energy price disparity and public welfare abstract the differences in the price of energy to economic sectors are linked to a number of system parameters and to public welfare there are large disparities in energy prices within states when comparing residential and industrial prices although neoclassical economics predicts one price in markets the large disparities between the two sectors across states negatively affects the efficiency of resource allocation creates subsidies for those getting the cheap energy and results in unequal access to energy these in turn lead to inefficient partitioning of energy between products and waste higher pollution leakage of wealth and poorer energy use efficiency i e high energy intensity states with large energy price disparities between sectors have statistically higher poverty lower incomes more pollution and use more energy but with less efficiency higher energy price disparities also result in higher throughput per unit of output thus reducing the chances for sustainability and lower public welfare

how might nature value man abstract while much time and effort is spent attempting to quantify environmental services for inclusion in the economic system no one seems to ask how nature might value us an ecological accounting process is devised to accommodate ecosystem flows allowing for the computation of ecological prices and leading to the calculation of net ecosystem output and the efficiency of its production the process is somewhat similar to economic accounting but allows us to consider the ecosystem as open conforming to thermodynamic laws examples such as intervention to reduce soil erosion illustrate how humans might be appreciated by the ecosystem in some instances the net output might be higher with some human presence than with no human presence

external shocks and the demand for adjustment finance when a country experiences a long term adverse external shock resulting in a balance of payments deficit unsustainable in the medium term how quickly should it adjust because time is required for movement of productive factors and consumptive patterns the short term effect of the shock will be a large increase in the value of foreign exchange it then pays to borrow abroad during the first years of the transition against those years when full resource and demand reallocations have taken place to allow this adjustment path the market exchange rate should follow the shadow exchange rate this article uses a simple traded nontraded sector model with lagged responses and optimal borrowing theory to derive a quantitative relationship between the magnitude of the shock and the optimal amount of borrowing the speed at which the original shortfall of foreign currency should be closed and the required currency depreciation during the borrowing and repayment period

a reexamination of the role of thermodynamics for environmental economics abstract as the discussion about the role of thermodynamics in environmental economics has not led to a conclusion yet a more fundamental approach seems to be necessary which also takes into consideration the relationship between economics and the natural sciences in general to this end value theory is chosen as a starting point because it is the centerpiece of every economic theory it is shown that neoclassical environmental economics suffers from serious deficiencies because of its value concept heedlessly copied from classical mechanics thermodynamics can be expected to be helpful to redress these defects because the economy can be thought of as a dissipative structure dependent on its environment the obvious way to integrate thermodynamics consists in the formulation of thermodynamic constraints to complement neoclassical environmental economics but this approach remains unsatisfactory because the neoclassical mechanical hardcore is incompatible with the entropy law and its implications evidently the neoclassical paradigm and its value concept have to be given up but the alternative of the energy theory of value must be rejected because its determinism cannot be reconciled with the richness of human behaviour as thermodynamic analogies offer no solution either there is a dilemma between the necessity and the apparent impossibility of adequately integrating thermodynamic concepts it turns out that a normative inconsistency is responsible which is due to the demand for intergenerational justice therefore the integration of thermodynamics into environmental economics hinges on a meta economic value decision if sustainability is adopted as the guiding principle the insights of thermodynamics call for a macro economic environmental policy setting absolute limits to the economy but this macro policy is incompatible with neoclassical economics so that a social reconstruction of economics based on a social theory of value becomes necessary in sum thermodynamics is important for environmental economics besides fulfilling a general heuristic function it also fulfils a decisive conceptual and an analytical function insofar as it helps to justify sustainability and to operationalize macro economic environmental policy

adjustment policies in developing countries a reassessment this paper analyzes policy responses to external shocks of the 1973 76 and 1979 81 periods in developing economies grouped according to the level of industrialization and the policies applied it is shown that outward oriented economies relied largely on export promotion and import substitution to offset the balance of payments effects of external shocks in both periods inward oriented economies failed to apply such output increasing policies of adjustment rather they financed the balance of payments effects of external shocks by foreign loans in the 1974 76 period and had to take deflationary measures in 1979 81 when their increased indebtedness limited the possibilities for further borrowing the policies applied led to rates of economic growth substantially higher in outward oriented than in inward oriented economies with growth rates in 1983 averaging 5 percent in the first case and practically nil in the second

