Ecological economics#Methodology

The antecedents of ecological economics can be traced back to the Romantics of the 19th century as well as some Enlightenment political economists of that era. Concerns over population were expressed by Thomas Malthus, while John Stuart Mill predicted the desirability of the stationary state of an economy. Mill thereby anticipated later insights of modern ecological economists, but without having had their experience of the social and ecological costs of the Post–World War II economic expansion. In 1880, Marxian economist Sergei Podolinsky attempted to theorize a labor theory of value based on embodied energy; his work was read and critiqued by Marx and Engels.{{cite journal|last1=Bellamy Foster|first1=John|first2=Paul|last2=Burkett|title=Ecological Economics and Classical Marxism: The "Podolinsky Business" Reconsidered|journal=Organization & Environment|date=March 2004|volume=17|issue=1|pages=32–60|url=http://johnbellamyfoster.org/wp-content/uploads/sites/9/2014/07/OandE-2004-Foster-Burkett-32-60.pdf|access-date=31 August 2018|doi=10.1177/1086026603262091|s2cid=146544853|archive-url=https://web.archive.org/web/20180831104237/http://johnbellamyfoster.org/wp-content/uploads/sites/9/2014/07/OandE-2004-Foster-Burkett-32-60.pdf|archive-date=31 August 2018|url-status=dead}} Otto Neurath developed an ecological approach based on a natural economy whilst employed by the Bavarian Soviet Republic in 1919. He argued that a market system failed to take into account the needs of future generations, and that a socialist economy required calculation in kind, the tracking of all the different materials, rather than synthesising them into money as a general equivalent. In this he was criticised by neo-liberal economists such as Ludwig von Mises and Freidrich Hayek in what became known as the socialist calculation debate.Cartwright Nancy, J. Cat, L. Fleck, and T. Uebel, 1996. Otto Neurath: philosophy between science and politics. Cambridge University Press

The debate on energy in economic systems can also be traced back to Nobel prize-winning radiochemist Frederick Soddy (1877–1956). In his book Wealth, Virtual Wealth and Debt (1926), Soddy criticized the prevailing belief of the economy as a perpetual motion machine, capable of generating infinite wealth—a criticism expanded upon by later ecological economists such as Nicholas Georgescu-Roegen and Herman Daly.[https://www.nytimes.com/2009/04/12/opinion/12zencey.html Zencey, Eric. (2009, April 12). Op-ed. New York Times, p. WK9.] Accessed: December 23, 2012.

European predecessors of ecological economics include K. William Kapp (1950)Kapp, K. W. (1950) The Social Costs of Private Enterprise. New York: Shocken. Karl Polanyi (1944),Polanyi, K. (1944) The Great Transformation. New York/Toronto: Rinehart & Company Inc. and Romanian economist Nicholas Georgescu-Roegen (1971). Georgescu-Roegen, who would later mentor Herman Daly at Vanderbilt University, provided ecological economics with a modern conceptual framework based on the material and energy flows of economic production and consumption. His magnum opus, The Entropy Law and the Economic Process (1971), is credited by Daly as a fundamental text of the field, alongside Soddy's Wealth, Virtual Wealth and Debt.{{cite book |last1=Georgescu-Roegen |first1=Nicholas |date=1971 |title=The Entropy Law and the Economic Process. |url=https://archive.org/details/entropylawe00nich |format=Full book accessible at Scribd |location=Cambridge, Massachusetts |publisher=Harvard University Press |isbn=978-0674257801 }} Some key concepts of what is now ecological economics are evident in the writings of Kenneth Boulding and E. F. Schumacher, whose book Small Is Beautiful – A Study of Economics as if People Mattered (1973) was published just a few years before the first edition of Herman Daly's comprehensive and persuasive Steady-State Economics (1977).Schumacher, E.F. 1973. Small Is Beautiful: A Study of Economics as if People Mattered. London: Blond and Briggs.Daly, H. 1991. Steady-State Economics (2nd ed.). Washington, D.C.: Island Press.

The first organized meetings of ecological economists occurred in the 1980s. These began in 1982, at the instigation of Lois Banner,{{cite journal | last1 = Røpke | first1 = I | year = 2004 | title = The early history of modern ecological economics | journal = Ecological Economics | volume = 50 | issue = 3–4| pages = 293–314 | doi = 10.1016/j.ecolecon.2004.02.012 | bibcode = 2004EcoEc..50..293R }} with a meeting held in Sweden (including Robert Costanza, Herman Daly, Charles Hall, Bruce Hannon, H.T. Odum, and David Pimentel). Most were ecosystem ecologists or mainstream environmental economists, with the exception of Daly. In 1987, Daly and Costanza edited an issue of Ecological Modeling to test the waters. A book entitled Ecological Economics, by Joan Martinez Alier, was published later that year.Costanza R. (2003). [http://www.ecoeco.org/pdf/costanza.pdf Early History of Ecological Economics and ISEE]. Internet Encyclopaedia of Ecological Economics. Alier renewed interest in the approach developed by Otto Neurath during the interwar period.Martinez-Alier J. (1987)Ecological economics: energy, environment and society The year 1989 saw the foundation of the International Society for Ecological Economics and publication of its journal, Ecological Economics, by Elsevier. Robert Costanza was the first president of the society and first editor of the journal, which is currently edited by Richard Howarth. Other figures include ecologists C.S. Holling and H.T. Odum, biologist Gretchen Daily, and physicist Robert Ayres. In the Marxian tradition, sociologist John Bellamy Foster and CUNY geography professor David Harvey explicitly center ecological concerns in political economy.

Articles by Inge Ropke (2004, 2005){{cite journal | last1 = Røpke | first1 = I | year = 2004 | title = The early history of modern ecological economics Ecological Economics 50(3-4) 293-314. Røpke, I. (2005) Trends in the development of ecological economics from the late 1980s to the early 2000s | journal = Ecological Economics | volume = 55 | issue = 2| pages = 262–290 | doi = 10.1016/j.ecolecon.2004.10.010 | bibcode = 2005EcoEc..55..262R | s2cid = 67755032 }} and Clive Spash (1999){{cite journal |url=http://www.clivespash.org/1999_Spash_EV_Development.PDF |last1=Spash|first1= C. L. |year=1999|title= The development of environmental thinking in economics. |journal=Environmental Values|volume= 8|issue=4|pages= 413–435 |access-date=2012-12-23 |url-status=dead |archive-url=https://web.archive.org/web/20140221084752/http://www.clivespash.org/1999_Spash_EV_Development.PDF |archive-date=2014-02-21 |doi=10.3197/096327199129341897 }} cover the development and modern history of ecological economics and explain its differentiation from resource and environmental economics, as well as some of the controversy between American and European schools of thought. An article by Robert Costanza, David Stern, Lining He, and Chunbo Ma{{cite journal | last1 = Costanza | first1 = R. | last2 = Stern | first2 = D. I. | last3 = He | first3 = L. | last4 = Ma | first4 = C. | year = 2004 | title = Influential publications in ecological economics: a citation analysis | journal = Ecological Economics | volume = 50 | issue = 3–4| pages = 261–292 | doi = 10.1016/j.ecolecon.2004.06.001 | bibcode = 2004EcoEc..50..261C }} responded to a call by Mick Common to determine the foundational literature of ecological economics by using citation analysis to examine which books and articles have had the most influence on the development of the field. However, citations analysis has itself proven controversial and similar work has been criticized by Clive Spash for attempting to pre-determine what is regarded as influential in ecological economics through study design and data manipulation.{{cite journal | last1 = Spash | first1 = C. L. | year = 2013 | title = Influencing the perception of what and who is important in ecological economics | journal = Ecological Economics | volume = 89 | pages = 204–209 | doi = 10.1016/j.ecolecon.2013.01.028 | bibcode = 2013EcoEc..89..204S }} In addition, the journal Ecological Economics has itself been criticized for swamping the field with mainstream economics.{{cite journal | last1 = Spash | first1 = C. L. | year = 2013 | title = The Shallow or the Deep Ecological Economics Movement? | url = http://epub.wu.ac.at/4024/1/Spash_2013_EE_Shallow_or_Deep.pdf| journal = Ecological Economics | volume = 93 | pages = 351–362 | doi = 10.1016/j.ecolecon.2013.05.016 | bibcode = 2013EcoEc..93..351S | s2cid = 11640828 }}{{cite journal | last1 = Anderson | first1 = B. | last2 = M'Gonigle | first2 = M. | year = 2012 | title = Does ecological economics have a future?: contradiction and reinvention in the age of climate change | journal = Ecological Economics | volume = 84 | pages = 37–48 | doi = 10.1016/j.ecolecon.2012.06.009 | bibcode = 2012EcoEc..84...37A }}

