1、Ecological economics. An introductory course Autumn 2011,Ralf ErikssonEconomics School of Business and Economics bo Akademi UniversityUniPiD,Lecture 1.,Introduction and conceptual background,13/12/2019,Ecological Economics,2,The structure of the course,The course consists of 10 modules of which 9 is
2、 the actual course work and the 10th is reserved for exam i.e. Weeks 38-47 (5 credits) 5 credits N.B. the change compared to the preliminary course description!,13/12/2019,Ecological Economics,3,Course content in brief:,Introduction and the general policy perspective required by sustainability econo
3、mic growth in a historical perspective Ethics and ecological economics Environmental economics sustainability conceptions and measurement within ecological economics economics and ethics of climate change global food security the state of the seas on earth and locally (the Baltic Sea) the possibilit
4、y of degrowth N.B. the change to the preliminary course content!,Ecological Economics,4,The Goal of the course,To give an introduction to the discipline of ecological economics To discuss different perspectives on ecological economics problems and their solutions,13/12/2019,Ecological Economics,5,Li
5、terature,Eriksson, R. & J. O. Andersson (2010) Elements of Ecological Economics. Routledge. (This is the main text!) Edwards-Jones, G., B. Davies and S. Hussain (2000) Ecological economics. An introduction. Blackwell Science, Oxford. Common, M. & S. Stagl (2005) Ecological Economics. An Introduction
6、. Cambridge UP. The reading will be specified during the course. Also other sources will be referred to/recommended.,13/12/2019,Ecological Economics,6,(One) definition:,Ecological economics is a transdisciplinary field of academic research that addresses the interdependence and co-evolution of human
7、 economies and ecosystems over time and space (Palgrave dictionary of economics),Ecological economics,7,Another definition,“Ecological economics addresses the relationships between ecosystems and economic systems in the broadest sense. These relationships are the locus of many of our most pressing c
8、urrent problems (i.e. sustainability, acid rain, global warming, species extinction, wealth distribution) but they are not well covered by any existing discipline. Environmental and resource economics, as it is currently practiced, covers only the application of neo-classical economics to the enviro
9、nmental and resource problems.,13/12/2019,Ecological economics,8,Ecology, as it is currently practiced, sometimes deal with human impacts on ecosystems, but the more common tendency is to stick to natural systems. Ecological economic aims to extend these modest areas of overlap. It will include neoc
10、lassical environmental economics and ecological impact studies as subsets, but will also encourage new ways to think about the linkages between ecological and economic systems.”,13/12/2019,Ecological economics,9,Ecological economics vs. Environmental economics?,Ecological economics? problem oriented
11、 Pluralistic Complexity Strong sustainability Pessimistic view of the capacity of the markets capacity to handle env. problems,Environmental economics? Method oriented Neoclassical Simplicity Weak sustainability Optimistic view of the capacity of the markets capacity to handle env. problems,13/12/20
12、19,Ecological economics,10,Ecological consciousness in social science the limits to growth,Club of Rome (1968) Large scale computer models Limits to Growth 1972 (Meadows et al.),13/12/2019,Ecological economics,11,Ecological consciousness in social science the limits to growth Different conceptions o
13、f growth,a) Continuous growth,Continuous growth physical units far off or Physical limits are themselves growing exponentially,13/12/2019,Ecological economics,12,Time,carrying capacity,populationphysical economy,b) Sigmoid growth,signals from physical limits to growing economy are instant, accurate
14、and responded to immediately, or population or economy limits itself without signals,13/12/2019,Ecological economics,13,time,c) Overshoot and oscillation,Signals or responses are delayed and limits are unerodable or are able to recover quickly from erosion,13/12/2019,Ecological economics,14,time,d)
15、Overshoot and collapse,signals are or responses are delayed, and Limits are erodable (irreversibly degraded when exceeded),13/12/2019,Ecological economics,15,time,”Criticism”,The model has its limitations Treats the world as a homogeneous entity Unfairly pessimistic does not take account of the pric
16、e-mechanism,13/12/2019,Ecological economics,16,Ecological economics some fundamental ideas,From a closed system to an environment-dependent system,13/12/2019,Ecological economics,17,GNP-Money flow from H to B or B to H the view of standard/neoclassical economics the economy as a closed system.,13/12
17、/2019,Ecological economics,18,Households,Business,Consumption spending,Goods and services,Factor services,Wages, rates and profits,This closed system does not consider the entropic throughput Was created when environment = entropic throughput was no scarce resource we have moved from a Cowboy econom
