Sunday, July 10, 2011

Musings on Ecological vs. Environmental Economics

One way of distinguishing between environmental and ecological economics is that environmental economics has a focus on price while ecological economics has a focus on quantity. Environmental economics focuses on market failures as the main determinant of environmental problems. Seen in terms of externalities, the problem is incorrect prices and the solution is implementing the right prices. In many cases these prices must be determined through research, hence the huge emphasis on valuation. Ecological economics sees environmental problems as being primarily problems of scale – that the scale of exploitation of natural resources and the production of wastes are both too large relative to the Earth’s carrying capacity. Therefore, ecological economists are more likely to analyze economic-ecologic systems in terms of quantities of flows of materials and energy. Tools of analysis include energy return on investment and the ecological footprint – both quantity rather than price indicators. Ecological economics focuses primarily on sustainability – equitable distribution of resources over time, while environmental economics focuses on efficiency – ensuring that marginal costs and benefits of activities are equal.

How much overlap is there between ecological economics as actually practiced and the mainstream economic field of environmental and resource economics? Ma and Stern (2006) addressed this issue by analyzing the content and citation patterns of the leading journals in each field – Ecological Economics and the Journal of Environmental Economics and Management (JEEM). They found that there is a significant overlap between the two fields at the journal level — the two journals cite similar journals. The main differences are that ecological economics tends to cite (but not be cited by) general natural science journals more often than environmental economics does, environmental economics cites more heavily from journals rather than other publications, and citations in environmental economics are more concentrated on particular journals and individual publications. However, there is much less similarity at the level of individual articles. Nonmarket valuation articles dominate the articles cited in papers published in JEEM while green accounting, sustainability, and the environmental Kuznets curve are all prominent topics in Ecological Economics. Michael Hanemann was the most cited author in JEEM, while Robert Costanza was the most cited author in Ecological Economics.

Over time, however, there has been a convergence between mainstream environmental and resource economics and ecological economics. This can be seen in the trends over time in topics covered in journal articles with a greater number of mainstream valuation articles published in Ecological Economics [Castro e Silva and Teixeira] and mainstream papers increasingly include more realistic biophysical features.

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