Tuesday, March 04, 2008

What is the difference between ecological economics and environmental economics?

I thought I understood the differences to mean that one group branched off from the other group, but according to Wikipedia, that doesn’t necessarily hold true. Granted, what is Wikipedia and how relevant is it as a source? But I wanted to gain some perspective of what ‘other’ people thought of environmental economics. By ‘other’ people, I mean folks who may have a normative base of sustainability, or who aren’t economically inclined but want to somehow understand how economics and the environment interrelate.


"Environmental Economics" should not be confused with "Ecological Economics." The two fields are related, but are in some ways very different. Most environmental economists have been trained as economists. They apply the tools of economics to address environmental problems, many of which are related to so-called market failures--circumstances wherein the "invisible hand" of economics is unreliable. Most ecological economists have been trained as ecologists, but have expanded the scope of their work to consider the impacts of humans and their economic activity on ecological systems and services, and vice-versa. This field takes as its premise that economics is a strict subfield of ecology. Ecological economics is sometimes described as taking a more pluralistic approach to environmental problems and focuses more explicitly on long-term environmental sustainability and issues of scale.

Though I normally read Wikipedia with a skeptical eye, I think that their definition helps me to understand the differences between the two approaches of understanding the environment and economics. Perhaps they are bordering one another, separated by a line that splits the two vantage points.

One side would behave as if people are of little importance, and that the environment takes a superior position of priority. Such terms as “intergenerational justice” may be their grounds for moving towards compromise with the side that they deem evil for exhausting natural resources for the selfish intents of human-kind. They might also consider economists to be negligent to the concept of sustainability. Of course, a less radical understanding of this dynamic would be to incorporate an understanding of economics into the study of environmentalism; thus ecological economics.

The other side might move towards common ground by taking a stance of liberty and claiming that it is up to the dynamics of families to teach people about the importance of environmental accountability. They might also argue that if there was private ownership of land, then there might be more incentive to value the land and thus take care of it and the natural resources it provides. In fact, if a business were to own the land and want to make money off of it, it would be in the interest of the company to replenish the resources so as to continue operating in business!

Because economics as well as the environment are dynamic, there are no real ways to accurately evaluate things such as “environmental foot-prints.” Arguably, both approaches will have to deal with situations where inefficient usage of the land, including wastefulness, will occur.
The true purpose behind the importance of understanding the relationship between the two approaches comes down to policy. One side would want to come up with the ‘best’ policy pertaining to environmental issues. The other side would want to prevent government from having too much power and policy over individuals when it comes to environmental usage and availability. Because one side, those who want policy to determine how both economics and the environment are dealt with, has a current relevance, the nature of the debate comes down to why things aren’t working better. The side that advocates individual preferences has an answer, but it is considered theoretical because our government, our system, is currently operating in such a way that is contrary to individual preferences; it is a governmental-control system that attempts to take into consideration things such as the environment and economics, but does little to actually allow markets and dynamics to simply emerge.

Now, I think I have a pretty good idea of the differences of ideologies at work, will there be a viable solution to the way economics and the environment interrelates? Perhaps if we rely on government to come up with a solution, we’ll sacrifice individual liberty. And, perhaps if we leave it up to individuals, we’ll all consume ourselves to death. Perhaps there is a middle ground right on the line that separates environmental economics and ecological economics that will yield the solution.

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