Various competing schools of thought exist in the field. Some are close to resource and environmental economics while others are far more heterodox in outlook. An example of the latter is the European Society for Ecological Economics. An example of the former is the Swedish Beijer International Institute of Ecological Economics. Clive Spash has argued for the classification of the ecological economics movement, and more generally work by different economic schools on the environment, into three main categories. These are the mainstream new resource economists, the new environmental pragmatists,{{cite web |url=http://www.clivespash.org/wp-content/uploads/2015/04/Spash_NEP_2009_EV.pdf|title=The New Environmental Pragmatists, Pluralism and Sustainability|website=clivespash.org

|access-date=10 April 2023|date=April 2015}} and the more radical social ecological economists.{{cite web |url=http://www.clivespash.org/2011_Spash_AJES_Social_Ecol_Econ.pdf |title=Spash, C.L. (2011) Social ecological economics: Understanding the past to see the future. American Journal of Economics and Sociology 70, 340-375 |access-date=2014-01-07 |url-status=dead |archive-url=https://web.archive.org/web/20140107122030/http://www.clivespash.org/2011_Spash_AJES_Social_Ecol_Econ.pdf |archive-date=2014-01-07 }} International survey work comparing the relevance of the categories for mainstream and heterodox economists shows some clear divisions between environmental and ecological economists.{{cite journal|author=Jacqui Lagrue |title=Spash, C.L., Ryan, A. (2012) Economic schools of thought on the environment: Investigating unity and division |journal=Cambridge Journal of Economics |volume=36 |issue=5 |pages=1091–1121 |date=2012-07-30 |doi=10.1093/cje/bes023 |hdl=10.1093/cje/bes023 |hdl-access=free }} A growing field of radical social-ecological theory is degrowth economics.{{Cite web |last=Nelson |first=Anitra |date=2024-01-31 |title=Degrowth as a Concept and Practice : Introduction |url=https://commonslibrary.org/degrowth-as-a-concept-and-practice-introduction/ |access-date=2024-02-24 |website=The Commons Social Change Library |language=en-AU}}Degrowth addresses both biophysical limits and global inequality while rejecting neoliberal economics. Degrowth prioritizes grassroots initiatives in progressive socio-ecological goals, adhering to ecological limits by shrinking the human ecological footprint (See Differences from Mainstream Economics Below). It involves an equitable downscale in both production and consumption of resources in order to adhere to biophysical limits. Degrowth draws from Marxian economics, citing the growth of efficient systems as the alienation of nature and man.{{Cite journal|last1=Klitgaard|first1=Kent A.|last2=Krall|first2=Lisi|date=December 2012|title=Ecological economics, degrowth, and institutional change|url=https://linkinghub.elsevier.com/retrieve/pii/S0921800911004897|journal=Ecological Economics|language=en|volume=84|pages=247–253|doi=10.1016/j.ecolecon.2011.11.008|bibcode=2012EcoEc..84..247K |url-access=subscription}} Economic movements like degrowth reject the idea of growth itself. Some degrowth theorists call for an "exit of the economy".{{Cite journal|last=Schwartzman|first=David|date=March 2012|title=A Critique of Degrowth and its Politics|url=http://www.tandfonline.com/doi/abs/10.1080/10455752.2011.648848|journal=Capitalism Nature Socialism|language=en|volume=23|issue=1|pages=119–125|doi=10.1080/10455752.2011.648848|s2cid=56469290|issn=1045-5752|url-access=subscription}} Critics of the degrowth movement include new resource economists, who point to the gaining momentum of sustainable development. These economists highlight the positive aspects of a green economy, which include equitable access to renewable energy and a commitment to eradicate global inequality through sustainable development (See Green Economics). Examples of heterodox ecological economic experiments include the Catalan Integral Cooperative and the Solidarity Economy Networks in Italy. Both of these grassroots movements use communitarian based economies and consciously reduce their ecological footprint by limiting material growth and adapting to regenerative agriculture.{{Cite journal|last=Chiengkul|first=Prapimphan|date=May 2018|title=The Degrowth Movement: Alternative Economic Practices and Relevance to Developing Countries|url=http://journals.sagepub.com/doi/10.1177/0304375418811763|journal=Alternatives: Global, Local, Political|language=en|volume=43|issue=2|pages=81–95|doi=10.1177/0304375418811763|s2cid=150125286|issn=0304-3754|url-access=subscription}}

Cultural and heterodox applications of economic interaction around the world have begun to be included as ecological economic practices. E.F. Schumacher introduced examples of non-western economic ideas to mainstream thought in his book, Small is Beautiful, where he addresses neoliberal economics through the lens of natural harmony in Buddhist economics. This emphasis on natural harmony is witnessed in diverse cultures across the globe. Buen Vivir is a traditional socio-economic movement in South America that rejects the western development model of economics. Meaning Good Life, Buen Vivir emphasizes harmony with nature, diverse pluralculturism, coexistence, and inseparability of nature and material. Value is not attributed to material accumulation, and it instead takes a more spiritual and communitarian approach to economic activity. Ecological Swaraj originated out of India, and is an evolving world view of human interactions within the ecosystem. This train of thought respects physical bio-limits and non-human species, pursuing equity and social justice through direct democracy and grassroots leadership. Social well-being is paired with spiritual, physical, and material well-being. These movements are unique to their region, but the values can be seen across the globe in indigenous traditions, such as the Ubuntu Philosophy in South Africa.{{Cite journal|last1=Kothari|first1=Ashish|last2=Demaria|first2=Federico|last3=Acosta|first3=Alberto|date=December 2014|title=Buen Vivir, Degrowth and Ecological Swaraj: Alternatives to sustainable development and the Green Economy|url=http://link.springer.com/10.1057/dev.2015.24|journal=Development|language=en|volume=57|issue=3–4|pages=362–375|doi=10.1057/dev.2015.24|s2cid=86318140|issn=1011-6370|url-access=subscription}}

