The Case for Ecological Economics
By James Matthew Alston
18 June 2019
“In 2018, the World Meteorological Organization published its statement on the State of the Climate. The report showed that the 20 warmest years on record have occurred in the last 22 years. In the same year, the State of California’s Energy Commission published a report linking changing atmospheric conditions due to global warming as a direct cause of the devastating forest fires that swept through California, burning nearly 1.9 million acres’ of land and costing more than US$3.5 billion of damages. In 2017, the Lancet Countdown on Health and Climate Change found that 153 billion working hours had been lost worldwide due to high temperatures, predominantly on farms, and that high temperatures were simultaneously affecting the ability of crops to grow. And Professor Paul Elkins of University College London argued in response to these findings that tackling climate change ‘is going to be a net benefit to humanity in monetary terms.’
But economics hasn’t cottoned on. Most dominant economic theories work on the assumption that technology and progress can overcome any biological/ biophysical limitations the earth may have. This, of course, isn’t true; we are beginning to see some of the limitations of our unsustainable existence, the above being just a few examples. In 1966 economist Kenneth Boulding called this economic conception of the world the ‘cowboy’, that being a metaphor of the noble wanderer who roams the ‘illimitable plains’ of endless discoverable resources with no thought that they might, at some point, come to an end. Boulding said all the way back then that the problems our planet is facing are ‘not all in the future by any means’. Indeed, they are currently more visible than ever.
But this apathy or disinterest with dealing with the problem of climate change isn’t limited to economics. A 2018 Gallup poll revealed that only 64% of Americans think climate change is caused by human activities, and of those only 45% believe it will be a serious threat in their lifetimes. In the Pacific countries and east Asia, only 37% believe climate change will harm them personally, and just 26% of people in the Middle East believe climate change is a problem that is harming people right now. Multiple techniques have been used to change attitudes, including showing the connections between climate change and air pollution and health problems, or to things like the aforementioned forest fires in the USA.
Multiple techniques have been used to change attitudes, including showing the connections between climate change and air pollution and health problems, or to things like the aforementioned forest fires in the USA. A common tactic is to show people how important it is to take a personal responsibility for the problem. Unfortunately, this often causes a phenomenon called cognitive dissonance, which is a feeling of discomfort when a person’s beliefs are challenged by new evidence given to them. In the case of climate change, this actually causes people to turn away from the issue due to feelings of guilt, rather than work to combat it. Instead of giving people personal responsibility, a better method is to get people to believe climate change is a communal issue that requires action from the whole community, society, and world.
However, a small but growing field of economics wants people to think about the environment in a different sense altogether. If questioned, would you be able to estimate the monetary value of the earth’s ecology? If this figure existed, would it make people stop and think a little harder about exactly what it is we’re destroying? Would it make people care more about the environment if they knew mistreating it would negatively impact the economy? These are questions ecological economics aims to answer.
Cowboys and cosmonauts – the case for ecological economics
Ecological economics is, in part, a reaction to the traditional cowboy conception of the world. Boulding’s idea was to instead think of the world as a ‘spaceman economy, in which the earth has become a solitary spaceship, without unlimited reservoirs of anything’, and in which human beings must find their natural, sustainable state. In this metaphor, all we have is what is on our spaceship with us – and when that runs out, the money runs out, too.
As Robert Costanza, a leading ecological economist, put it in his 1989 article ‘What is Ecological Economics?’, the discipline aims to ‘make economics more cognizant of ecological impacts’ and simultaneously ‘make ecology more sensitive to economic forces, incentives, and constraints’. Costanza reiterated what Boulding had said over twenty years before: ‘current economic paradigms… are all based on the underlying assumption of continuing and unlimited economic growth.’ To combat what Costanza saw as the ‘ignorance’ humans have of the world’s environmental and economic interdependence, he explored technology’s capacity to circumventthe limits of the environment. His conclusion? Technology can’t endlessly circumvent the environment. The limits exist, and economics needs to realise this, soon.
Ecological economics argues that using only GDP as a metric (as many economic fields currently do) is unreliable because it doesn’t take into account the costs of things like pollution and deforestation; in its place, it argues for GPI, Genuine Progress Indicator. GPI uses the same data as GDP, but adds things like income gaps, poverty rates and environmental damage. By this judgment economic worth peaked per person in 1978 and we have actually become poorer due to our destruction of the environment.
In this sense, the discipline bears similarities to the green and environmental movements that began gaining ground in the 1970s. Ecological economists recognise – and they argue that ‘standard’ economists often don’t realise this, or at least choose to ignore it – that growth cannot be endless. In an interview from 2010, Costanza noted that ‘in nature, things don’t grow forever’. Instead, organisms reach their natural adult size, and then they stop. But this doesn’t mean they stop improving. Organisms continue to develop even after they stop getting physically bigger – like an adult human that isn’t getting any taller, but continues to read books and go to the gym to get smarter and fitter. Constanza admits that the thought of the economy no longer growing is a terrifying one for regular economists, but argues that the economy stalling isn’t a bad thing. Rather, what is needed now is progression to a ‘steady state’, in which our society still improves, but our economy doesn’t get bigger.
The revolution will be green – climate change
In a nutshell, ecological economics attempts to show how human economies and natural ecologies are intrinsically linked and have evolved together through time. The field bridges the gap between economics and several other disciplines, including archaeology, history and anthropology. It wants to change the common understanding that human technology can overcome any boundaries the world throws at us by showing that this judgment is unsustainable and, essentially, wrong.
But ecological economics is more than a call to action for economists to change the way they think about the world: it also tries to talk about the natural world in a way people can understand. In 1997, a paper came out that estimated the value of ‘ecosystem services’ – that is,the monetary value of the ecological systems that contribute to human civilisation – at $33 trillion per year. The GNP of the entire world at the time was around $18 trillion. Talking to people in terms of monetary figures helps them comprehend the worth of the environment and the scale of the problem. Money talks. Ecological economists have grasped that.
What’s the solution to the forthcoming environmental disaster, then? Sustainable development and green policies, according to ecological economists. The International Society for Ecological Economics, for example, states its purpose as ‘developing a sustainable world.’ Its solutions to the current problems include research into environmental tax reform, how equity relates to sustainability, and how ecological and economic models can be integrated to protect biodiversity and the earth’s atmosphere. To this end, it publishes the latest cutting-edge research on topics such as clean development, transnational conservation projects, and the effects of deforestation in its journal. And it’s not the only one: there’s also the International Journal of Ecological Economics and Statistics, founded in India, which aims to link the discipline to a closer study of ecological statistics. But this isn’t just research for the sake of research – the field wants to change people’s attitude towards ecology, and genuinely influence policy.
The International Society and these two journals have developed against the backdrop of a rapidly deteriorating environmental situation and a political sphere that doesn’t seem to care about the crisis we’re facing; yet at the same time, the green and environmental movements have never had more public support. With natural disasters abounding, Western countries dropping out of climate agreements, and nonsensical debates over the actual existence of climate change still being held, the field has an essential role in showing that the economy is fundamentally linked to the natural world we are rapidly destroying. As it becomes increasingly clear that environmental catastrophe is just round the corner, it’s time for economists – and politicians, and everyone else – to finally start paying attention.”