Ecological Economics

Ecological Economics

"Ecological Economics is a policy-oriented perspective that addresses the interdependence and co-evolution between human economies and their natural ecosystems."1 This perspective is the result of growing concern over the negative adverse impacts that human economic growth has had on the environment. Ecological economics differs greatly from traditional economics. In the past and even currently, economics has primarily dealt with using ecosystems and their natural resources to maximize wealth. With economic growth being the primary objective, consideration for the effects of economic activities on the interdependent ecosystems has been severely lacking. This is accounted for by the commonly held belief that the effects of economic activities on our environment are reversible given adequate time, money and technology or else that economic systems will be able to find replacements for lost ecosystem materials. Therefore, prevailing economics RELY on the adaptability of ecosystems to serve the primary goal of increasing human economic wealth. In contrast, ecological economics is primarily concerned with what future humans want for themselves and the ecosystems upon which THEY rely. The idea is then to use this goal to determine appropriate ecosystem management practices to ensure the requisite ecosystem health is achieved. Activities for economic gain are then limited by what the ecosystem can tolerate while still at the requisite level of health. Thus, ecological economics relies on the adaptability of human economies to preserve natural ecosystems.

The acceptance and application of ecological economics is crucial to the 21st century. Already the effects of traditional economic thought can be seen by global warming, THE melting of the polar ice caps, THE changes in climate, THE shortages of petroleum and so forth. It is critical that leaders and societies around the world adopt this perspective in order to achieve sustainable development. Otherwise, humans risk altering natural ecosystems to the point of endangering the wealth AND HEALTH of future generations. Ecological economics leads to sustainable development, which ensures that resources will indefinitely continue to be available for humans. This perspective also EMPHASIZES that economic growth need not be compromised as continued development of the use of ecological materials can also lead to economic growth. In spite of the eventual required adoption of this perspective, change is likely to be slow due to the knowledge requirements for proper administration. An IN-DEPTH understanding of how each economic activity affects natural ecosystems and how changes in natural ecosystems affect economic activity in addition to knowledge of human economic adaptability IS required. Thorough research requires considerable capital as well as time. Moreover, development of appropriate indicators of sustainable economic health and a system for valuation of ecosystems and their services is needed. Finally, changes to property rights systems, laws and institutions for incentive compatibility with sustainability must be made. It is evident that there is a huge investment in time, capital and resources that is necessary to attain the compulsory understanding and knowledge and the development of indicator, valuation and incentive systems.

The benefit of ecological economics is the guarantee of a bright future for both natural ecosystems and economics for future generations as their interdependence is addressed. Ecological economics can be applied to all economic structures and processes as ecosystem materials are required in all sectors including information and service sectors that still require material goods.

Reference:
Daly, Herman E. “Economics in a Full World”, Scientific American, September 2005, Vol. 293, Issue 3.