The Development of an Ecological Economics

By Costanza, Robert; Cleveland, Cutler et al. | Journal of Business Administration and Policy Analysis, Annual 1999 | Go to article overview

The Development of an Ecological Economics

Costanza, Robert, Cleveland, Cutler, Perrings, Charles, Journal of Business Administration and Policy Analysis


Ecology and economics have developed as separate disciplines throughout their recent histories in the 20th century. While each has addressed the way in which living systems self-organize to enable individuals and communities to meet their goals, and while each has borrowed theoretical concepts from the other and shared patterns of thinking with other sciences, they began with different first principles, addressed separate issues, utilized different assumptions to reach answers, and supported different interests in the policy process. Bringing these domains of thought together and attempting to reintegrate the natural and social sciences has lead to what we call ecological economics. After numerous experiments with joint meetings between economists and ecologists in the 1980's (e.g. Jansson 1984), the International Society for Ecological Economics (ISEE) was formed in 1988, the journal, Ecological Economics, was initiated and published its first issue in February of 1989 (currently publishing 12 issues per yea r), and major international conferences have brought together ecologists, economists and a broad range of other scientists and practitioners. Several ecological economic institutes have been formed around the world, and a significant number of books have appeared with the term ecological economics in their titles (e.g. Martinez Alier 1987, Costanza 1991, Peet 1992, The Group of Green Economists 1992, Jansson et al 1994, Barbier et al. 1994, Costanza et al. 1997a, Edward-Jones et al. 2000).

As Martinez-Alier (1987) and Cleveland (1987) point out, ecological economics has historical roots as long and deep as any field in economics or the natural sciences, going back to at least the 17th century. Nevertheless, its immediate roots lie in work done in the 1960s and 1970s. Kenneth Boulding's classic "The economics of the coming spaceship Earth" (Boulding 1966) set the stage for ecological economics with its description of the transition from the "frontier economics" of the past, where growth in human welfare implied growth in material consumption, to the "spaceship economics" of the future, where growth in welfare can no longer be fueled by growth in material consumption. This fundamental difference in vision and world view was elaborated further by Daly (1968) in recasting economics as a life science-akin to biology and especially ecology, rather than a physical science like chemistry or physics. The importance of this shift in "pre-analytic vision" (Schumpeter 1950) cannot be overemphasized. It imp lies a fundamental change in the perception of the problems of resource allocation and how they should be addressed. More particularly, it implies that the focus of analysis should be shifted from marketed resources in the economic system to the biophysical basis of interdependent ecological and economic systems, (Clark, 1973; Martinez-Alier, 1987; Cleveland, 1987; and Christensen, 1989).

The broader focus of ecological economics is carried in a 'systems' framework. The systems approach, with its origins in non-linear mathematics, general systems theory, non-equilibrium thermodynamics, and ecosystem ecology, is a comparatively recent development that has opened up lines of inquiry that were off the agenda for earlier work in what Lotka termed biophysical economics (Clark 1976, Cleveland 1987, Martinez-Alier 1987, Christensen 1989, Clark and Munroe 1994). While bioeconomic and ecological economic models both incorporate the dynamics of the natural resources under exploitation, the former tend to take a partial rather than a general equilibrium approach (van der Ploeg et al. 1987).

The core problem addressed in ecological economics is the sustainability of interactions between economic and ecological systems. Ecological economics addresses the relationships between ecosystems and economic systems in the broadest sense (Costanza 1991). It involves issues that are fundamentally cross-scale, transcultural and transdisciplinary, and calls for innovative approaches to research, to policy and to the building of social institutions (Costanza and Daly 1987, Common and Perrings 1992, Holling 1994, Berkes and Folke 1994, d'Arge 1994, Golley 1994, Viederman 1994). …

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