biological and economic foundations of renewable resource exploitation abstract a physiologically based population dynamics model of a renewable resource is used as the basis to develop a model of human harvesting the model incorporates developing technology and the effects of market forces on the sustainability of common property resources the bases of the model are analogies between the economics of resource harvesting and allocation by firms and adapted organisms in nature specifically the paper makes the following points 1 it shows how economic and ecological theories may be unified 2 it punctuates the importance of time frame in the two systems evolutionary versus market 3 it shows contrary to prevailing economic wisdom how technological progress may be detrimental to resource preservation 4 it shows how the anticipated effects of high discount rates on resource use can be catastrophic when synergized by progress in harvesting technology 5 it suggests that increases in efficiency of utilization of the harvest encourages higher levels of resource exploitation and 6 it shows the effects of environmental degradation on consumer and resource dynamics the model leads to global implications on the relationship between economic growth and the ability of modern societies to maintain the environment at a sustainable level

policy responses to exogenous shocks in developing countries this essay will report on the results of research on the policy responses of developing countries to exogenous external shocks in the 1973 8 and 1978 83 periods it will further examine the economic performance of outward oriented and inward oriented developing countries in the light of the policies applied

limits to economic growth as shown by a computable general equilibrium model abstract economic growth is distinguished from commercial growth and is defined in this article as the growth of the value a society puts in monetary terms on all commercial and non commercial goods and values it possesses during a certain period a computable general equilibrium model is used to show the impact of changes in the endowments preferences and production possibilities on economic income which in the model comprises all wealth besides land with its natural resources and labor energy is the key endowment to drive an economy the model leads in an intuitive way to the following conclusions 1 societies should start to use appropriate indicators for true economic growth rather than just for commercial growth as measured by gross national product 2 all types of economic growth are limited no matter if based on endowment growth production efficiency growth or changes in preferences 3 economic growth should be oriented more towards increasing production efficiency and less towards using more natural resources 4 human population growth puts at risk the possibilities for average economic growth per person 5 we should get better prepared to use solar energy in the future 6 besides economic growth there exists pure utility growth which is not measurable in monetary terms it includes much of scientific progress in the long run and is of great importance even though it cannot be included in an indicator of economic growth

niche diversification in environmental ecological economics abstract this paper is devoted to the identification and comparison of the niches of neoclassical environmental economics nee and ecological economics eco it is presented in four sections section 1 argues that the existing literature does not make the differences and relations between the sister disciplines neatly transparent section 2 critically examines the antecedents of the subjects with reference to three structural dimensions such as scarcity perception problem solving orientation and range of integration section 3 collates the elements and reformulates the definitions section 4 is coda on the essay the divide between the paradigms which came to the surface during the 1960s became prominent through the growth controversy of the subsequent decade the controversy over the need for change of economic theory to cope with the growing intensity of environmental uncertainty makes the disciplines sore about each other the neoclassical paradigm comprising of elements like relative scarcity allocative approach market correction and technological optimism characterises nee the distinguishing characteristics of eco include thermodynamic irreversibility absolute scarcity economy ecosystem symbiosis biophysical approach ecological stewardship and prudent pessimism the niches are competitive and complementary in some respects and thus provide a unique example of fruitful niche diversification within environmental ecological economics we have a feeling that the economics profession can trace out the interface of the disciplines in some policy areas and raise the effectiveness of prescriptions so that this academic species diversity can serve humankind to its full potential

the role of technology in sustaining agriculture and the environment abstract visions of sustainable development often leave unanswered the question what actions taken by the current generation will ensure that future generations can meet their economic and environmental needs in this context we assess the role of technology in steering agriculture along a more sustainable path from the agricultural sector s perspective this requires an optimal investment plan for a nation s stock of environmental assets that accounts for an intergenerational fulfillment of sustainability s dual goals 1 satisfying food and fiber needs at reasonable costs to consumers and 2 providing environmental service flows in reviewing agricultural indicators to assess the nation s performance in meeting these goals we find productivity growth has increased while rates of soil erosion wetland conversion and pesticide application have declined however individuals continue to demand more environmental services while private markets undersupply environmental services the capacity of the agricultural sector to meet food and fiber and environmental service demands partially depends on the availability and adoption of new technology several market impediments explain the undersupply of sustainable technologies 1 firms cannot fully appropriate rents from technology development 2 success may vary with farm structure 3 the heterogeneity of the resource base influences adoption and 4 farmers cannot capture the benefits of environmental services to address these market failures sustainable agriculture policy should 1 support research and development in sustainable technologies and provide incentives to encourage adoption 2 ensure that conservation efforts reflect the efficient and sustainable allocation of environmental assets and 3 legitimize markets for foods produced under more sustainable practices

