Ecological Economics and Sustainability Joshua Farley Community Development

Ecological Economics and Sustainability Joshua Farley Community Development and Applied Economics Gund Institute for Ecological Economics University of Vermont

Economies as Evolutionary Systems n Hunter gatherer economy (Pleistocene) n n Egalitarian cooperation Agricultural economy (Holocene) Private property rights (limited) n Capture of surplus, hierarchy structures n n Industrial economy (Anthropocene) Fossil fuels and competition n Scarcity of natural capital n

Economy in the Anthropocene Steffen, W. , Grinevald, J. , Crutzen, P. , Mc. Neill, J. , 2011. The Anthropocene : conceptual and historical perspectives. Philosophical Transactions of the Royal Society A: Mathematical, Physical and Engineering Sciences 369, 842 -867.

Economy in the Anthropocene

Nature in the Anthropocene

Nature in the Anthropocene

Societal Challenges in the Anthropocene Just and sustainable degrowth

Transition to Sustainability

Transition to Sustainability Marginal market costs (Market supply curve) Poor people have no demand

Transition to Sustainability n n n Limits to throughput Just distribution Incentives to produce necessary technologies

Changing the Paradigm

Conventional Economics n n n Exponential Growth Ecosystem as part Scarcity, markets and feedback loops Substitutability Energy and resources? n n Production functions Circular economy

Weak Sustainability Schelling (Nobel Memorial Prize in 2005): “Agriculture and Forestry are less than 3% of total output, and little else is much affected. Even if agricultural productivity declined by a third over the next half century, the per capita GNP we might have achieved by 2050 we would still achieve in 2051. ”

Ecological Economic View n n n Economy is sustained and contained by global ecosystem Relative scarcity has changed dramatically Economic institutions must adapt

Laws of Physics n n n Can’t make something from nothing or vice versa Can’t do work without energy Disorder increases

Laws of ecology n Conversion of ecosystem structure into economic products and waste degrades and destroys ecosystem services n n Time lags common Both economic products and ecosystem services essential to civilization

Strong Sustainability n “If the biota, in the course of aeons, has built something we like but do not understand, then who but a fool would discard seemingly useless parts? To keep every cog and wheel is the first precaution of intelligent tinkering. ” Aldo Leopold

Price Mechanism Fails n n Ecosystem Services: can’t be owned Information: value maximized when free

Changing the Goals

From micro-allocation and maximizing monetary value n Micro-allocation: n n How do we allocate natural capital among the production of different economic goods and services? Satisfaction of subjective preferences Preferences weighted by purchasing power n Maximize monetary value n n Food and eflornithine

…To macroallocation and Sustainable Scale n How much ecosystem structure should be: converted to economic production n conserved to generate essential ecosystem services? n n How large an economy and how many people can our ecosystems sustain?

…Just Distribution n Between species n n Between generations n n How much of the planet’s net primary productivity should we take for ourselves? What are our obligations to future generations? Within a generation n Who is entitled to resources created by nature and society as a whole?

… and Efficient Allocation n n Once we’ve achieved a sustainable and just economy, how can we maximize human well-being from available resources? Solving prisoner’s dilemmas

Changing the Rules

Rules for Sustainability n Extract renewable resources no faster than they can regenerate n n Extract essential non-renewable resources no faster than we develop renewable substitute n n Restore depleted stocks Energy sector invests. 3% of revenue in R&D Emit waste no faster than it can be absorbed n Emissions below absorption rates when waste stocks are excessive, e. g. CO 2

Rules for Sustainability n n Neither extraction nor emission can threaten critical ecosystem services Steady state population

Rules for Justice n We cannot grow our way out of poverty n n n Poverty is higher now than in 1969, when per capita GNP was ½ of today’s Resources created by nature and society as a whole should be shared Basic needs must trump luxury

Rules for Efficiency n How we allocate depends on desirable ends, characteristics of scarce resources n n Economics cannot be faith-based Non-excludable: markets cannot work, cooperation required Non-rival: markets inefficient, cooperation required Most ecosystem services are non-rival

Efficiency: Prisoner’s Dilemmas n n n Global Climate Change Natural resource depletion/biodiversity loss Green technology Minimize cost of producing information n Maximize value once it exists n n Cooperation is necessary n Mathematical biology, behavioral economics, political theory, anthropology, evolution all agree

Institutions for Cooperation n n Institutions can make generous people act selfishly, or selfish people act generously Reciprocity or payments? Market economy makes people selfish n Social economy promotes reciprocity n Mixing the two fails n n Social norms: glorify greed or punish it?

Conclusions n n Markets emerged simultaneously with fossil fuels Nature of ‘scarce’ resources has changed from rival, excludable to non-rival and/or nonexcludable Cannot transform physical characteristics of resources to fit market model Must adapt economic system to resource characteristics, human behavior n n n Prisoner’s dilemmas Physiological necessities Cooperation and common ownership for sustainability

Evolution of Cooperation n Genetic n Multi-level selection n n Distribution of pro-social behavior Bacteria, slime-molds, insects, fish, humans (super cooperators) Oxytocin Detecting cheaters Cultural n n n Altruistic punishment Punishing non-punishers Group identity