What is Ecological Economics?

Principles of Ecological Economics: Guidance for a Sustainable Society with Robert Costanza, PhD, Wednesday, January 23, 2008 See http://www.iceh.org/pdfs/SBLF/CostanzaInfoSheet.pdf 

Ecological economics vs. conventional economics

Ecological economics is a growing transdisciplinary field that aims to improve and expand economic theory to integrate the earth’s natural systems, human values and human health and well-being. In conventional economics, the primary goal is to increase goods and services produced by human industries (built capital), and the gross domestic product (GDP) is a national measure of the total value of goods and services produced annually. Conventional economics assumes that ever-increasing GDP is desirable, possible, and that everyone benefits. Ecological economics takes a broader perspective and recognizes that there are more things that contribute to human well-being than just the amount of stuff, such as health and education (human capital), friends and family (social capital) and the contribution of the earth and its biological and physical systems (natural capital). Its goal is to develop a deeper scientific understanding of the complex linkages between human and natural systems, and to use that understanding to develop effective policies that will lead to a world which is ecologically sustainable, has a fair distribution of resources (both between groups and generations of humans and between humans and other species), and efficiently allocates scarce resources including “natural” and “social” capital.

What is sustainability and how does it relate to Ecological Economics?

Ecological economics reminds us that "sustainability" is a multi-faceted goal by focusing on the complex interrelationship between different elements of sustainability: ecological sustainability, social sustainability and economic sustainability. It reminds us of the complexity of the many interacting systems that make up the biosphere and the uncertainty that is a fundamental characteristic of all complex systems. Ecological economics is concerned with the problem of assuring sustainability in the face of uncertainty, and aims to maintain the resilience of ecological and socioeconomic systems by conserving and investing in natural, social and human assets.

Ecological economics also seeks true economic efficiency. Economic efficiency and good economic decision making are not possible if all of the costs and benefits are not considered or included in prices. Often current market prices do not capture the full costs of an economic activity that depletes resources or damages natural systems (natural capital); or inflicts costs to human health and well-being (social and human capitals) caused by pollution or other side effects of the activity. These excluded costs are called "externalities", defined as costs that are not included in the price of the product but are shouldered by a third party, outside the producer/seller and buyer/consumer. Capture of these costs in the market would provide a powerful incentive to move towards sustainability.