behaviour in commons dilemmas homo economicus and homo psychologicus in an ecological economic model in mainstream economy behaviour is often formalised following the rational actor approach however in real life the behaviour of people is typified by multidimensional optimisation to realise this people engage in cognitive processes such as social comparison imitation and repetitive behaviour habits so as to efficiently use their limited cognitive resources a multi agent simulation program is being developed to study how such micro level processes affect macro level outcomes sixteen agents are placed in a micro world consisting of a lake and a gold mine each agent s task is to satisfy its personal needs by fishing and or mining whereby they find themselves in a commons dilemma facing the risk of resource depletion homo economicus and homo psychologicus are formalised to study the effects of different cognitive processes on the agents behaviour results show that for the h psychologicus the transition from a fishing to a mining society is more complete than for the h economicus moreover introducing diversity in agents abilities causes the h economicus on the average to decrease its time spent working whereas for the h psychologicus we observe an increase in the time spent working these results confirm that macro level indicators of sustainability such as pollution and fish harvest are strongly and predictably affected by behavioural processes at the micro level it is concluded that the incorporation of a micro level perspective on human behaviour within integrated models of the environment yields a better understanding and eventual management of the processes involved in environmental degradation 2000 elsevier science b v all rights reserved

concepts of efficiency in ecological economics sisyphus and the decision maker abstract efficiency forms the bedrock of policy planning and business approaches to sustainable development but what do ecological economists mean by efficiency in the resource use context efficiency has a wide range of potential interpretations from the ratio of work output energy inputs to pareto efficiency despite the potential richness of the efficiency concept in practice efficiency is often narrowly conceived within disciplinary boundaries this appears to be the case even in ecological economics which purports to be transdisciplinary and pluralistic such narrow disciplinary perspectives essentially waste the richness of the efficiency concept this wasting could mean ecological economists and decision makers are destined to sisyphean toil in the pursuit of sustainable development this paper explores the efficiency concept and its interpretation it then reviews ecological economic literature to find that there is much room for improvement in the way ecological economists apply efficiency finally the paper presents a framework within which a truly ecological economic approach to efficiency can emerge armed with this framework policy makers and planners should be better prepared to make decisions leading to sustainable development

organizational patterns of economies an ecological perspective abstract a complex adaptive systems paradigm can be used to abridge theorizing in ecological and economic sciences the paper discusses economic flows connectivity and stability from the perspective of theoretical ecology the global economy by analogy with ecosystems appears to self organize as an ascendent system most of the world trade is done among the tiny fraction of technologically advanced countries and trade interaction strength exhibits a power law with exponential decay small world behavior and preferential attachment characterizes interactions among economic agents industrial economies and the world economic system as a whole appear to evolve towards the maximum power efficiency development that fosters efficiency in the maximum power sense all the world becomes industrialized implies a trade off in socio economic diversity and may be antithetical to the stability of the global economy if we take an ecological perspective then the problem of global development does not reside in the realm of technology or global governance it boils down to the question of required natural balance in living systems the balance between organized complexity and overhead the harmony between efficiency and adaptability

the role of thermodynamics in the study of economic and ecological systems abstract economic theory has always maintained that economic value is generated solely within the economy where it is fully distributed among the factors of production before being consumed according to this theory the economy is an isolated system that does not need flows to pass across its boundaries in support of its steady state general equilibrium from a thermodynamic point of view this idea is unacceptable according to thermodynamic theory any open system which allows flows of matter and energy to cross its boundaries is capable of maintaining itself in steady state only because it transport value from its environment to restore the value that has been consumed within the system and dissipated drawing on the analogy with thermodynamics this paper replaces the traditional systemic analog of the economy which is the closed circular flow process with the steady flow process according to this analog any efficient economy is an open system both physically and economically requiring a flow of economic value to maintain its steady state in other words an economically isolated system has to be inefficient and is bound to misallocate and overuse environmental resources whether the economy behaves as an economically isolated inefficient or open efficient system is an empirical question however if real economies are economically open and efficient and environmental resources are abused due to the economy s unrestrained material growth parts of traditional economic theory espicially those related to benefit evaluation will have to be modified policy recommendations will be affected in any case because internalization the panacea of resource misallocations cannot be more than a temporary solution instead of opening the economy internalization encloses the harmed resource and saves it by abusing excessively other environmental resources

the case for methodological pluralism abstract ecology and economics share the same greek root both address complex systems ecology consists of numerous approaches to understanding natural systems energetics population biology food web models hierarchy theory to mention just a few within ecology field knowledge and the reporting of new observations are well respected economics on the other hand is dominated by one pattern of thinking and standard of proof the market model and econometrics within economics field knowledge and observations per se are little valued agreement on a correct method is frequently taken as an indication of the maturity of a science the argument is developed in this paper that all the aspects of complex systems can only be understood through multiple methodologies the agreement on method within economics however seems to reflect stronger pressures within the discipline for conformity than for truth relative to ecology since ecological economics seeks to understand a larger system than either economics or ecology seeks to understand a diversity of methodologies is appropriate and pressures to eliminate methodologies for the sake of conformity should be avoided

