[Scpg] Ecological Economics - The Best New Idea for 2009

LBUZZELL at aol.com LBUZZELL at aol.com
Mon Feb 9 07:25:53 PST 2009


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Ecological  Economics - The Best New Idea for 2009



In  the future, economists will return to Earth
The  year 2009 will witness a tsunami of economic appeals to fix, as 
disgraced  Federal Reserve Chairman Alan Greenspan put it, the 'flaw' in their 
thinking.  Most will get it wrong. 
The  proposals for bailouts, regulations, and government spending sprees all 
share  one tragic flaw: They assume no physical or biological limits to human 
growth.  Most economists cling to an 18th century mechanical universe that 
conjured an  'invisible hand' of God, which would allegedly convert private greed 
into public  utopia. 
Indeed,  a few got rich but the meek inherit an Earth featuring child 
slavery,  sweatshops, a billion starving people, toxic garbage heaps, dead rivers,  
exhausted aquifers, disappearing forests, depleted energy stores, lopped-off  
mountain tops, acid seas, melting glaciers, and an atmosphere heating up like a 
 flambé. 
Meanwhile,  a rigorous sub-culture of scientists and economists have been 
working to free  economics from its eighteenth century quagmire by reconciling 
human enterprise  with the laws of physics, biology, and ecology. 
Their  time has come. This year, 2009, will signal the birth of a genuinely 
innovative  economics that will eventually displace the patchwork 
rationalisations for  greed. The new ecological accounting is variously called 'dynamic 
equilibrium',  'steady-state' or 'biophysical' economics.  
What  about technology?
Ignoring  nature remains the tragic conceit of conventional economists, who 
presume we can  grow our economies forever without regard to quantities of 
materials, energy,  and pollution. Biophysical economics, on the other hand, 
acknowledges that there  exist no cases in nature of unlimited growth. 
Dr.  Albert Bartlett, Emeritus Professor of Physics at Colorado University, 
urges  economists to learn the laws of nature. Non-material values - 
creativity,  dreams, love - may expand without limit, but materials and energy in the 
real  world remain subject to the requirements of thermodynamics and biology. 
"Growth  in population or rates of consumption cannot be sustained. Smart growth 
is  better than dumb growth," says Bartlett, "but both destroy the 
environment." 
What  about technology? Some economists imagine that computer chips or 
nanotechnology  will save us from the laws of nature, but every technical efficiency 
in history  has resulted in more consumption of energy and resources, not 
less. Remember  when computers were going to save paper? That never happened. 
Computers  increased paper consumption from about 50 million tonnes annually in 
1950 to 250  million tonnes today. Meanwhile, we lost 600 million hectares of 
forest. 
Nor  is the internet a celestial realm where ideas are exchanged for 'free'.  
Computers require copper, silicon, oil, toxic chemicals, massive energy for  
server networks, and garbage heaps for techno-trash. In every industrialised  
nation, energy and material consumption is increasing, not decreasing.  
Technology is not energy. It costs energy. 
Malthus  revisited
In  the 1970s, World Bank economist Herman Daly wrote Steady-State  Economics 
to outline the future of ecological economics. Daly makes a  distinction 
between 'sustainable growth', which is 'impossible', and  'sustainable 
development', which is natural. "The larger system is the biosphere  and the subsystem is 
the human economy," says Daly. "We can develop  qualitatively, but we cannot 
grow beyond the biosphere's limits." 
A  UK commission chaired by Sir Nicholas Stern called global warming 'the 
greatest  market failure ever seen'. Pavan Sukhdev, economist for Deutschbank, 
estimates  that forest destruction erases $2.5 trillion in 'natural capital' 
annually. Mark  Anielski, an economist in Edmonton, estimates that 'ecological 
services' from  Canada's boreal forests - carbon capture, water filtration - are 
worth about $93  billion per year. 
In  the 19th century, Thomas Malthus and John Stuart Mill introduced 
ecological  economics, warning that human expansion would eventually meet natural 
limits.  Industrialists have mocked Malthus and ignored Mill for two centuries, 
but the  evidence now suggests that the discovery of petroleum only postponed 
the  effects. 
Many  economists now recognise that Malthus and Mill were essentially 
