It is time to stop quivering in our boots in pointless fear of the future and just roll up our sleeves and build it.
- Ray Pierrehumbert

Tuesday, July 3, 2007

Environmental Economics vs Ecological Economics

A fellow named Zeke Hausfather has showed up on the globalchange list and is saying a lot of interesting things. At last I am getting some glimmer of an idea that some sort of sensible discussion is happening in some corner of economics. I hope this leads to some substantive reading at some point.

In the discussion (unfortunately marred by a moderator's error as you will see) on the Rolling Stone article aboout the "Secret Campaign to Deny Global Warming", Zeke offers the summary that there is a
fundamental divide in the community of economists studying environmental matters; namely whether unlimited growth is possible coupled with a dematerialization of the economy, or if we need to aim for a more "steady state" solution. This question largely divides Ecological Economists from Environmental Economists
which seems like a very good place to start. Much better than what we usually see, about "correctly discounting the future" and such.

I'm not sure which side I will find mroe attractive, but I am inclined to a belief that "unlimited growth is possible" as a designed feature. This is not because I believe that the quantities that have been growing, historically, are all that useful. Rather it is because I don't think the growing quantity is very meaningful at all.

If all of our systems are predicated on the increase of an arbitrary quantity, by all means let us try to arrange to gradually redefine it so that it tends to increase!

In other words, I see the "environmental" (vs "ecological"; what awful nomenclature) position as achievable by design as a retrofit, and preferable to revolutionary change in the economy on the one hand or ever-hotter flirtation with catastrophe on the other. The real economy, which will seek sustainability and serenity, will have to ride atop this artifact, but we won't need to unplug it!

Am I making sense? I wonder.

7 comments:

David Duff said...

"Am I making sense? I wonder."

Er, no, is the word I'm struggling for!

Just teasing, Mr. Tobis, I, too, struggle to avoid the portentious jargon that so-called experts put up to screen what might appear to be rubbish if they wrote it in good, plain English.

Michael Tobis said...

I didn't expect David to make much sense of this. He's too attached to the idea of economics as pure science rather than as engineering.

I'd appreciate hearing from anyone else who sees what I'm trying to say, here.

paul.baer said...

A few brief points.

First, the question about growth itself is more complex than that characterization. One of the main proponents of the "steady state economy" (Herman Daly) popularized the distinction between "growth" (increase in resource throughput) and "development" (improvement in the quality of life). His point was that GDP actually captures the former more than the latter, and he was one of the pioneers of alternatives to GDP. He would certainly be friendly to the idea that we could (and should) have a metric that would increase with real "development."

Second, there is much more at stake than simply whether indefinite "growth" is possible. The divide (which I know first hand, and plant myself squarely on the "ecological" side of, in spite of the fact that it's a rather silly name) is also about whether economics is or can be value free, whether social decisions about "value" should be based on asking individuals about their preferences (e.g., "contingent valuation" surveys), and a variety of more-or-less related issues.

Finally (for now!) a crucial part of the divide is the perception of the urgency of the problem. Environmental economists tend to think that think that things are more or less OK and that with proper pricing of externalities we can adequately dematerialize the economy. Ecological economists are more likely to see the system in a planetary crisis in need of a serious “structural adjustment,” in which the need to maintain more-or-less business-as-usual “growth” in the North, while also allowing similar growth in the South, is simply not a reasonable strategy.

Why this divide has evolved as it has is an interesting question in academic sociology.

--pb

Michael Tobis said...
This comment has been removed by the author.
Michael Tobis said...

[slightly amended]

Thanks, Paul.

I'm trying to suggest something a little stranger than an alternative metric. I'm suggesting we gradually redefine value such that GDP becomes a measure of development in the sense of "etre plus" rather than "avoir plus".

Changes in culture are incremental in the absence of catastrophe. If it is a catastrophe we are trying to avoid, we have to be as incremental as possible.

I have always said the way we keep score (money) is arbitrary and sensitive to politics and culture. A conscious effort to gradually value nondestructive activity and penalize extractive activity by incentives both social and economic might just do the trick.

A carbon tax and a carbon sequestration incentive would be a way to get coal interests to behave constructively. This is far preferable to declaring them to be enemies, because you end up getting what you want and having allies instead of enemies.

Economics cannot be value free in the same way that NASA cannot be value free. I suspect that a sane economics does not have to be revolutionary or threatening though. Economics just has to be a hell of a lot smarter than it has been.

In my view, then, the question of urgency is distinct from the question of whether sustainable growth of GDP is conceivable.

inel said...

With respect to 'etre plus' rather than 'avoir plus', have you heard about the European (un)Happy Planet Index in the news today?

I mentioned it to fergus, after posting it for my Norwegian friend with whom I compare notes on life in Norway, the UK and the US (countries which all have very different expectations and approaches to happiness, economics and the environment). You too might find this New Economics Foundation (nef) report in PDF format, or at least the Friends of the Earth (FoE) UK 21st in European league of carbon efficiency and well-being press release about it, interesting. I shall leave you with this teaser from the latter, which reminded me of your intriguing Little Prince post over at Grist:

"Across Europe people report comparable levels of well-being whether their lifestyles imply the need for the resources of six and a half, or just one planet like Earth. The message to politicians is that people are just as likely to lead satisfied lives whether their levels of consumption are very low or high and therefore they should not be afraid of policies to reduce demand."

Paul Baer said...

Thanks Inel for the pointer to the FoE press release and the New Economics Foundation publication! They look fabulous...

--pb