allocation distribution and scale towards an economics that is efficient just and sustainable abstract the practical policy of issuing tradeable permits for depletion and pollution requires for its implementation the clear separation of the three basic economic goals of efficient allocation equitable distribution and sustainable scale economic theory needs to catch up with policy in recognizing that scale issues cannot be reduced to either allocation or distribution

incentives precision technology and environmental protection abstract this paper calls for a reevaluation of the pollution problem in order to devise efficient strategies for its control it contends that a fundamental cause of pollution is inefficiency in input use during the production process this inefficiency manifests itself as input waste and polluting residues precision technologies can increase the effectiveness of inputs used in production and reduce pollution generation despite their potential economic and ecological benefits adoption of precision technologies has been slow this paper presents a conceptual framework to identify and analyze the specific factors that affect their diffusion among microunits these include various heterogeneous characteristics of microunits prices which do not reflect the relevant scarcities due to distortionary regulatory policies and lack of institutional mechanisms for efficient allocation of inputs and outputs it rationalizes the observed variations in the appropriate choice of technology across microunits and argues for the need to broaden the range of incentive based instruments for environmental protection beyond pollution taxes

environmental tax reform efficiency and political feasibility although market based environmental measures like uniform co2 taxes reach a given standard at minimal cost they do not prevail in real world policies an effciency oriented environmental policy fails as it involves a redistributen of pollution rights resulting in a strong and generally effective opposition of the groups that forego economic rents the present paper analyzes the tradoff between efficiency and political feasibility of several co2 tax and reimbursement schemes using a computable general equilibrium model of switzerland the simulation results indicate that a policy combining a uniform co2 tax with differentiated labor subsidies preventing intersectoral redistribution is a better solution for the tradeoff than the presently existing tax schemes in various countries

entropy law and exhaustion of natural resources is nicholas georgescu roegen s paradigm defensible abstract i examine whether the entropy law dictates absolute limits to growth i distinguish the entropy law proper diffusion without coherent work from its application the carnot cycle diffusion with coherent work while the entropy law pertains to mechanistic systems the carnot cycle is the result of purposeful agency since the economic process is carried out by purposeful agency to generate coherent work it is not governed by the entropy law rather it resembles the carnot cycle resources hence cannot be defined objectively a la the entropy law resources can only be defined relative to the purposeful agency thus the prognosticators of doom like georgescu roegen cannot be bolstered by the entropy law

the evolution of preferences why sovereign preferences may not lead to sustainable policies and what to do about it abstract the conventional economic paradigm assumes that tastes and preferences are exogenous to the economic system and that the economic problem consists of optimally satisfying those preferences tastes and preferences usually do not change rapidly and in the short term this assumption makes sense sustainability is an inherently long term problem and in the long run it does not make sense to assume tastes and preferences are fixed and given if preferences are expected to change over time and under the influence of education advertising changing cultural assumptions etc the old assumption of consumer sovereignty is not adequate different criteria of optimality are needed how preferences change how they relate to the goal of sustainability and how they can or should be actively influenced to satisfy the new criteria needs to be determined ecological economics has emphasized the three rank ordered goals of ecological sustainability fair distribution and allocative efficiency this paper examines how preferences evolve and change over time and the implications of this for developing policies that meet these three goals in democratic societies

assessing the degrowth discourse a review and analysis of academic degrowth policy proposals abstract debates on ecological and social limits to economic growth and new ways to deal with resource scarcity without compromising human well being have re emerged in the last few years central to many of these is a call for a degrowth approach in this paper a framework is developed to support a systematic analysis of degrowth in the academic literature this article attempts to present a clearer notion of what the academic degrowth literature explores by identifying organising and analysing a set of proposals for action retrieved from a selection of articles the framework is applied to classify proposals according to their alignment to ecological economics policy objectives sustainable scale fair distribution and efficient allocation type of approach top down versus bottom up and geographical focus local national or international a total of 128 peer reviewed articles focused on degrowth were reviewed and 54 that include proposals for action were analysed the proposals identified align with three broad goals 1 reduce the environmental impact of human activities 2 redistribute income and wealth both within and between countries and 3 promote the transition from a materialistic to a convivial and participatory society the findings indicate that the majority of degrowth proposals are national top down approaches focusing on government as a major driver of change rather than local bottom up approaches as advocated by many degrowth proponents the most emphasised aspects in the degrowth literature are related to social equity closely followed by environmental sustainability topics such as population growth and the implications of degrowth for developing nations are largely neglected and represent an important area for future research moreover there is a need for a deeper analysis of how degrowth proposals would act in combination