correct. A 2008  Goldman-Sachs report about commodity shortages stated, "we see 
parallels with  Malthusian economics." Popular investment advisor, James Dines, 
told a New York  Investment Conference in May that food and fuel scarcities are a 
"result of a  Malthusian planetary limit."  
Limits  to growth are real," says Anita M. Burke, former Shell Oil and B.C. 
Hydro  sustainability advisor. "We must embrace adaptation strategies that 
create new  ways of being in relationship to each other and the planet. The 
solutions  offered by growth economics are inadequate. These will be replaced by an  
economics that accepts the limits and laws of nature." 
Biophysical  Economics
"Energy  used by the economy is … a proxy of the amount of real work done in 
our  economy," says Charles A. Hall, at the State University of New York. In 
the  1980s, Hall and others hypothesised, "Over time, the Dow Jones should 
snake  about the real amount of work." Twenty years later, a century's market and  
energy data shows that whenever the Dow Jones Industrial Average spikes 
faster  than US energy consumption, it crashes: 1929, 1970s, the dot.com bubble, 
and now  with the mortgage collapse. 
World  oil production plateaued in 2005, and as the price of oil rose from 
$35/barrel  in 2004 to $147 in 2008, it added a $3.5 trillion annual cost to 
human  civilisation. "That reduced discretionary income," says Hall. "The domino 
that  led to a decline in aggregate demand, particularly for suburban real 
estate."  Jeff Rubin, Chief Economist at CIBC World Markets, agrees: "Oil shocks 
create  global recessions." 
A  popular Wall Street publication, The  Corporate Examiner, is planning a 
special edition this year on 'the end of  faith-based economics', with an 
article by Hall and his colleagues. In October,  Hall convened the first 
International Conference on Biophysical Economics in  Syracuse, New York, and will 
publish a book this year. "Since economics is about  the production and transfer of 
physical things or services that require energy,"  says Hall, "it is a 
biophysical science, not a social science."  
Robert  Costanza, Director of the Gund Institute for Ecological Economics at 
the  University of Vermont, will launch two periodicals this year: an annual 
academic  anthology, The  Year in Ecological Economics, and a bimonthly 
magazine, Solutions,  for technical and popular articles about ecology and economics. 
"To repair our  economic system," explains editor Ida Kubiszewski, we must 
realise that "the  mounting environmental and social problems we face are 
systemic. Articles  in Solutions will  employ whole-systems thinking." 
The  editorial board includes pioneers of ecological economics - Herman Daly, 
Ernest  Collenbach, and Vancouver's Bill Rees, who developed 'ecological 
footprint'  analysis at the University of British Columbia. Rees calculates that 
human  consumption of the biosphere is 'already 30 per cent into overshoot', 
consuming  more than the ecosystem can replenish. "We must account for the 
environment,"  says Rees, "reduce total consumption, and then address equitable  
distribution." 
"We  are dying of consumption," says Peter Dauvergne, sustainability advisor 
at UBC  and author of The Shadows of Consumption. "The unequal globalisation 
of the  costs of consumption is putting ecosystems and billions of people at 
risk." 
To  honestly achieve a "sustainable" economy, humanity must step through a 
paradigm  shift, as profound as the transition in the sixteenth century when 
Copernicus  showed that the Earth is not the centre of the universe. Likewise, 
ecology  teaches us that humanity is not the centre of life on the planet. Just 
as the  Pope's henchmen refused to look through Galileo's telescope, some 
economists  avoid looking out the window to see what keeps humanity alive: 
photosynthesis,  precious materials, and concentrated energy. 
"Sooner  or later," as ecologist David Abram puts it, "technological 
civilisation must  accept the invitation of gravity and settle back … into the rhythms 
of a  more-than-human Earth." 
In  the 21st century, human enterprise has reached the scale of the planet. 
We have  to account for ourselves on nature's balance sheet. This is 
biophysical  economics. It appears inevitable. Biophysical culture is what we will make 
of  it. 
-  Rex Weyler 
Thanks  to George Vye for passing this along to  us. 
 
 
 
 
 
 
 










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