Ecological economics differs from mainstream economics in that it heavily reflects on the ecological footprint of human interactions in the economy. This footprint is measured by the impact of human activities on natural resources and the waste generated in the process. Ecological economists aim to minimize the ecological footprint, taking into account the scarcity of global and regional resources and their accessibility to an economy.{{Cite web|url=https://wwf.panda.org/knowledge_hub/teacher_resources/webfieldtrips/ecological_balance/eco_footprint/|title=Ecological Footprint - WWF|access-date=2020-11-12|website=wwf.panda.org}} Some ecological economists prioritise adding natural capital to the typical capital asset analysis of land, labor, and financial capital. These ecological economists use tools from mathematical economics, as in mainstream economics, but may apply them more closely to the natural world. Whereas mainstream economists tend to be technological optimists, ecological economists are inclined to be technological sceptics. They reason that the natural world has a limited carrying capacity and that its resources may run out. Since destruction of important environmental resources could be practically irreversible and catastrophic, ecological economists are inclined to justify cautionary measures based on the precautionary principle.{{cite journal | last1 = Costanza | first1 = R | year = 1989 | title = What is ecological economics? | url = http://www.uvm.edu/giee/publications/Costanza_EE_1989.pdf | journal = Ecological Economics | volume = 1 | issue = 1 | pages = 1–7 | doi = 10.1016/0921-8009(89)90020-7 | bibcode = 1989EcoEc...1....1C }} As ecological economists try to minimize these potential disasters, calculating the fallout of environmental destruction becomes a humanitarian issue as well. Already, the Global South has seen trends of mass migration due to environmental changes. Climate refugees from the Global South are adversely affected by changes in the environment, and some scholars point to global wealth inequality within the current neoliberal economic system as a source of this issue.{{Cite web|title=Integrating Southern Perspectives {{!}} degrowth.info|url=https://www.degrowth.info/en/2017/10/integrating-southern-perspectives/|access-date=2020-11-12|language=en-US}}

The most cogent example of how the different theories treat similar assets is tropical rainforest ecosystems, most obviously the Yasuni region of Ecuador. While this area has substantial deposits of bitumen it is also one of the most diverse ecosystems on Earth and some estimates establish it has over 200 undiscovered medical substances in its genomes – most of which would be destroyed by logging the forest or mining the bitumen. Effectively, the instructional capital of the genomes is undervalued by analyses that view the rainforest primarily as a source of wood, oil/tar and perhaps food. Increasingly the carbon credit for leaving the extremely carbon-intensive ("dirty") bitumen in the ground is also valued – the government of Ecuador set a price of US$350M for an oil lease with the intent of selling it to someone committed to never exercising it at all and instead preserving the rainforest.

While this natural capital and ecosystems services approach has proven popular amongst many it has also been contested as failing to address the underlying problems with mainstream economics, growth, market capitalism and monetary valuation of the environment.Martinez-Alier, J., 1994. Ecological economics and ecosocialism, in: O'Connor, M. (Ed.), Is Capitalism Sustainable? Guilford Press, New York, pp. 23-36Spash, C.L., Clayton, A.M.H., 1997. The maintenance of natural capital: Motivations and methods, in: Light, A., Smith, J.M. (Eds.), Space, Place and Environmental Ethics. Rowman & Littlefield Publishers, Inc., Lanham, pp. 143-173{{cite journal | last1 = Toman | first1 = M | year = 1998 | title = Why not to calculate the value of the world's ecosystem services and natural capital | journal = Ecological Economics | volume = 25 | pages = 57–60 | doi = 10.1016/s0921-8009(98)00017-2 }} Critiques concern the need to create a more meaningful relationship with Nature and the non-human world than evident in the instrumentalism of shallow ecology and the environmental economists commodification of everything external to the market system.{{cite book | last1=O'Neill | first1=John | author-link=John O'Neill (philosopher)| title=Ecology, policy, and politics : human well-being and the natural world | publisher=Routledge | location=London New York | year=1993 | isbn=978-0-415-07300-4 | oclc=52479981 }}{{cite journal | last1 = O'Neill | first1 = J.F. | year = 1997 | title = Managing without prices: On the monetary valuation of biodiversity | journal = Ambio | volume = 26 | pages = 546–550 }}{{cite journal | last1 = Vatn | first1 = A | year = 2000 | title = The environment as commodity | journal = Environmental Values | volume = 9 | issue = 4| pages = 493–509 | doi = 10.3197/096327100129342173 | doi-broken-date = 1 November 2024 }}

{{Main|Nature|Ecology|Planetary boundaries}}

File:Diagram of natural resource flows-en.svg

A simple circular flow of income diagram is replaced in ecological economics by a more complex flow diagram reflecting the input of solar energy, which sustains natural inputs and environmental services which are then used as units of production. Once consumed, natural inputs pass out of the economy as pollution and waste. The potential of an environment to provide services and materials is referred to as an "environment's source function", and this function is depleted as resources are consumed or pollution contaminates the resources. The "sink function" describes an environment's ability to absorb and render harmless waste and pollution: when waste output exceeds the limit of the sink function, long-term damage occurs.Harris J. (2006). Environmental and Natural Resource Economics: A Contemporary Approach. Houghton Mifflin Company.{{rp|8}} Some persistent pollutants, such as some organic pollutants and nuclear waste are absorbed very slowly or not at all; ecological economists emphasize minimizing "cumulative pollutants".{{rp|28}} Pollutants affect human health and the health of the ecosystem.

The economic value of natural capital and ecosystem services is accepted by mainstream environmental economics, but is emphasized as especially important in ecological economics. Ecological economists may begin by estimating how to maintain a stable environment before assessing the cost in dollar terms.{{rp|9}} Ecological economist Robert Costanza led an attempted valuation of the global ecosystem in 1997. Initially published in Nature, the article concluded on $33 trillion with a range from $16 trillion to $54 trillion (in 1997, total global GDP was $27 trillion).{{cite journal | author = Costanza R | year = 1998 | title = The value of the world's ecosystem services and natural capital1 | journal = Ecological Economics | volume = 25 | issue = 1 | pages = 3–15 | doi = 10.1016/S0921-8009(98)00020-2 | bibcode = 1998EcoEc..25....3C | url = https://discovery.ucl.ac.uk/id/eprint/10189378/ |display-authors=etal}} Half of the value went to nutrient cycling. The open oceans, continental shelves, and estuaries had the highest total value, and the highest per-hectare values went to estuaries, swamps/floodplains, and seagrass/algae beds. The work was criticized by articles in Ecological Economics Volume 25, Issue 1, but the critics acknowledged the positive potential for economic valuation of the global ecosystem.{{rp|129}}

The Earth's carrying capacity is a central issue in ecological economics. Early economists such as Thomas Malthus pointed out the finite carrying capacity of the earth, which was also central to the MIT study Limits to Growth. Diminishing returns suggest that productivity increases will slow if major technological progress is not made. Food production may become a problem, as erosion, an impending water crisis, and soil salinity (from irrigation) reduce the productivity of agriculture. Ecological economists argue that industrial agriculture, which exacerbates these problems, is not sustainable agriculture, and are generally inclined favorably to organic farming, which also reduces the output of carbon.{{rp|26}}

Global wild fisheries are believed to have peaked and begun a decline, with valuable habitat such as estuaries in critical condition.{{rp|28}} The aquaculture or farming of piscivorous fish, like salmon, does not help solve the problem because they need to be fed products from other fish. Studies have shown that salmon farming has major negative impacts on wild salmon, as well as the forage fish that need to be caught to feed them.