the economic viability of battery storage for residential solar photovoltaic systems a review and a simulation model battery storage is generally considered an effective means for reducing the intermittency of electricity generated by solar photovoltaic pv systems however currently it remains unclear when and under which conditions battery storage can be profitably operated in residential pv systems without policy support based on a review of previous studies that have examined the economics of integrated pv battery systems in this paper we devise a simulation model that investigates the economic viability of battery storage for residential pv in germany under eight different electricity price scenarios from 2013 to 2022 in contrast to previous forward looking studies we assume that no premium is paid for solar photovoltaic power and or self consumed electricity additionally we run the model with a large number of different pv and storage capacities to determine the economically optimal configuration in terms of system size we find that already in 2013 investments in storage solutions were economically viable for small pv systems given the assumptions of our model the optimal size of both residential pv systems and battery storage rises significantly in the future higher electricity retail prices lower electricity wholesale prices or limited access to the electricity wholesale market add to the profitability of storage we conclude that additional policy incentives to foster investments in battery storage for residential pv in germany will only be necessary in the short run at the same time the impending profitability of integrated pv storage systems is likely to further spur the ongoing trend toward distributed electricity generation with major implications for the electricity sector

ecological pricing and economic efficiency abstract there is a need to accurately account for the contributions of environmental assets to the overall economy such accounting would permit policies that allow protection of important natural resources and aid the analytic process to determine an accurate basis for a sustainable economy the aim is to develop an accounting framework for ecology that is sufficiently consistent with the economic framework that the two can be fruitfully combined with appropriate definitions of the flows the two systems can be connected into a common framework no single measure of the system productivity and efficiency can be given for the combined system however until the ecosystem metabolism can be converted into economic terms this could be done with a series of economic valuation techniques ecological prices could then be estimated and a single measure of ecological economic output could be given with the net combined system input and output now in common terms a technical system efficiency measure can logically be proposed because human activity inevitably involves dissipation such emissions would now have a monetary price because such emissions are irrecoverable the total output of the combined system is greater than it is under the current definition giving rise to a technical system wide efficiency measure

energy diversity and development in economic systems an empirical analysis abstract as economic systems develop over time they tend to become more complex with more structure and greater throughputs assuming favorable conditions energy use increases as more economic sectors develop and more channels for flow are opened economic diversity as measured by the number of economic sectors using energy and the equatability of flows between them generally increases as diversity increases the efficiency of generating outputs with a given amount of energy also increases development capacity the product of system energy throughput and diversity of flows is a measure of the potential system output and is calculated for selected countries capacity changes over time are shown to relate to changes in economic output in selected countries two distinct development strategies become evident one which promotes energy use and one which emphasizes diversity and the sustainability of each is examined while most countries utilize a mix of the two developing countries generally rely more on increasing energy use to increase output while developed countries tend to become more diverse as a means of increasing outputs sustainability is enhanced by strategies which promote diversity and resource use efficiency in economic systems

what is ecological economics ecological economics addresses the relationships between ecosystems and economic systems in the broadest sense these relationships are the locus of many of our most pressing current problems i e sustainability acid rain global warming species extinction wealth distribution but they are not well covered by any existing discipline environmental and resource economics as it is currently practiced covers only the application of neoclassical economics to environmental and resource problems ecology as it is cur rently practiced sometimes deals with human impacts on ecosystems but the more common tendency is to stick to natural systems ecological economics aims to extend these modest areas of overlap it will include neoclassical environmental economics and ecological impact studies as sub sets but will also encourage new ways of thinking about the linkages between ecological and economic systems we have chosen the name ecological economics for this area of study because it implies a broad ecological interdisciplinary and holistic view of the problem of studying and managing our world the earth from space cover of the journal reflects this global holistic perspective we did not intend to imply with the ordering of the two words in the title that the journal is mainly an economics journal it is intended to be a new approach to both ecology and economics that recognizes the need to make economics more cognizant of ecological impacts and dependencies the need to make ecology more sensitive to economic forces incentives and constraints and the need to treat integrated economic ecologic systems with a common but diverse set of conceptual and analytical tools there was much discussion of other possible names such as economic ecology or ecology and economics or some conjoining of the two words that to me end up being confusing tongue twisters like ecolnomics or econology but ecological economics seemed to get closest to the mean ing we desired while still being evocative to the uninitiated