Announcements

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Announcements

• New TA Nate Berg
• Office hours for Kate830-1030 T, THFri
  2-4Cyber café or table section in library
• Text books are in.

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Why Ecological Economics?
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Back to the roots
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Oikos the household

• Study of natures household ecology
• Managing the human household economics
• Production of real goods and services bounded
  and natural
• Ecological economics management of human
  household based on knowledge of nature

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Chrematistiké- study of numbers

• Retail trade, finance, speculation, how money
  begets money
• Not bounded or natural
• E.g. International financial flows dwarf the
  trade in real goods and services

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Coevolutionary economics

• Hunter-gatherer economics
• Accumulation death
• Economics of early agricultural societies
• Depended on technological advance
• Advent of property rights
• Industrial market economics
• Use of non-renewable resources
• Ecological economics
• Driven by the growing scarcity of natural capital

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From Empty World to Full World
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What is scarce?

• In agriculture?
• Not enough tractors and pesticides, or not enough
  water, arable land, and climate stability?
• In natural resources?
• Not enough boats, or not enough fish?
• Not enough chain saws, or not enough forests?
• In community development?
• Too few roads and houses, or too few social
  connections?
• Too little food, or inadequate distribution?

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So what distinguishes ecological economics from
conventional (neoclassical) economics?

• Physics, Ethics and Practice

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Physics The Laws of Thermodynamics
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1rst Law Matter energy cannot be created or
destroyed

• We cant make something from nothing, and we
  cant make nothing from something
• Natural resources are essential to economic
  production
• Natural resources also provide vital economics
  services
• The opportunity cost of economic growth is a
  reduction in the flow of goods and services from
  nature

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2nd Law Entropy increases in the universe

• All economic production becomes waste
• One way flow from natural resource-gt human made
  economic service-gt waste
• IRREVERSIBILITY
• Economic production degrades the environment
• Opportunity cost of economic growth waste
  emissions further reduce the flow of goods and
  services from nature
• Throughputs, not inputs

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The pre-analytic vision of ecological economics
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The sustaining and containing system
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The Ecological-Economic System is Extremely
Complex

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

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Negative Feedback Loops
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The Pre-analytic Vision of Neoclassical Economics
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(No Transcript)
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The Economic System is Simple

• Human behavior is very simple
• The market system is simple
• We can model the system mathematically, and solve
  for an optimal equilibrium
• Risk dominates uncertainty and ignorance

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

• Sustainable growth is an oxymoron
• Ever continuing growth in material consumption is
  an impossible goal
• BUT welfare is a psychic flux, not a physical
  flux.
• Economic development is possible, but not
  continuous economic growth

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Ethics the desirable ends
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The desirable ends

• How do we provide a high quality of life for this
  and future generations?
• Consumption is only one narrow component of human
  needs

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Sustainable Scale

• Ethical assumption Future generations matter
• Scale the size of the economic system relative
  to the ecosystem that contains and sustains it
• There is a finite limit to the physical size of
  the economic system
• The limits to economic growth are determined by
  ecological constraints.
• Macro level opportunity costs of economic growth
  do not provide economic signals

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Just Distribution

• Ethical assumption current generations matter
• Does it make sense to care about the well-being
  of people not yet born and ignore the well-being
  of those alive today?
• Is sustainability possible without more equal
  distribution?
• Do hungry people care about the future?
• Can Americans continue to consume 25 of the
  Earths resources?
• Is depleting the earths resources fair to future
  generations?
• How do we decide on a Just distribution?