- Ecological economics is a rapidly growing transdisciplinary approach to understanding the economy and its dependence on and interactions with natural ecosystems. Ecological economists seek to redress the limitations of mainstream economics, since economic theories and models that fail to address environment-economy linkages give increasingly unreliable guidance as human populations and economies grow and make increasing demands on the natural world.
While there are different approaches and methodologies within ecological economics and the discipline continues to evolve rapidly, I have come to see some common threads in research approaches and findings:
- Human demands on the biosphere are degrading the earth systems upon which humanity depends
- Wellbeing in the long run will require that economic activity respects planetary boundaries.
- Highly unequal distributions of wealth and income tend to undermine sustainability.
- Especially in the rich world, ever increasing levels of GDP, consumption and resource utilization are no longer translating into increased human welfare (the Easterlin Paradox).
- While greener technologies and consumption practices can reduce the consumption of resources and the generation of wastes, in many cases the benefits of such shifts will tend to be cancelled out by the Jevon’s Paradox or by further GDP growth. Rich countries can support sustainability by shifting to post-growth economic policies (focusing on human wellbeing rather than rising GDP).
- While markets are an important human innovation, unless well-designed taxes, regulations and incentives are in place (e.g., carbon taxes and renewable portfolio standards), profit seeking firms will tend to deplete natural capital, to over-exploit common pool resources and to externalize costs.
- The neoclassical model of humans as atomistic and rational consumers with insatiable demands is deficient and should be replaced with a model more consistent with the empirical evidence that recognizes that humans can be both selfish and altruistic, that humans are social beings, and that consumption can both improve and undermine well being.
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Ecological economics is distinct from environmental economics. The latter involves applying methods from mainstream economics to the environment with limited scrutiny of the underlying assumptions of this paradigm. There is some overlap between the two schools of thought (for instance, both tend to advocate for putting a price on carbon emissions), but much of the work carried out in environmental economics tends to adopt standard presumptions and to lack explicit modelling of environment-economy linkages or consideration of planetary boundaries.