18、y to a Spaceman economy,13/12/2019,Ecological economics,19,The economy as an open subsystem of the ecosystem,13/12/2019,Ecological economics,20,Economy,Cowboy economy,Spaceman economy,S,S,H,H,Man-made capital,Natural capital,S = solar energy H = heat M = matter E = energy,Recycle,Recycle,M,M,E,E,Eco
19、system,Ecosystem,M,E,E,M,Economy,The circular flow in a steady-state economy,13/12/2019,Ecological economics,21,Ecosystem,Economy (Stocks),S,H,Service,Flow of service from natural ecosystem,Flow of service from human economy,Throughput,Depletion-Production,Pollution-Depreciation,Entropy hourglass (G
20、eorgescu-Roegen),13/12/2019,Ecological economics,22,Solar flow,Solar stock (low entropy),Terrestrial Stock (low entropy),Terrestrial flow,(high entropy),Consumption and welfare?, it is the capital stock from which we derive satisfactions, not from the additions to it (production) or the subtractions
21、 from it (consumption), that consumption, far from being desideratum, is a deplorable property of the capital stock which necessitates the equally deplorable activities of production; and that the objective of economic policy should not be to maximise it, i.e. to enable us to maintain our capital st
22、ock with as little consumption or production as possible (Boulding, Daly 1996),13/12/2019,Ecological economics,23,Point of departure: The global ethical trilemma,13/12/2019,Ecological Economics,24,Figure 1.1 the global ethical TRILEMMA Pick two ignore the third,Mass consumptionProsperity Global soci
23、al- Eco-efficientdemocracy capitalism Global Ecological justice sustainabilityRed-green planetarism,13/12/2019,Ecological Economics,25,The corners of the triangle correspond to the three components often included in the definitions of sustainable development: the ecological, the economic and the soc
24、ial dimensions. In practice it is impossible to reach all three,13/12/2019,Ecological Economics,26,Prosperity,Rostows stage-theory (economic growth it like the flight of an airplane) The goal, and final stage was “the age of high mass-consumption“. When Rostow wrote this (1960) no attention was paid
25、 to the natural environment Economic growth is still the standard for success globally!,13/12/2019,Ecological Economics,27,Justice,One possible definition could be based on capabilities (A. Sen) A regime will be deemed just if and to the degree that it promotes harmonization of capabilities to achie
26、ve functionings at a level that is sufficient, universally attainable and sustainable. (DeMartino, s.144),13/12/2019,Ecological Economics,28,The world is hardly just today,Income (compared in terms of market exchange rates MER among the respective currencies) is more than 70 times higher. Income (co
27、mpared in terms of purchasing power parity exchange rates) is reckoned as more than 10 times higher. Consumption of animal food is 7 times higher. Release of carbon dioxide is 22 times higher. Consumption of electricity is 35 times higher. Consumption of paper is 89 times higher.,13/12/2019,Ecologic
28、al Economics,29,Ecological sustainability,Sustainability (in some sense to be discussed in chapter 5) become a fundamental value comparable to liberty or justice. One way of measuring ecol. Sustainability is the ecological footprint Which shows the human pressure on ecosystems,13/12/2019,Ecological
29、Economics,30,Figure 1.2 global ecological overshoot from the 1960s to the 2050s,13/12/2019,Ecological Economics,31,Figure 1.2 shows how the global ecological footprint has increased since the 1960s and how it is expected to grow if humankind continues to increase its consumption of natural resources
30、. A rapid reduction would be necessary to bring down the global footprint to a level that is consistent with Earths limited biocapacity,13/12/2019,Ecological Economics,32,Pick two ignore the third,The ethical trilemma derives from the difficulty to achieve all three goals simultaneously. It is relat
31、ively easy to pick one of the corners and to find out what would be required to achieve that specific goal. You can read books on how to promote economic growth, how to reduce inequities or how to avoid environmental degradation, but it is much harder to find works that treat all three even just two
32、 of the goals at the same time.,13/12/2019,Ecological Economics,33,The dominating policy today is perhaps the one that stresses growth, i.e. the top of the triangle (Figure 1.1) A combination of Prosperity and Justice could be a standard (global) social democratic view. Whereas most environmental ec
33、onomists are situated on the side of “eco-efficient capitalism” ecological economists tend to have a penchant towards “red-green planetarism”.,13/12/2019,Ecological Economics,34,The big and difficult task would be to take all the corners into consideration. We will come back to this problem in the l