Knapp G, Roheim CA and Anderson JL (2007) [http://search.worldwildlife.org/cs.html?url=http://www.worldwildlife.org/what/globalmarkets/wildlifetrade/WWFBinaryitem4985.pdf&qt=The+Great+Salmon+Run&col=&n=4 The Great Salmon Run: Competition Between Wild And Farmed Salmon]{{dead link|date=January 2018 |bot=InternetArchiveBot |fix-attempted=yes }} World Wildlife Fund. {{ISBN|0-89164-175-0}}Washington Post. [https://www.washingtonpost.com/wp-dyn/content/article/2007/12/13/AR2007121301190.html Salmon Farming May Doom Wild Populations, Study Says].

Since animals are higher on the trophic level, they are less efficient sources of food energy. Reduced consumption of meat would reduce the demand for food, but as nations develop, they tend to adopt high-meat diets similar to that of the United States. Genetically modified food (GMF) a conventional solution to the problem, presents numerous problems – Bt corn produces its own Bacillus thuringiensis toxin/protein, but the pest resistance is believed to be only a matter of time.{{rp|31}}

Global warming is now widely acknowledged as a major issue, with all national scientific academies expressing agreement on the importance of the issue. As the population growth intensifies and energy demand increases, the world faces an energy crisis. Some economists and scientists forecast a global ecological crisis if energy use is not contained – the Stern report is an example. The disagreement has sparked a vigorous debate on issue of discounting and intergenerational equity.

Image:Nitrogen Cycle.svg|Nitrogen cycle

Image:Water cycle.png|Water cycle

Image:Carbon cycle-cute diagram.svg|Carbon cycle

Image:Oxygen cycle.svg|Oxygen cycle

{{See also|Environmental ethics}}{{Renewable energy sources}}

Mainstream economics has attempted to become a value-free 'hard science', but ecological economists argue that value-free economics is generally not realistic. Ecological economics is more willing to entertain alternative conceptions of utility, efficiency, and cost-benefits such as positional analysis or multi-criteria analysis. Ecological economics is typically viewed as economics for sustainable development,Soderbaum P. (2004). [http://www.ecoeco.org/pdf/politics_ideology.pdf Politics and Ideology in Ecological Economics]. Internet Encyclopaedia of Ecological Economics. and may have goals similar to green politics.

In international, regional, and national policy circles, the concept of the green economy grew in popularity as a response to the financial predicament at first then became a vehicle for growth and development.{{Cite journal|last1=Bina|first1=O.|date=2011|title=Promise and shortcomings of a green turn in recent policy responses to the 'double crisis'|journal=Ecological Economics|volume=70|pages=2308–2316|doi=10.1002/geo2.36|url=http://discovery.ucl.ac.uk/1565542/1/Georgeson_et_al-2017-Geo__Geography_and_Environment.pdf|doi-access=free|bibcode=2017GeoGE...4E..36G }}

The United Nations Environment Programme (UNEP) defines a 'green economy' as one that focuses on the human aspects and natural influences and an economic order that can generate high-salary jobs. In 2011, its definition was further developed as the word 'green' is made to refer to an economy that is not only resourceful and well-organized but also impartial, guaranteeing an objective shift to an [https://sustainabledevelopment.un.org/content/documents/126GER_synthesis_en.pdf economy that is low-carbon, resource-efficient, and socially-inclusive].

The ideas and studies regarding the green economy denote a fundamental shift for more effective, resourceful, environment-friendly and resource‐saving technologies that could lessen emissions and alleviate the adverse consequences of climate change, at the same time confront issues about resource exhaustion and grave environmental dilapidation.{{Cite journal|last1=Janicke|first1=M.|date=2012|title='Green growth': from a growing eco-industry to economic sustainability|journal=Energy Policy|volume=28|pages=13–21|doi=10.1016/j.enpol.2012.04.045}}

As an indispensable requirement and vital precondition to realizing sustainable development, the [http://www.un.org/waterforlifedecade/pdf/green_economy_in_action_eng.pdf Green Economy] adherents robustly promote good governance. To boost local investments and foreign ventures, it is crucial to have a constant and foreseeable macroeconomic atmosphere. Likewise, such an environment will also need to be transparent and accountable. In the absence of a substantial and solid governance structure, the prospect of shifting towards a sustainable development route would be insignificant. In achieving a green economy, competent institutions and governance systems are vital in guaranteeing the efficient execution of strategies, guidelines, campaigns, and programmes.

Shifting to a Green Economy demands a fresh mindset and an innovative outlook of doing business. It likewise necessitates new capacities, skills set from labor and professionals who can competently function across sectors, and able to work as effective components within multi-disciplinary teams. To achieve this goal, vocational training packages must be developed with focus on greening the sectors. Simultaneously, the educational system needs to be assessed as well in order to fit in the environmental and social considerations of various disciplines.UNEP, 2012. GREEN ECONOMY IN ACTION: Articles and Excerpts that Illustrate Green Economy and Sustainable Development Efforts, p. 6. Retrieved 8 June 2018 from http://www.un.org/waterforlifedecade/pdf/green_economy_in_action_eng.pdf

Among the topics addressed by ecological economics are methodology, allocation of resources, weak versus strong sustainability, energy economics, energy accounting and balance, environmental services, cost shifting, modeling, and monetary policy.

{{Thermodynamics|cTopic=Laws of thermodynamics}}

A primary objective of ecological economics (EE) is to ground economic thinking and practice in physical reality, especially in the laws of physics (particularly the laws of thermodynamics) and in knowledge of biological systems. It accepts as a goal the improvement of human well-being through development, and seeks to ensure achievement of this through planning for the sustainable development of ecosystems and societies. Of course the terms development and sustainable development are far from lacking controversy. Richard B. Norgaard argues traditional economics has hi-jacked the development terminology in his book Development Betrayed.Norgaard, R. B. (1994) Development Betrayed: The End of Progress and a Coevolutionary Revisioning of the Future. London: Routledge

Well-being in ecological economics is also differentiated from welfare as found in mainstream economics and the 'new welfare economics' from the 1930s which informs resource and environmental economics. This entails a limited preference utilitarian conception of value i.e., Nature is valuable to our economies, that is because people will pay for its services such as clean air, clean water, encounters with wilderness, etc.

Ecological economics is distinguishable from neoclassical economics primarily by its assertion that the economy is embedded within an environmental system. Ecology deals with the energy and matter transactions of life and the Earth, and the human economy is by definition contained within this system. Ecological economists argue that neoclassical economics has ignored the environment, at best considering it to be a subset of the human economy.

The neoclassical view ignores much of what the natural sciences have taught us about the contributions of nature to the creation of wealth e.g., the planetary endowment of scarce matter and energy, along with the complex and biologically diverse ecosystems that provide goods and ecosystem services directly to human communities: micro- and macro-climate regulation, water recycling, water purification, storm water regulation, waste absorption, food and medicine production, pollination, protection from solar and cosmic radiation, the view of a starry night sky, etc.

There has then been a move to regard such things as natural capital and ecosystems functions as goods and services.Daily, G.C. 1997. Nature's Services: Societal Dependence on Natural Ecosystems. Washington, D.C.: Island Press.Millennium Ecosystem Assessment. 2005. Ecosystems and Human Well-Being: Biodiversity Synthesis. Washington, D.C.: World Resources Institute. However, this is far from uncontroversial within ecology or ecological economics due to the potential for narrowing down values to those found in mainstream economics and the danger of merely regarding Nature as a commodity. This has been referred to as ecologists 'selling out on Nature'.{{cite journal | last1 = McCauley | first1 = D. J. | year = 2006 | title = Selling out on nature | journal = Nature | volume = 443 | issue = 7| pages = 27–28 | doi = 10.1038/443027a | pmid = 16957711 | bibcode = 2006Natur.443...27M | s2cid = 6814523 }} There is then a concern that ecological economics has failed to learn from the extensive literature in environmental ethics about how to structure a plural value system.

