Ecological Economics and Applied Problem Solving

1. Ecological Economics and Applied Problem Solving

2. 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?

3. Transdisciplinarity • 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.

4. I. What are the Desirable Ends?

5. Desirable 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

6. II. What are the scarce resources?

7. First 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

8. Second 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

9. What is scarcer, natural or manmade capital?

10. 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

11. III. What are the market relevant characteristics of scarce resources?

12. Three 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

13. Ecosystem 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

14. Ecosystem 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

15. 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

16. So How do We Allocate?

17. When do markets work? Excludable Non-Excludable Open Access Regime: Oceanic fisheries, timberetc. from unprotected forests, waste absorption capacity Market Good: land, oil, timber, captured fish, waste absorptioncapacity? Rival Potential market goodbut 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. Non-rival

18. Macro-allocation

19. Allocation of non-market goods • Requires participatory democratic decision making process • Just distribution therefore applies to political power as well as resources

20. Case Study: Conversion of Mangrove Ecosystems to Shrimp Aquaculture

21. Site location

22. Project 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

23. Desirable ends

24. Quality of life • For who? • Local • Indigenous community • Tagabinet villagers • Coastal fishing communities • National: seafood supply • Global: carbon sequestration, biodiversity preservation

25. Scale and distribution • 70% of mangroves in Philippines lost • Intact mangroves provide public goods, common resources for community • Shrimp aquaculture benefits owners and American consumers

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

27. Scarce resources from ecosystem • Ecosystem goods • Building materials • Food • Ecosystem services • Coastline protection • Waste absorption • Nursery

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

29. Synthesis and Communication

30. …Leads to Action • Press conference on site, with owners, community members, local government, representatives of federal government • Illegal dikes torn down by community members

31. … and efficient allocation

32. Useful Resource • Applied Problem Solving in Ecological Economics • Farley, Erickson and Daly, Island Press