Ecological Economics and Ecological Economics and Applied Problem SolvingApplied Problem Solving

What is Economics?What is Economics?

• The allocation of scarce resources among alternative desirable ends– What are the desirable ends?– What are the scarce resources?– What is the nature of these scarce

resources?– How do we allocate?

TransdisciplinarityTransdisciplinarity

• We are dealing with the issues at the interface of two highly complex and interconnected systems

• Can’t be understood from perspective of one discipline alone.

• Specific problem must determine appropriate methodologies, not vice versa.

I. What are the Desirable Ends?I. What are the Desirable Ends?

Desirable EndsDesirable Ends

• A high quality of life for this and future generations, which requires:– Ecologically sustainable scale– Just distribution of resources within and

between generations– Efficient use of resources

II. What are the scarce II. What are the scarce resources?resources?

First law of thermodynamicsFirst law of thermodynamics• Matter energy cannot be created or

destroyed– We cannot create something from nothing,

nor nothing from something

– All economic production requires natural capital

– Continuous physical growth of the economy is impossible

Second law of thermodynamicsSecond law of thermodynamics• Entropy never decreases in an isolated

system– Things fall apart, wear out, become waste

– Irreversible, evolutionary, qualitative change

– There is only a finite stock of accumulated low entropy

– The ultimate limit to the physical size of the economic system is the low entropy provided by solar energy

What is What is scarcer, scarcer, natural or natural or manmade manmade capital?capital?

Conclusions:Conclusions:

• The ultimate scarce resource is a finite supply of low entropy matter/energy

– It will not increase in response to price increases

• Natural capital has become the scarcest resource

III. What are the market III. What are the market relevant characteristics of relevant characteristics of

scarce resources?scarce resources?

Three important characteristicsThree important characteristics

• Ecosystem goods vs. ecosystem services

• Excludability– can it be owned?– If not, the market won’t provide it

• Rivalness– does it wear out when we use it?– If not, the market shouldn’t provide it

Ecosystem goodsEcosystem goods

• Raw materials = ecosystem structure

• Production = material transformation

• Used up, not worn out: use = depletion

• Rate of flow can generally be controlled

• Characterized by risk

Ecosystem servicesEcosystem services

• Structure generates function= ecosystem services

• Not transformed into what it produces

• Spontaneously restored

• Rate of use cannot be controlled

• Characterized by uncertainty and ignorance

So What?So What?

• Raw material extraction depletes ecosystem services

• Waste output depletes ecosystem services

• Services from nature include life support functions

• We cannot treat ecosystem goods and services independently

So How do We Allocate?So How do We Allocate?

When do markets work?When do markets work?

Rival

Non-rival

Excludable Non-Excludable

Market Good: land, oil, timber, captured fish, waste absorptioncapacity?

Potential market good but inefficient: patented information, e.g. energy efficiency, pollution control tech.

Pure Public Good:Information, most ecosystem services, e.g. climate stability, coastline protection, life support functions, etc.

Open Access Regime:Oceanic fisheries, timberetc. from unprotected forests, waste absorption capacity

Macro-allocationMacro-allocation

Allocation of non-market goodsAllocation of non-market goods

• Requires participatory democratic decision making process

• Just distribution therefore applies to political power as well as resources

Case Study: Conversion of Mangrove Case Study: Conversion of Mangrove Ecosystems to Shrimp AquacultureEcosystems to Shrimp Aquaculture

Site locationSite location

Project designProject design

• Case study• Developed in close collaboration with local

partners:– NGOs: ELAC, PRRM, Tambuyog, ISANet,

APEX– Local Government– Community representatives– Local University

• Multiple disciplines represented

Desirable endsDesirable ends

Quality of lifeQuality of life

• For who?– Local

• Indigenous community• Tagabinet villagers• Coastal fishing communities

– National: seafood supply– Global: carbon sequestration, biodiversity

preservation

Scale and distributionScale and distribution

• 70% of mangroves in Philippines lost

• Intact mangroves provide public goods, common resources for community

• Shrimp aquaculture benefits owners and American consumers

Working with Stakeholders•Framing the problem•Local knowledge•Stakeholder values

Scarce resources from ecosystemScarce resources from ecosystem

• Ecosystem goods– Building materials– Food

• Ecosystem services– Coastline protection– Waste absorption– Nursery

……from conversionfrom conversion

•Shrimp and fish for 3-5 years•Less protein than intact ecosystem•Massive waste output•Irreversible(?) destruction of ecosystem

Synthesis and CommunicationSynthesis and Communication

……Leads to ActionLeads to Action

• Press conference on site, with owners, community members, local government, representatives of federal government

• Illegal dikes torn down by community members

… … and efficient allocationand efficient allocation

Useful ResourceUseful Resource

• Applied Problem Solving in Ecological Economics– Farley, Erickson and Daly, Island Press