. 2004 Aug 24;101(34):12579–82 Pineapple does not require bees to be pollinated, so the value of their service dropped to zero. Thirdly, conservation programmes for the sake of financial benefit underestimate human ingenuity to invent and replace ecosystem services by artificial means. McCauley argues that such proposals are deemed to have a short lifespan as the history of

technology Technology is the application of Conceptual model, conceptual knowledge to achieve practical goals, especially in a reproducible way. The word ''technology'' can also mean the products resulting from such efforts, including both tangible too ...

is about how Humanity developed

artificial Artificiality (the state of being artificial, anthropogenic, or man-made) is the state of being the product of intentional human manufacture, rather than occurring naturally through processes not involving or requiring human activity. Connotati ...

alternatives to nature's services and with time passing the cost of such services tend to decrease. This would also lead to the devaluation of ecosystem services. Lastly, it should not be assumed that conserving ecosystems is always financially beneficial as opposed to alteration. In the case of the introduction of the

Nile perch The Nile perch (''Lates niloticus''), also known as the African snook, Goliath perch, African barramundi, Goliath barramundi, Giant lates or the Victoria perch, is a species of freshwater fish in family Latidae of order Perciformes. It is wides ...

Lake Victoria Lake Victoria is one of the African Great Lakes. With a surface area of approximately , Lake Victoria is Africa's largest lake by area, the world's largest tropics, tropical lake, and the world's second-largest fresh water lake by surface are ...

, the ecological consequence was decimation of native

fauna Fauna (: faunae or faunas) is all of the animal life present in a particular region or time. The corresponding terms for plants and fungi are ''flora'' and '' funga'', respectively. Flora, fauna, funga and other forms of life are collectively ...

. However, this same event is praised by the local communities as they gain significant financial benefits from trading the fish. McCauley argues that, for these reasons, trying to convince decision-makers to conserve nature for

monetary Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are: med ...

reasons is not the path to be followed, and instead appealing to morality is the ultimate way to campaign for the protection of nature.