File:Uneconomic Growth diagram.jpg

Resource and neoclassical economics focus primarily on the efficient allocation of resources and less on the two other problems of importance to ecological economics: distribution (equity), and the scale of the economy relative to the ecosystems upon which it relies.Daly, H. and Farley, J. 2004. Ecological Economics: Principles and Applications. Washington: Island Press. Ecological economics makes a clear distinction between growth (quantitative increase in economic output) and development (qualitative improvement of the quality of life), while arguing that neoclassical economics confuses the two. Ecological economists point out that beyond modest levels, increased per-capita consumption (the typical economic measure of "standard of living") may not always lead to improvement in human well-being, but may have harmful effects on the environment and broader societal well-being. This situation is sometimes referred to as uneconomic growth (see diagram above).

{{Main|Weak and strong sustainability}}

{{See also | Nicholas Georgescu-Roegen #Criticising neoclassical economics (weak versus strong sustainability)}}

File:Nested_sustainability-v2.gif|right|The three nested systems of sustainability - the economy wholly contained by society, wholly contained by the biophysical environment. Clickable.|275px|thumb

poly 123 35 134 30 171 41 196 65 194 98 167 119 121 123 79 101 73 64 101 40Economic

poly 67 52 41 70 41 111 71 150 123 167 169 163 207 147 234 113 239 83 218 49 190 32 204 77 194 111 167 125 115 126 83 110 62 78 64 60 Social

poly 243 58 258 83 255 133 230 168 202 185 158 195 114 195 63 181 27 153 10 115 13 78 31 54 46 39 38 71 36 116 66 148 118 169 163 169 209 153 237 118 242 81 Environment

Ecological economics challenges the conventional approach towards natural resources, claiming that it undervalues natural capital by considering it as interchangeable with human-made capital—labor and technology.

The impending depletion of natural resources and increase of climate-changing greenhouse gasses should motivate us to examine how political, economic and social policies can benefit from alternative energy. Shifting dependence on fossil fuels with specific interest within just one of the above-mentioned factors easily benefits at least one other. For instance, photo voltaic (or solar) panels have a 15% efficiency when absorbing the sun's energy, but its construction demand has increased 120% within both commercial and residential properties. Additionally, this construction has led to a roughly 30% increase in work demands (Chen).

The potential for the substitution of man-made capital for natural capital is an important debate in ecological economics and the economics of sustainability.

There is a continuum of views among economists between the strongly neoclassical positions of Robert Solow and Martin Weitzman, at one extreme and the 'entropy pessimists', notably Nicholas Georgescu-Roegen and Herman Daly, at the other.{{cite journal | last1 = Ayres | first1 = R.U. | year = 2007 | title = On the practical limits of substitution | url = http://pure.iiasa.ac.at/7800/1/IR-05-036.pdf| journal = Ecological Economics | volume = 61 | pages = 115–128 | doi = 10.1016/j.ecolecon.2006.02.011 | s2cid = 154728333 }}

Neoclassical economists tend to maintain that man-made capital can, in principle, replace all types of natural capital. This is known as the weak sustainability view, essentially that every technology can be improved upon or replaced by innovation, and that there is a substitute for any and all scarce materials.

At the other extreme, the strong sustainability view argues that the stock of natural resources and ecological functions are irreplaceable. From the premises of strong sustainability, it follows that economic policy has a fiduciary responsibility to the greater ecological world, and that sustainable development must therefore take a different approach to valuing natural resources and ecological functions.

Recently, Stanislav Shmelev developed a new methodology for the assessment of progress at the macro scale based on multi-criteria methods, which allows consideration of different perspectives, including strong and weak sustainability or conservationists vs industrialists and aims to search for a 'middle way' by providing a strong neo-Keynesian economic push without putting excessive pressure on the natural resources, including water or producing emissions, both directly and indirectly.Shmelev, S.E. 2012. Ecological Economics. Sustainability in Practice, Springer

File:Cost and exergy for heating energy in Finland.jpg

{{Main|Energy economics}}

A key concept of energy economics is net energy gain, which recognizes that all energy sources require an initial energy investment in order to produce energy. To be useful the energy return on energy invested (EROEI) has to be greater than one. The net energy gain from the production of coal, oil and gas has declined over time as the easiest to produce sources have been most heavily depleted.{{cite book |title= Energy and Resource Quality: The ecology of the Economic Process |last1=Hall |first1=Charles A.S.

|last2= Cleveland |first2=Cutler J.

|last3=Kaufmann |first3=Robert

|year=1992 |publisher= University Press of colorado |location= Niwot, Colorado }} In traditional energy economics, surplus energy is often seen as something to be capitalized on—either by storing for future use or by converting it into economic growth.

Ecological economics generally rejects the view of energy economics that growth in the energy supply is related directly to well-being, focusing instead on biodiversity and creativity – or natural capital and individual capital, in the terminology sometimes adopted to describe these economically. In practice, ecological economics focuses primarily on the key issues of uneconomic growth and quality of life. Ecological economists are inclined to acknowledge that much of what is important in human well-being is not analyzable from a strictly economic standpoint and suggests an interdisciplinary approach combining social and natural sciences as a means to address this. When considering surplus energy, ecological economists state this could be used for activities that do not directly contribute to economic productivity but instead enhance societal and environmental well-being. This concept of dépense, as developed by Georges Bataille, offers a novel perspective on the management of surplus energy within economies. This concept encourages a shift from growth-centric models to approaches that prioritise sustainable and meaningful expenditures of excess resources.{{Cite book |url=https://www.taylorfrancis.com/books/edit/10.4324/9780203796146/degrowth-giacomo-alisa-federico-demaria-giorgos-kallis |title=Degrowth: A Vocabulary for a New Era |date=2014-11-19 |publisher=Routledge |isbn=978-0-203-79614-6 |editor=Giacomo D'Alisa |editor2=Federico Demaria |editor3=Giorgos Kallis|location=London |doi=10.4324/9780203796146}}

Thermoeconomics is based on the proposition that the role of energy in biological evolution should be defined and understood through the second law of thermodynamics, but also in terms of such economic criteria as productivity, efficiency, and especially the costs and benefits (or profitability) of the various mechanisms for capturing and utilizing available energy to build biomass and do work.Peter A. Corning 1 *, Stephen J. Kline. (2000). [https://archive.today/20120630072317/http://www3.interscience.wiley.com/cgi-bin/abstract/71007254/ABSTRACT Thermodynamics, information and life revisited, Part II: Thermoeconomics and Control information ] Systems Research and Behavioral Science, Apr. 07, Volume 15, Issue 6, Pages 453 – 482Corning, P. (2002). “[http://www.complexsystems.org/abstracts/thermoec.html Thermoeconomics – Beyond the Second Law] {{webarchive|url=https://web.archive.org/web/20080922072349/http://www.complexsystems.org/abstracts/thermoec.html |date=2008-09-22 }}” – source: www.complexsystems.org As a result, thermoeconomics is often discussed in the field of ecological economics, which itself is related to the fields of sustainability and sustainable development.

