Sahu 1994 Ecological-Economics

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ECOLOGICAL ECONOMICS ELSEVIEREcological Economics 11 ( 1994) 9- 19

Niche diversification in environmental/ecologicalNirmal Chandra Sahu *, Bibhudatta Nayak

economics

Deparrment of Economics, Berhampur Unicersiry, Bhanja Bihar, Berhampur 760 007, Orissa, India Received 5 February 1993; accepted 18 September 1993

Abstractpaper is devoted to the identification and comparison of the niches of neoclassical environmental economics and ecological economics (ECO). It is presented in four sections. Section 1 argues that the existing literature does not make the differences and relations between the sister disciplines neatly transparent. Section 2 critically examines the antecedents of the subjects with reference to three structural dimensions, such as scarcity perception, problem-solving orientation and range of integration. Section 3 collates the elements and reformulates the definitions, Section 4 is a coda on the essay. The divide between the paradigms which came to the surface during the 1960s became prominent through the growth controversy of the subsequent decade. The controversy over the need for change of economic theory to cope with the growing intensity of environmental uncertainty makes the disciplines sore about each other. The neoclassical paradigm comprising of elements like relative scarcity, allocative approach, market correction and technological optimism characterises NEE. The distinguishing characteristics of EC0 include thermodynamic irreversibility, absolute scarcity, economy-ecosystem symbiosis, biophysical approach, ecological stewardship and prudent pessimism. The niches are competitive and complementary in some respects, and thus provide a unique example of fruitful niche diversification within environmental/ecological economics. We have a feeling that the economics profession can trace out the interface of the disciplines in some policy areas and raise the effectiveness of prescriptions so that this academic species diversity can serve humankind to its full potential.This Keywords:

(NEE)

Allocative Scarcity perception

approach;

Biophysical

paradigm;

Ecological

economics;

Neoclassical

environmental

economics;

1. introductionThe deterioration in the quality of natural environment is a problem of great fascination and controversy in the economics profession of the contemporary world. Arising partly out of disagreement in scientific views, the controversy is

* Corresponding

author. Science

mainly due to the difference in the paradigms. Neoclassical environmental economics (NEE) and ecological economics (ECO) share a common concern for the human habitat and cover overlapping grounds, but now operate almost like two different branches of economics and environmental science. Claims and counterclaims on the validity and significance of the two cognitive structures create confusion on the niches as the sister disciplines descend down to the class rooms, conferences and decision-making levels. This paper

0921-8009/94/$07.00 0 1994 Elsevier SSDI 0921-8009(93)E0084-T

B.V. All rights reserved

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N. C. Sahu, B. Nayak /Ecological

Economics I I (I 994) 9-19

surveys and reviews the literature to facilitate the process of identification of their niches and indicate the range and complexity of possible interdependence between them.

The need for niche identification NEE looks at the approach of EC0 as the voice of dissent from the orthodoxy (Common, 1988a, p. 20). On the other hand, Proops (1989, p. 601 views NEE as a limited subset of ECO. In some NEE quarters, the very existence of EC0 is not accepted (Common, 1988b). In the EC0 camp, economists are fervently urged to take up the challenge to counter the NEE conclusions with alternative approaches (Viederman, 1992). In addition to these, an inquisitive sophomore has three types of confusions. First, since ecology is a branch of environmental science, why should NEE be a subset of ECO? Some books on NEE (Nijkamp, 1976a,b) cover economic-ecologic aspects. Further, academic courses on NEE include study of the ecosystems and their economics (CReNIEO, 1988, MKU. 1988). Another source of confusion relates to the definitions and their immediate implications. Environment defined as the totality of natural external conditions and influences that affect the way things live and develop (Freeman et al.. 1973, p. 19) is a resource. Ecosystem defined as a system of give-and-take among plants. animals and their surroundings (Schultz. 1981. p. 486) can refer to a unit as small as a pond or as big as the biosphere which has been treated by Homo sapiens as a resource (Bates, 1968). Viewed as environment it is non-reproducible. and as biosphere, its balance is irreversible if (mislused beyond the assimilative capacity. Since NEE is the study of the economy-environment relationships (Common, 1988aI and EC0 that of the economy-ecosystem interrelation (Proops, 1989). why the niches are different is not neatly transparent. Thirdly, NEE is a little more than a quarter century old recognised discipline (Proops, 1989, p. 601. Some universities introduced it about two decades ago (Seneca and Taussig, 19741. In a