34、ast chapter (module) of this course.,13/12/2019,Ecological Economics,35,Lecture 2. economic growth and human development,36,Ecological economics 2011 (UniPID),THE IPAT EQUATION,I = P x A x T where: I stands for environmental impact P stands for population A stands for consumption per capita or afflu
35、ence T stands for throughput natural resourses used per unit of consumption; it is largely dependent on the technology used in the production of goods and services,37,Ecological economics 2011 (UniPID),For example like above,World population x GDP per capita x Tonnes of natural resources/Global GDPG
36、DP Gross Domestic Product is the value in monetary terms of the goods and services produced in a country. It is also roughly equal to the GNI the Gross National Income of the country. GNI comprises the total value produced within a country (i.e. its GDP), together with its incomes received from less
37、 payments made to other countries. On a global level GDP is exactly equal to GNI.,Ecological economics 2011 (UniPID),38,Table 2.1 Life expectancy, 1000-2003 (years at birth for both sexes combined),Ecological economics 2011 (UniPID),39,2.2. Population (millions) 1-2030,Ecological economics 2011 (Uni
38、PID),40,Levels of per capita GDP (1990 $),Ecological economics 2011 (UniPID),41,Six types of capital,Natural capital is physical assets provided by nature; natural resources and amenities that deliver services to the economy. They are generally reproduced naturally, without human interference, but s
39、ince humans nowadays are able to remake nature on a massive scale, natural capital can be degraded and destroyed, but also enhanced and created,Ecological economics 2011 (UniPID),42,2. Manufactured capital corresponds to the “real capital” of the classical economists. It consists of man-made equipme
40、nt, buildings and infrastructures that are used for productive purposes. Manufactured capital wears out and must be replaced by investments in new tools, machinery, vehicles, buildings, etc.,Ecological economics 2011 (UniPID),43,3. Human capital consists of the motivations, skills and knowledge of t
41、he workers. Investment in human capital involves upbringing, education, training and experience.,Ecological economics 2011 (UniPID),44,4.Intellectual capital is the pool of knowledge and ideas accumulated in cultural artefacts, such as books and computer memories. Discoveries, innovations, recipes,
42、scientific results, fiction and plays, compositions and pictures can be stored and reused. Even if the materials encoding the ideas may wear out, the ideas in fact depreciate less the more they are used. Intellectual capital is often merged with human capital, but there are good reasons to separate
43、the two. One is that the reproduction of intellectual capital is practically delinked from the use of scarce natural resources, and therefore of great interest from an ecological point of view.,Ecological economics 2011 (UniPID),45,5.Social capital is embedded in the culture and institutions of a so
44、ciety. Trust, mutual understanding, and shared values are crucial for economic cooperation. Activities such as politics, legislation and governance can improve social capital. Cultural norms, customs and institutions do not wear out, but they may become obsolete and dysfunctional as times changes.,E
45、cological economics 2011 (UniPID),46,6. Financial capital, also called fictive capital in contrast to “real capital”, is funds of purchasing power necessary for facilitating transactions and investments in a capitalist economy. Since financial capital consists of symbolic assets, such as loans, curr
46、encies, stocks, futures and derivatives, astronomical amounts can be transacted cheaply and almost instantly.,Ecological economics 2011 (UniPID),47,Energy, entropy .and ecological footprint,According to the entropy law (2nd law of termodynamics the order in the universe tends to decreas: the use of
47、non-renauvable natural resources makes the order increase such a when oil i pumped up and made unuseful when used different engines Howeever, solar energy is (from human perspective) renewable, thanks mostly to phostynthesis(see slides 21 and 22 in lecture 1),Ecological economics 2011 (UniPID),48,.a
48、nd ecological footprint,Ecological footprint (EF) is a measure of the use of renewable resources. EF is a measure expressed in the land and water (in hectares) to produce what the economy consumes and requires for to absorb waste. Using our IPAT equation we can measure the global environmental impac
49、t in terms of ecological footprints in the following way:Impact = Population x GDP/capita x EF/GDP Since we live in a full world the EF/GDP relation should be dimished.,Ecological economics 2011 (UniPID),49,Strong and weak sustainability,How substituble are natural resources to man made capital reso
50、urces? WEAK SUSTAINABILIY is the standard assumption of mainstream economics; Natural resources are substitutable by man made resources STRONG SUSTAINABILITY is the assumption of ecological economics; there are critical limits of the natural resources that should not be exceed, and cannot be recovered by built (artifical) systems,