Exergy analysis is performed in the field of industrial ecology to use energy more efficiently.{{cite web|url=http://exergy.se/goran/thesis/ |title=Exergy - a useful concept |author=Wall, Göran |publisher=Exergy.se |access-date=2012-12-23}} The term exergy, was coined by Zoran Rant in 1956, but the concept was developed by J. Willard Gibbs. In recent decades, utilization of exergy has spread outside of physics and engineering to the fields of industrial ecology, ecological economics, systems ecology, and energetics.

{{See also|Net energy gain}}

An energy balance can be used to track energy through a system, and is a very useful tool for determining resource use and environmental impacts, using the First and Second laws of thermodynamics, to determine how much energy is needed at each point in a system, and in what form that energy is a cost in various environmental issues.{{Citation needed|date=November 2009}} The energy accounting system keeps track of energy in, energy out, and non-useful energy versus work done, and transformations within the system.{{cite web |url=http://telstar.ote.cmu.edu/environ/m3/s3/05account.shtml |title=Environmental Decision making, Science and Technology |publisher=Telstar.ote.cmu.edu |access-date=2012-12-23 |url-status=dead |archive-url=https://web.archive.org/web/20100105164509/http://telstar.ote.cmu.edu/environ/m3/s3/05account.shtml |archive-date=2010-01-05 }}

Scientists have written and speculated on different aspects of energy accounting.Stabile, Donald R. "Veblen and the Political Economy of the Engineer: the radical thinker and engineering leaders came to technocratic ideas at the same time," ''American Journal of Economics and Sociology (45:1) 1986, 43-44.

{{See also|Ecosystem valuation|Price of life}}

Ecological economists agree that ecosystems produce enormous flows of goods and services to human beings, playing a key role in producing well-being. At the same time, there is intense debate about how and when to place values on these benefits.Farley, Joshua. "Ecosystem services: The economics debate." Ecosystem services 1.1 (2012): 40-49. https://doi.org/10.1016/j.ecoser.2012.07.002{{cite journal | last1 = Kallis | first1 = Giorgos | last2 = Gómez-Baggethun | first2 = Erik | last3 = Zografos | first3 = Christos | year = 2013 | title = To value or not to value? That is not the question | journal = Ecological Economics | volume = 94 | pages = 97–105 | doi = 10.1016/j.ecolecon.2013.07.002 | bibcode = 2013EcoEc..94...97K }}

A study was carried out by Costanza and colleagues{{cite journal |author1=Costanza, R. |author2=d'Arge, R. |author3=de Groot, R. |author4=Farber, S. |author5=Grasso, M. |author6=Hannon, B. |author7=Naeem, S. |author8=Limburg, K. |author9=Paruelo, J. |author10=O'Neill, R.V. |author11=Raskin, R. |author12=Sutton, P. |author13=and van den Belt, M. |year=1997 |title=The value of the world's ecosystem services and natural capital |journal=Nature |volume=387 |issue=6630 |pages=253–260 |url=http://www.esd.ornl.gov/benefits_conference/nature_paper.pdf |doi=10.1038/387253a0 |bibcode=1997Natur.387..253C |s2cid=672256 |url-status=dead |archive-url=https://web.archive.org/web/20120730185431/http://www.esd.ornl.gov/benefits_conference/nature_paper.pdf |archive-date=2012-07-30 }} to determine the 'value' of the services provided by the environment. This was determined by averaging values obtained from a range of studies conducted in very specific context and then transferring these without regard to that context. Dollar figures were averaged to a per hectare number for different types of ecosystem e.g. wetlands, oceans. A total was then produced which came out at 33 trillion US dollars (1997 values), more than twice the total GDP of the world at the time of the study. This study was criticized by pre-ecological and even some environmental economists – for being inconsistent with assumptions of financial capital valuation – and ecological economists – for being inconsistent with an ecological economics focus on biological and physical indicators.{{cite journal|author1=Norgaard, R.B. |author2=Bode, C. |year=1998|title= Next, the value of God, and other reactions|journal=Ecological Economics|volume= 25|issue=1 |pages= 37–39|doi=10.1016/s0921-8009(98)00012-3|bibcode=1998EcoEc..25...37N }}

The whole idea of treating ecosystems as goods and services to be valued in monetary terms remains controversial. A common objection{{cite journal|last1=Brouwer|first1=Roy|title=Environmental value transfer: state of the art and future prospects|journal=Ecological Economics|date=January 2000|volume=32|issue=1|pages=137–152|doi=10.1016/S0921-8009(99)00070-1|bibcode=2000EcoEc..32..137B }}{{cite journal|last1=Gómez-Baggethun|first1=Erik|last2=de Groot|first2=Rudolf|last3=Lomas|first3=Pedro|last4=Montes|first4=Carlos|title=The history of ecosystem services in economic theory and practice: From early notions to markets and payment schemes|journal=Ecological Economics|date=1 April 2010|volume=69|issue=6|pages=1209–1218|doi=10.1016/j.ecolecon.2009.11.007|bibcode=2010EcoEc..69.1209G }}{{cite journal|last1=Farber|first1=Stephen|last2=Constanza|first2=Robert|last3=Wilson|first3=Matthew|title=Economic and ecological concepts for valuing ecosystem services|journal=Ecological Economics|date=June 2002|volume=41|issue=3|pages=375–392|doi=10.1016/S0921-8009(02)00088-5|bibcode=2002EcoEc..41..375F }} is that life is precious or priceless, but this demonstrably degrades to it being worthless within cost-benefit analysis and other standard economic methods.{{Cite book|last1=Vuong|first1=Quan-Hoang|last2=Nguyen|first2=Minh-Hoang|title=Better economics for the Earth: A lesson from quantum and information theories|date=2024|publisher=AISDL|isbn=979-8332865794}} Reducing human bodies to financial values is a necessary part of mainstream economics and not always in the direct terms of insurance or wages. One example of this in practice is the value of a statistical life, which is a dollar value assigned to one life used to evaluate the costs of small changes in risk to life–such as exposure to one pollutant.{{cite web | url=https://www.epa.gov/environmental-economics/mortality-risk-valuation | title=Mortality Risk Valuation | date=20 April 2014 }} Economics, in principle, assumes that conflict is reduced by agreeing on voluntary contractual relations and prices instead of simply fighting or coercing or tricking others into providing goods or services. In doing so, a provider agrees to surrender time and take bodily risks and other (reputation, financial) risks. Ecosystems are no different from other bodies economically except insofar as they are far less replaceable than typical labour or commodities.