developing country like India, as many as 40 universities/ institutions offered the course at the graduate and higher levels in 1989 (MKU, 1989). Compared to this, EC0 is recently explored as a new academic discipline. It is the product of the natural urge of a number of practitioners in the field (Proops, 1989), the foundation of which was laid in the Wallenberg Symposium at Stockholm in 1982 (Costanza, 1989). Now EC0 has also been introduced in some of the universities (May, 1992; Soderbaum, 19921. The question that crops up here is what is the necessity of a new branch of inquiry when an already settled subject is addressing its issues? Is EC0 a new name or does it incorporate new substance?

The approach We make an attempt in this paper to provide answers to the questions raised above by rearranging and analysing the materials found in the literature. The elements have been found from the antecedents of the two subjects which have been examined with reference to three structural dimensions, such as scarcity perception, problem-solving orientation and range of integration. Under each dimension, the two approaches are discussed followed by a brief commentary. Then the elements are collated to reformulate the definitions. The paper is eclipsed by three main limitations. First, since it does not necessarily aim at describing the sister disciplines in their historical perspectives. repetitions, here and there, have become unavoidable. Second, the paper does not intend to be exhaustive in the survey of literature. Nor is there an attempt made to go for an in-depth study or critical appreciation of any specific problem or work of any economist. The relevant representative references are brought together to bring out the main trends in economic thinking as they divide into two streams and make an unbiased measurement of the gap that lies between them. Third, as the two structures overlap in some areas, it is not possible to draw a boundary line between them. There is, therefore, some degree of oversimplification involved in the derivation and classification of the elements.

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2. Structural dimensions 2.1. Scarcity perception Malthusian scarcity (17981, Ricardian scarcity (18171, Mills stationary state (1857) and Jevons coal question (1865) represent some of the early economists concern with natural resource scarcity (Cracker and Rogers, 1971; Common, 1988a). However, from around 1870, the scarcity issue was relegated under the shadow of the profound faith of neoclassical economics on market mechanism, substitution possibilities and technological progress. As a result, examples of free goods are still given only from natural environment. After about one century, keeping pace with the growing awareness about the environmental crisis, Allen V. Kneese and his colleagues of Resources For the Future, influenced by the perspective of K.W. Kapps The Social Costs of Public Enterprise of 1950 (Ayres and Kneese, 1969), led a resurgence of interest among economists (Victor, 1991, p. 193) to integrate the market failure concept with the emerging scarcity of clean air, water and soil. The origin of modern NEE lies here. In its initial years, the subject was better referred to as pollution control and aesthetic uplift from the viewpoint of the upper middle classes (Mason Gaffney, 1966, p. 101). Notwithstanding the neoclassical optimism, there appeared several apprehensions about the feasibility of economic growth built upon the finitude of the resource dowry of humankind. Rosa Luxemburg in The Accumulation of Capital (1913) had visualised a catastrophic objective limit of global capitalist system (Rousseas. 1979). Bertrand Russell in his The Limits of Human Power (1951) cautioned that the consequences of economic growth are irreversible as entropy always increases. But in the economics profession, Kenneth E. Bouldings argument in 1966 that the economics of coming spaceship earth should be different from that of the open earth of the past was a landmark in creating the divide. Further, E.J. Mishan and E.F. Schumacher constantly questioned the desirability of material prosperity. Then the Club of Rome world model analysed the predicament of humankind in 1972,

and sparked the growth controversy through which the gulf between NEE and EC0 became prominent.NEE

The economists of this camp sought and found their counters to the problems of the 1970s within the mainstream. No fundamental modification was felt necessary in the relative scarcity perception of the conventio