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Winslow ecological econonomics
- 8. Classic diagram from NCE book Firm Household $ G&S Labor $ Environment waste resources
- 9. Diagram from Ecological Economics Ecosystem Economy matter energy matter energy recycling solar energy heat Welfare economic services ecosystem services Human Social Activity
- 11. Thermodynamics - It’s the Law 1st Law In any closed system matter and energy can be neither created nor destroyed. Matter and energy can be interchanged. You can’t make something from nothing. 2nd Law Energy and matter move towards a less ordered state. Transformations lead to increased entropy. Entropy increases in an isolated system.
- 12. Thermodynamics - It’s the Law How is this related to economics? Since we can’t make something from nothing, “production” is an illusion. We can recycle materials but it uses energy. Resource Degradation/ Pollution Throughput The faster the throughput, the faster the depletion and degradation and the more “lost opportunity.” Resource Depletion
- 13. Thermodynamics - It’s the Law How is this related to economics? It is important to evaluate flows in terms of ecosystems capacity to assimilate waste and provide resources and technological capacity to substitute. Resource Depletion Resource Degradation/ Pollution Throughput If our rate of throughput (growth) is greater than our regeneration capacity , this is occurring through drawing down natural capital.
- 14. Can't man-made capital make up for natural capital? The value delivered by the biosphere is estimated to be in the range of US$33 trillion per year (1997 dollars). Global economy delivers US$18 trillion per year. -The value of the world’s ecosystem services and natural capital NATURE , VOL 387 , 15 MAY 1997
- 18. Relatively Empty World Ecosystem Economy matter energy matter energy recycling solar energy heat Welfare economic services ecosystem services
- 19. Economy grows relative to ecosystem: Full World Ecosystem Economy matter energy matter energy recycling solar energy heat Welfare economic services ecosystem services
- 22. Diminishing Marginal Utility and Increasing Marginal Costs (or marginal dis-utility) MU MDU Uneconomic Growth Economic Growth MDU MU a b c
- 23. More common drawing of this concept: diminishing marginal benefits and increasing marginal costs. Benefits and costs Increasing growth in the economy -> Marginal benefits Marginal costs
- 24. Where are we on this graph? Benefits and costs Increasing growth in the economy -> Marginal benefits Marginal costs
- 27. Average Costs LRAC $ Q Short run and long run average costs are both assumed to eventually increase in microeconomics. SRAC1
- 29. Scale of Economy Also Relevant to Social Systems Church Nature Family Friends Market - buying and selling
- 30. " Getting and spending, we lay waste our powers."
- 33. Physics Technics Economics, Politics Ethics Religion, Philosophy Ultimate means (low-entropy matter-energy) Intermediate means (artifacts) Intermediate ends (health, safety, comfort) Ultimate ends (final cause) Realm of consumer Realm of producer Realm of philosophy, democracy, public discourse
- 43. Other Thoughts on Ultimate Ends?
- 45. Human Capital Economic Production Process Goods and Services Evolving Cultural Norms and Policy Well Being ( Individual and Community) Consumption (based on changing, adapting preferences) Education, training, research. Building Investment (decisions about, taxes community spending, education, science and technology policy, etc., based on complex property rights regimes) Individual Public GDP Wastes Common Ecological services/ amenities having, being - having, - being negative impacts on all forms of capital being, doing, relating Restoration, Conservation Natural Capital Manufactured Capital having positive impacts on human capital capacity doing, relating Complex property rights regimes Solar Energy Social Capital Limited Substitutability Between Capital Forms Model of the Ecological Economic System Waste heat Institutional rules, norms, etc. Materially closed earth system From: Costanza, R., J. C. Cumberland, H. E. Daly, R. Goodland, and R. Norgaard. 1997. An Introduction to Ecological Economics. St. Lucie Press, Boca Raton, 275 pp.
- 57. Achieving a Steady State
- 63. Micro-Level Solutions Ethical Profits Reduce throughput Reorient products/ services Encourage fair regulation Develop disruptive technologies
- 65. Comprehensive Efficiency Identity Reduce throughput MMK services gained NK services sacrificed MMK services gained MMK stock = MMK stock throughput throughput NK stock NK stock NK services sacrificed X X X Service Efficiency How well are man made resources meeting what they are designed for? How well are we allocating resources? MMK = Man-made capital stock (e.g. equipment, goods) NK = Natural capital stock (e.g. soil, minerals, living organisms)
- 66. Comprehensive Efficiency Identity MMK services gained MMK stock = MMK stock throughput throughput NK stock NK stock NK services sacrificed X X X Maintenance Efficiency or Durability How much man-made stock are we getting for a given level of throughput? Are things well-made and durable? MMK services gained NK services sacrificed Reduce throughput
- 67. Comprehensive Efficiency Identity MMK services gained MMK stock = MMK stock throughput throughput NK stock NK stock NK services sacrificed X X X Production Efficiency Are we getting a high level of throughput for the amount of NK stock available? MMK services gained NK services sacrificed Reduce throughput
- 68. Comprehensive Efficiency Identity MMK services gained MMK stock = MMK stock throughput throughput NK stock NK stock NK services sacrificed X X X Ecosystem Efficiency Amount of NK stock we can get for NK services sacrificed. MMK services gained NK services sacrificed Reduce throughput
- 69. Reorient products/ services Sustainable Value Pollution Prevention Pros: Cost and risk reduction Product Stewardship Pros: Reputation and legitimacy, future cost savings Clean Technology Pro: Innovation and repositioning Base of the Pyramid Pros: Growth and future value
- 70. Different strategies for different markets (from Capitalism at the Crossroads, S. Hart) Developed Markets: reducing corporate footprint Emerging Markets: avoiding collision between economic growth and resource depletion and degradation Traditional/Survival Markets: understanding needs, developing native capacities
- 72. How does globalization affect sustainability?
- 74. Question: What Would New Economy Look Like?
Editor's Notes
- Critique: It is useful but it suggests that there is nothing outside of the diagram. It is in exchange value. It ignores that matter and energy are going around. Matter and energy are also going in and coming out of this model as waste. This movement of matter and energy are not abstract but must follow physical laws.
- Social Systems should be included: Economy exists within natural environment. Economy also embedded in social environment. Social environments influence the level of consumption, attitudes towards public goods, etc. People are spending more time in the economic world, neglecting non-economic world. This has consequences for the environment.
- Can we develop technologies that mimic natural systems? e.g. Industrial ecology. In many cases, environmental science and technology appear to be successful only because attention is focused narrowly. Technological change can have hidden consequences.
- Welfare comes from both man-made capital and natural capital.
- As economic/market interactions (earning and buying) take up more time and become more important than other interactions (family, social, church), increased emphasis on consumption. As market grows, this trend is reinforced through advertising. Citizens are now called consumers.
- You can't know how to allocate resources until you know distribution. Distribution depends on scale because: If the economy can no longer grow, you can't depend on growth to alleviate poverty. You can't scale up without affecting distribution.
- Remember that some investment leads to increased future production and productivity. Investment should work to promote public goods, leisure, recreation, not status goods.
- Reducing the work week could allow for full employment. Only possible if people are able to meet their needs working part time.
- Traditiona markets: ruf and tuf jeans in India village cell phones small hydropower generators cook stoves