Despite these issues, many ecologists and conservation biologists are pursuing ecosystem valuation. Biodiversity measures in particular appear to be the most promising way to reconcile financial and ecological values, and there are many active efforts in this regard.{{Cite web|last=Carrington|first=Damian|date=2021-02-02|title=Economics of biodiversity review: what are the recommendations?|url=http://www.theguardian.com/environment/2021/feb/02/economics-of-biodiversity-review-what-are-the-recommendations|access-date=2021-02-03|website=The Guardian|language=en}} The growing field of biodiversity finance[http://www.socialedge.org/features/opportunities/archive/2008/02/23/weblogentry.2008-02-20.6191038944 SocialEdge.org.] {{webarchive|url=https://web.archive.org/web/20090215083840/http://www.socialedge.org/features/opportunities/archive/2008/02/23/weblogentry.2008-02-20.6191038944 |date=2009-02-15 }} Accessed: December 23, 2012. began to emerge in 2008 in response to many specific proposals such as the Ecuadoran Yasuni proposal{{usurped|1=[https://web.archive.org/web/20080621054850/http://www.sosyasuni.org/en/News/Ecuadors-Oil-Change-An-Exporters-Historic-Proposal.html]}}[http://www.multinationalmonitor.org/mm2007/092007/koenig.html Multinational Monitor, 9/2007.] Accessed: December 23, 2012. or similar ones in the Congo. US news outlets treated the stories as a "threat"{{cite news| url=http://www.cnn.com/2007/BUSINESS/12/10/ecuador.oil.ap/ |title=Ecuador threat to drill jungle oil|archive-url=https://web.archive.org/web/20081218035742/http://www.cnn.com/2007/BUSINESS/12/10/ecuador.oil.ap/|archive-date=December 18, 2008}} to "drill a park"{{cite web|url=https://abcnews.go.com/International/wireStory?id=3980994 |title=International News | World News - ABC News |publisher=Abcnews.go.com |date=4 June 2012 |access-date=2012-12-23}} reflecting a previously dominant view that NGOs and governments had the primary responsibility to protect ecosystems. However Peter Barnes and other commentators have recently argued that a guardianship/trustee/commons model is far more effective and takes the decisions out of the political realm.

Commodification of other ecological relations as in carbon credit and direct payments to farmers to preserve ecosystem services are likewise examples that enable private parties to play more direct roles protecting biodiversity, but is also controversial in ecological economics.{{cite journal | last1 = Spash | first1 = Clive L | year = 2010 | title = The brave new world of carbon trading | url = https://mpra.ub.uni-muenchen.de/19114/1/MPRA_paper_19114.pdf| journal = New Political Economy | volume = 15 | issue = 2| pages = 169–195 | doi = 10.1080/13563460903556049 | s2cid = 44071002 }} The United Nations Food and Agriculture Organization achieved near-universal agreement in 2008{{cite web |url=http://www.panna.org/jt/agAssessment |title=Pesticide Action Network | Reclaiming the future of food and farming |access-date=2008-06-21 |url-status=dead |archive-url=https://web.archive.org/web/20080621193253/http://www.panna.org/jt/AgAssessment |archive-date=2008-06-21 }} that such payments directly valuing ecosystem preservation and encouraging permaculture were the only practical way out of a food crisis. The holdouts were all English-speaking countries that export GMOs and promote "free trade" agreements that facilitate their own control of the world transport network: The US, UK, Canada and Australia.{{cite news| url=https://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2008/04/17/do1702.xml | archive-url=https://web.archive.org/web/20080424230103/http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2008/04/17/do1702.xml | url-status=dead | archive-date=April 24, 2008 | location=London | work=The Daily Telegraph | title=GM crops can save us from food shortages | first1=Bill | last1=Emmott | date=April 17, 2008}}

Ecological economics is founded upon the view that the neoclassical economics (NCE) assumption that environmental and community costs and benefits are mutually canceling "externalities" is not warranted. Joan Martinez Alier,{{cite book|last1=Costanza|first1=Robert|title=Getting Down to Earth: Practical Applications of Ecological Economics|year=1996|publisher=Island Press|location=Washington, D.C.|isbn=978-1559635035|author2=Segura, Olman|author3=Olsen, Juan Martinez-Alier|url-access=registration|url=https://archive.org/details/gettingdowntoear0000unse}} for instance shows that the bulk of consumers are automatically excluded from having an impact upon the prices of commodities, as these consumers are future generations who have not been born yet. The assumptions behind future discounting, which assume that future goods will be cheaper than present goods, has been criticized by David PearcePearce, David "Blueprint for a Green Economy" and by the recent Stern Report (although the Stern report itself does employ discounting and has been criticized for this and other reasons by ecological economists such as Clive Spash).{{cite journal |author=Spash, C. L. |date=2007 |url=http://www.clivespash.org/EE2007_SpashonStern.pdf |title=The economics of climate change impacts à la Stern: Novel and nuanced or rhetorically restricted |journal=Ecological Economics |volume=63|number= 4 |pages=706–713 |doi=10.1016/j.ecolecon.2007.05.017 |bibcode=2007EcoEc..63..706S |access-date=2012-12-23 |url-status=dead |archive-url=https://web.archive.org/web/20140202105133/http://www.clivespash.org/EE2007_SpashonStern.pdf |archive-date=2014-02-02 }}

Concerning these externalities, some like the eco-businessman Paul Hawken argue an orthodox economic line that the only reason why goods produced unsustainably are usually cheaper than goods produced sustainably is due to a hidden subsidy, paid by the non-monetized human environment, community or future generations.Hawken, Paul (1994) "The Ecology of Commerce" (Collins) These arguments are developed further by Hawken, Amory and Hunter Lovins to promote their vision of an environmental capitalist utopia in Natural Capitalism: Creating the Next Industrial Revolution.Hawken, Paul; Amory and Hunter Lovins (2000) "Natural Capitalism: Creating the Next Industrial Revolution" (Back Bay Books)

In contrast, ecological economists, like Joan Martinez-Alier, appeal to a different line of reasoning.Martinez-Alier, Joan (2002) The Environmentalism of the Poor: A Study of Ecological Conflicts and Valuation. Cheltenham, Edward Elgar Rather than assuming some (new) form of capitalism is the best way forward, an older ecological economic critique questions the very idea of internalizing externalities as providing some corrective to the current system. The work by Karl William Kapp explains why the concept of "externality" is a misnomer.Kapp, Karl William (1963) The Social Costs of Business Enterprise. Bombay/London, Asia Publishing House. In fact the modern business enterprise operates on the basis of shifting costs onto others as normal practice to make profits.Kapp, Karl William (1971) Social costs, neo-classical economics and environmental planning. The Social Costs of Business Enterprise, 3rd edition. K. W. Kapp. Nottingham, Spokesman: 305-318 Charles Eisenstein has argued that this method of privatising profits while socialising the costs through externalities, passing the costs to the community, to the natural environment or to future generations is inherently destructive.Eisenstein, Charles (2011), "Sacred Economics: Money, Gift and Society in an Age in Transition" (Evolver Editions) As social ecological economist Clive Spash has noted, externality theory fallaciously assumes environmental and social problems are minor aberrations in an otherwise perfectly functioning efficient economic system.{{cite journal |author= Spash, Clive L. |date= 16 July 2010 |title= The brave new world of carbon trading |journal= New Political Economy |volume= 15 |pages=169–195 |issue= 2 |doi= 10.1080/13563460903556049 |s2cid= 44071002 |url=http://www.clivespash.org/2010_Spash_Brave_New_World_NPE.pdf |archive-url=https://web.archive.org/web/20130510185658/http://clivespash.org/2010_Spash_Brave_New_World_NPE.pdf |archive-date=2013-05-10}} Internalizing the odd externality does nothing to address the structural systemic problem and fails to recognize the all pervasive nature of these supposed 'externalities'.

