Tag Archives: ecological economics

Doughnut Economics

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Doughnut Economics is a new attempt to communicate the goal of an economy that works for humans while not exceeding the natural limits of the planetary system it is embedded in. You want to be in the dough part. If you are in the hole, you are within planetary boundaries but you are poor, starving, unwell, or otherwise not benefiting from the economy that is working for at least some other people. If you are outside the doughnut entirely, you are outside planetary boundaries and the planetary system will not be able to continue supporting the economic system (including you, and everyone else) indefinitely.

The majority of intelligent and educated people on the planet do not understand these concepts. We need a critical mass of people, certainly leaders and decision makers, to understand the problem before we have much hope of solving it. I support new and novel attempts to communicate these ideas. This one doesn’t quite seem fully coherent to me in terms of stocks and flows, and I think if we taught children about stocks and flows from a young age they would grow up better able to understand systems in terms that aren’t so dumbed down.

revisiting the trophic theory of money

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One of my most popular posts ever is a brief musing about the “trophic theory of money” I wrote back in 2014. Brian Czech, who developed or at least clarified and named the theory, has a new journal article about it here. He writes pretty well for a lay audience so I would encourage people to read the paper rather than rely on me to summarize, but nonetheless here are a few key points in my own words so people can start yelling at me:

  • Before humanity figured out how to produce an agricultural surplus, everybody was trying to scratch a living out of the dirt and there was no need for money to be invented. Once the agricultural surplus became significant, many people were freed up to do other things and this led to money. So money is essentially measuring the amount of activity happening outside of agriculture, and indirectly measuring the amount of agricultural surplus that allows this to happen.
  • Towards the end of the paper, Mr. Czech acknowledges that improvements in technology over time (usually driven by intentional investment in research and development) have been able to reduce environmental impact per unit of economic activity, even though total environmental impact has continued to grow. However, he believes this process has nearly reached its limit and will not continue much longer.
  • It is possible the economy could transition to a steady state where GDP (adjusted for inflation) is no longer growing. It is also possible our environmental impact will overshoot the planet’s carrying capacity enough and for long enough that a sharp contraction in GDP (and necessarily, the amount of agricultural surplus) will occur.

Where do I stand on this? I take the laws of thermodynamics, and the fact that humanity is a species existing within and not apart from nature, as a given. I think there is a lot of knowledge out there yet to be discovered, and if our society took the right steps we might be able to keep growing in a sustainable way for some time. I don’t think there is any evidence that our sociopolitical system even understands the problem let alone is likely to take those steps. I don’t think action on the necessary scale will take place unless and until we reach a crisis stage. About the most positive I can be is to hope for a relatively minor crisis rather than a civilization ending one.

non use values

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This paper mentions the importance of including non-use values in ecosystem services valuation.

Evidence of a Shared Value for Nature

Ecosystem service analysis aims to expand the accounting of human values for nature, yet frequently ignores or obfuscates a category of human values with potentially large magnitude, namely nonuse or passive use values. These values represent the satisfaction derived from the protection or restoration of species, habitats and wilderness areas, even if people never use them in any tangible way. The shunting of nonuse values to the background of ecosystem service analysis appears, in part, to be an attempt to avoid the perceived elitism of environmental values. To examine whether such values are the purview of the elite, we explore three types of evidence of who holds nonuse values. We find that when people are asked to 1) commit money via stated preference instruments, 2) respond to tweets, or 3) express opinions via surveys they demonstrate a significant willingness to protect and restore natural resources, regardless of their own use of those resources. Such values are represented in all socio-demographic groups that encompass race, ethnicity, immigration status, income, political affiliation, geographic location, age or gender, although the magnitude can vary among groups. The implications are that omitting nonuse values in ecosystem service analysis will tend to underestimate values, particularly for remote sites with limited use, and fail to represent important tradeoffs.