Mathematical modeling is a powerful tool that is used in ecological economic analysis. Various approaches and techniques include:Proops, J., and Safonov, P. (eds.) (2004), [http://www.e-elgar.co.uk/bookentry_main.lasso?id=2951 Modelling in Ecological Economics] {{Webarchive|url=https://web.archive.org/web/20141227091734/http://www.e-elgar.co.uk/bookentry_main.lasso?id=2951 |date=2014-12-27 }}, Edward ElgarFaucheux, S., Pearce, D., and Proops, J. (eds.) (1995), Models of Sustainable Development, Edward Elgar evolutionary, input-output, neo-Austrian modeling, entropy and thermodynamic models,{{Cite book|title = The Unity of Science and Economics: A New Foundation of Economic Theory|last1 = Chen|first1 = Jing|publisher = Springer|year = 2015|url = https://www.springer.com/us/book/9781493934645}} multi-criteria, and agent-based modeling, the environmental Kuznets curve, and Stock-Flow consistent model frameworks. System dynamics and GIS are techniques applied, among other, to spatial dynamic landscape simulation modeling.Costanza, R., and Voinov, A. (eds.) (2004), Landscape Simulation Modeling. A Spatially Explicit, Dynamic Approach, Springer-Verlag New-York, Inc.{{cite book|last1=Voinov|first1=Alexey|title=Systems science and modeling for ecological economics|year=2008|publisher=Elsevier Academic Press|location=Amsterdam|isbn=978-0080886176|edition=1st}} The Matrix accounting methods of Christian Felber provide a more sophisticated method for identifying "the common good"Felber, Christian (2012), "La economia del bien commun" (Duestro)

Ecological economics draws upon its work on resource allocation and strong sustainability to address monetary policy. Drawing upon a transdisciplinary literature, ecological economics roots its policy work in monetary theory and its goals of sustainable scale, just distribution, and efficient allocation.{{cite journal |last1=Ament |first1=Joe |title=Toward an Ecological Monetary Theory |journal=Sustainability |date=February 12, 2019 |volume=11 |issue=3 |page=923 |doi=10.3390/su11030923 |doi-access=free |bibcode=2019Sust...11..923A }} Ecological economics' work on monetary theory and policy can be traced to Frederick Soddy's work on money. The field considers questions such as the growth imperative of interest-bearing debt, the nature of money, and alternative policy proposals such as alternative currencies and public banking.

Assigning monetary value to natural resources such as biodiversity, and the emergent ecosystem services is often viewed as a key process in influencing economic practices, policy, and decision-making.Mace GM. Whose conservation? Science (80- ). 2014 Sep 25;345(6204):1558–60.Dasgupta P. Nature’s role in sustaining economic development. Philos Trans R Soc Lond B Biol Sci. 2010 Jan 12;365(1537):5–11. While this idea is becoming more and more accepted among ecologists and conservationist, some argue that it is inherently false.

McCauley argues that ecological economics and the resulting ecosystem service based conservation can be harmful.{{cite journal | last1=McCauley | first1=Douglas J. | title=Selling out on nature | journal=Nature | publisher=Springer Nature | volume=443 | issue=7107 | year=2006 |url=http://ibis.geog.ubc.ca/biodiversity/eflora/Selling_out_on_nature.pdf| issn=0028-0836 | doi=10.1038/443027a | pmid=16957711 | pages=27–28 | bibcode=2006Natur.443...27M | s2cid=6814523 }} He describes four main problems with this approach:

Firstly, it seems to be assumed that all ecosystem services are financially beneficial. This is undermined by a basic characteristic of ecosystems: they do not act specifically in favour of any single species. While certain services might be very useful to us, such as coastal protection from hurricanes by mangroves for example, others might cause financial or personal harm, such as wolves hunting cattle.Mech LD. The Challenge and Opportunity of Recovering Wolf Populations. Conserv Biol. 1995 Apr;9(2):270–8 The complexity of Eco-systems makes it challenging to weigh up the value of a given species. Wolves play a critical role in regulating prey populations; the absence of such an apex predator in the Scottish Highlands has caused the over population of deer, preventing afforestation, which increases the risk of flooding and damage to property.

Secondly, allocating monetary value to nature would make its conservation reliant on markets that fluctuate. This can lead to devaluation of services that were previously considered financially beneficial. Such is the case of the bees in a forest near former coffee plantations in Finca Santa Fe, Costa Rica. The pollination services were valued to over US$60,000 a year, but soon after the study, coffee prices dropped and the fields were replanted with pineapple.Ricketts TH, Daily GC, Ehrlich PR, Michener CD. Economic value of tropical forest to coffee production. Proc Natl Acad Sci U S A. 2004 Aug 24;101(34):12579–82 Pineapple does not require bees to be pollinated, so the value of their service dropped to zero.

Thirdly, conservation programmes for the sake of financial benefit underestimate human ingenuity to invent and replace ecosystem services by artificial means. McCauley argues that such proposals are deemed to have a short lifespan as the history of technology is about how Humanity developed artificial alternatives to nature's services and with time passing the cost of such services tend to decrease. This would also lead to the devaluation of ecosystem services.

Lastly, it should not be assumed that conserving ecosystems is always financially beneficial as opposed to alteration. In the case of the introduction of the Nile perch to Lake Victoria, the ecological consequence was decimation of native fauna. However, this same event is praised by the local communities as they gain significant financial benefits from trading the fish.

McCauley argues that, for these reasons, trying to convince decision-makers to conserve nature for monetary reasons is not the path to be followed, and instead appealing to morality is the ultimate way to campaign for the protection of nature.

{{Portal|Science|Environment|Ecology|Earth sciences|Systems science}}

{{div col|colwidth=21em}}

• Agroecology
• Circular economy
• Critique of political economy
• Deep ecology
• Earth Economics (policy think tank)
• Eco-economic decoupling
• Eco-socialism
• Ecofeminism
• Ecological economists (category)
• Ecological model of competition
• Ecological values of mangrove
• Energy quality
• Harrington paradox
• Green accounting
• Gund Institute for Ecological Economics
• Index of Sustainable Economic Welfare
• International Society for Ecological Economics
• Natural capital accounting
• Natural resource economics
• Outline of green politics
• Social metabolism
• Spaceship Earth
• Steady-state economy

{{div col end}}

{{Reflist|30em}}

{{Wikiquote}}

• Common, M. and Stagl, S. (2005). Ecological Economics: An Introduction. New York: Cambridge University Press.
• Costanza, R., Cumberland, J. H., Daly, H., Goodland, R., Norgaard, R. B. (1997). An Introduction to Ecological Economics. St. Lucie Press and International Society for Ecological Economics, [http://www.eoearth.org/article/An_Introduction_to_Ecological_Economics_%28e-book%29 (e-book at the Encyclopedia of Earth)]
• Daly, H. (1980). Economics, Ecology, Ethics: Essays Toward a Steady-State Economy, W.H. Freeman and Company, {{ISBN|0716711796}}.
• Daly, H. and Townsend, K. (eds.) 1993. Valuing The Earth: Economics, Ecology, Ethics. Cambridge, Mass.; London, England: MIT Press.
• Daly, H. (1994). "Steady-state Economics". In: Ecology - Key Concepts in Critical Theory, edited by C. Merchant. Humanities Press, {{ISBN|0391037951}}.
• Daly, H., and J. B. Cobb (1994). For the Common Good: Redirecting the Economy Toward Community, the Environment, and a Sustainable Future. Beacon Press, {{ISBN|0807047058}}.
• Daly, H. (1997). Beyond Growth: The Economics of Sustainable Development. Beacon Press, {{ISBN|0807047090}}.
• Daly, H. (2015). "Economics for a Full World." Great Transition Initiative, https://www.greattransition.org/publication/economics-for-a-full-world.
• Daly, H., and J. Farley (2010). Ecological Economics: Principles and Applications. Island Press, {{ISBN|1597266817}}.
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