record U.S. weather disasters in 2017

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Major hurricanes, fires and floods set a new record for the cost of damage in the U.S. in 2017. Setting aside the human misery caused, natural disasters tend to provide a short-term economic stimulus, because it is rare time that politicians tend to set aside their differences and borrow or print money as necessary to solve the problem. In the longer term though, I can’t help thinking that this is one way climate change can make us poorer, because we will be spending money and effort dealing with a higher rate of disasters that we could otherwise be spending on more productive work, investment or innovation. The other way climate change can make us poorer is just the long, slow grind of rising energy, food and water prices. I can imagine these two trends working together, where we are adapting to that long, slow grind, but when the disasters hit we no longer have the ability to recover completely like we used to. This is not unlike a stressed ecosystem that manages to hang on until that fire or flood hits, but then does not have the soil conditions or the seed bank or whatever to rejuvenate itself in the same spot after it gets wiped out.

decoupling

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Here’s a new article from Ecological Economics on the idea of decoupling human progress from energy use. In other words, the idea that we can continue to improve the quality of our lives and society without continuing to produce and consume ever more energy, materials, and stuff. To do this requires distinguishing needs from wants, which goes against the grain of mainstream economics.

A Framework for Decoupling Human Need Satisfaction From Energy Use

Climate change poses great challenges to modern societies, central amongst which is to decouple human need satisfaction from energy use. Energy systems are the main source of greenhouse gas emissions, and the services provided by energy (such as heating, power, transport and lighting) are vital to support human development. To address this challenge, we advocate for a eudaimonic need-centred understanding of human well-being, as opposed to hedonic subjective views of well-being. We also argue for a shift in the way we analyse energy demand, from energy throughput to energy services. By adopting these perspectives on either end of the wellbeing-energy spectrum, a “double decoupling” potential can be uncovered. We present a novel analytic framework and showcase several methodological approaches for analysing the relationship between, and decoupling of, energy services and human needs. We conclude by proposing future directions of research in this area based on the analytic framework.

ecosystem disservices

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This paper proposes the idea of “ecosystem disservices” to address criticisms scientists have made of the ecosystem services concept.

Limitations of the Ecosystem Services versus Disservices Dichotomy

Ongoing debate over the ecosystem services (ES) concept highlights a range of contrasting views and misconceptions. Schröter et al. (2014) summarise seven recurring arguments against the ES concept, which broadly relate to ethical concerns, translation across the science—policy interface, and how the concept’s normative aims and optimistic assumptions affect ES as a scientific approach. In particular, recent criticism has focused on how the concept is unable to address ecological complexity due to the limitations of the economic stock–flow model that ES is based on (Norgaard 2010). Acknowledging ecosystem disservices (EDS) (i.e. outcomes of ecosystem functions that negatively affect human communities) has been suggested as a way to account for this ecological complexity (McCauley 2006; Lyytimäki 2015). The impact of EDS on communities (i.e. the ‘cost’ of the action) can be measured financially, or through changes in individual or social well-being. McCauley (2006) and Lyytimäki (2015) list EDS examples like pest damage to crops, or trees removing water from watersheds.

Integration of ecological-biological thresholds in conservation decision making

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Here’s another attempt to link ecological and economic systems:

Integration of ecological-biological thresholds in conservation decision making

In the Anthropocene, coupled human and natural systems (CHANS) dominate and only a few natural systems remain without drastic human influence. Conservation criteria, such as many of those proposed by conservation biologists and ecologists with reference to areas of minimal human impact, are not relevant to much of the biosphere. On the other hand, conservation criteria delineated within economics are problematic with respect to their ability to arrive at operational indicators of well-being that can be applied in practice over multi-generational time spans. CHANS are subject to the process of economic development which, under current management structures, tends to afflict natural systems and transgress planetary boundaries. Hence, designing and applying conservation criteria applicable in real world systems where human and natural systems need to interact and sustainably coexist is essential. By both recognizing the criticality of satisfying basic needs as well as the great uncertainty over the needs and preferences of future generations, the current paper seeks to incorporate strict conservation criteria into economic evaluation. Specifically, these criteria require the conservation of environmental conditions such that the opportunity for intergenerational welfare optimization is maintained. In this direction, we propose the integration of ecological-biological thresholds into decision-making and use as an example the planetary boundaries approach. As such, both conservation biologists and economists must be involved in defining operational ecological-biological thresholds which can be incorporated into economic thinking and reflect the objectives of conservation, sustainability and intergenerational welfare optimization. As a result, we delineate the axioms of an operational framework of sustainability and hence set the basis for an interdisciplinary research agenda.