International Society for Ecological Economics

The Ecological Economics Approach To Sustainability

AnnMari Jansson, Monica Hammer, Carl Folke, Robert Costanza, AnnMari Jansson, Monica Hammer, Carl Folke, Robert Costanza

• Publisher: Island Press
• Year: 2013
• ISBN:
  9781610912815
• Topic: Business
• Subtopic: Business General
• Index: Business

Investing in Natural Capital presents the results of a workshop held following the second biannual conference of the International Society for Ecological Economics. It focuses on the relation of human development to natural capital, and the relation of natural capital to environmental processes.

Because we are capable of understanding our impact on the environment and the importance of managing it sustainably, humans play a special role in our ecosystem. The book emphasizes the essential connections between natural ecosystems and human socioeconomic systems, and the importance of insuring that both remain resilient. Specific chapters deal with methodology, case material, and policy questions, and offer a thorough exploration of this provocative and important alternative to conventional economics.

1

INVESTING IN NATURAL CAPITAL—WHY, WHAT, AND HOW?

Carl Folke
The Beijer International Institute of Ecological Economics
The Royal Swedish Academy of Sciences
Box 50005
S-104 05 Stockholm, Sweden

Department of Systems Ecology
Stockholm University
S-106 91 Stockholm, Sweden

Monica Hammer
Department of Systems Ecology
University of Stockholm
S-106 91 Stockholm, Sweden

Robert Costanza
Maryland International Institute for Ecological Economics
Center for Environmental and Estuarine Studies
University of Maryland
Box 38, Solomons, MD 20688-0038

AnnMari Jansson
Department of Systems Ecology
University of Stockholm
S-106 91 Stockholm, Sweden

ABSTRACT

This introductory chapter is a synthesis and overview of the major ideas contained in the other chapters of the book. It starts with a summary of some of the major characteristics of the rapidly evolving field of ecological economics, with particular emphasis on the concept of natural capital, and its maintenance and enhancement. In the next section a few essential features of the ecological economic approach are described. Thereafter, we present what we believe has evolved as important ecological economic research topics related to the issue of sustainability, and finally, what policy recommendations should be given, considering the state of current knowledge.

This synthesis chapter and the other chapters in the book were developed in part at a workshop which followed the second international conference of the International Society for Ecological Economics (ISEE) held in Stockholm, Sweden in August, 1992. Embedded in the chapter are views and consensus statements developed at the workshop. Basic points of consensus at the workshop included the fact that (1) the economic system is a subsystem of the global ecosystem, (2) fundamental uncertainty is large and irreducible and certain processes are irreversible, and (3) there are limits to biophysical throughput through the economic system. Therefore we need to conserve natural capital, or at least maintain adequate stocks, keep our options open to avoid irreversibilities and create opportunities, and include a broader range of values such as ethics, equity, and intergenerational concerns. Management should be proactive rather than reactive and should result in simple, implementable policy recommendations based on sophisticated understanding of the underlying systems.

The book is organized into three major sections. The first section on “Conceptual Underpinnings” consists of seven chapters that lay the groundwork and develop the “pre-analytic vision” for an ecological economics approach to sustainability. The second section consists of twelve chapters on “Methods and Analysis” that develop some specific methodological approaches, analytical results, and case studies based on this conceptual groundwork. The final section consists of six chapters that deal with “Policy and Institutions” to implement the results of the first two sections.

WHAT IS ECOLOGICAL ECONOMICS AND WHY DO WE NEED IT TO ACHIEVE SUSTAINABILITY?

To achieve sustainability, the global community must deal with new types of problems threatening the future well-being and existence of humanity. These problems are fundamentally cross-scale, transcultural and transdisciplinary, calling for new innovative research approaches and new social institutions (Holling this volume; Berkes and Folke this volume; d’Arge this volume). This research should be integrated rather than divorced from the policy and management process (Golley this volume; Viederman this volume).

The international recognition of sustainable development as a long term goal for human society at the Earth Summit in Rio de Janeiro in 1992, emphasizes the crucial importance of these issues within the human community. Critically important research is now needed to facilitate the transition to sustainable production and consumption systems. Innovative research aimed at articulating the methods and mechanisms by which human populations can strike a dynamic balance between economic development and ecological constraints they face constitutes the foundation on which the future will be built.

Ecological economics is a transdisciplinary field of study that addresses the relationships between ecosystems and economic systems in the broadest sense, in order to develop a deep understanding of the entire system of humans and nature as a basis for effective policies for sustainability. It takes a holistic systems approach that goes beyond the normal narrow boundaries of academic disciplines. This does not imply that disciplinary approaches are rejected, or that the purpose is to create a new discipline. Ecological economics is interdisciplinary in the sense that scholars from various disciplines collaborate side-by-side using their own tools and techniques, and transdisciplinary in the sense that new theory, tools, and techniques are developed to effectively deal with sustainability. It focuses more directly on the problems facing humanity and the life-supporting ecosystems on which we depend. These problems involve: (1) assessing and insuring that the scale of human activities are ecologically sustainable; (2) distributing resources and property rights fairly, both within the current generation of humans and between this and future generations, and between humans and other species; and (3) efficiently allocating resources as constrained and defined by 1 and 2 above, and including both marketed and non-marketed resources.

Humans have a special role to play in the system because we are responsible for understanding our own role in the larger system and managing it for sustainability (Costanza et al. 1991). This responsibility is not only an ethical and a moral issue. It has to do with the fact that saving the environment actually means saving ourselves, including future generations, since we, as a biological species, are dependent on healthy ecosystems for survival. Thus, ecological economics is an anthropocentric field of study in the sense that it cares about the survival and welfare of human beings on this planet.

It differs, however, from many other anthropocentric perspectives because it is embedded more in an ecocentric than an egocentric worldview (Rapport 1993). Ecological economics views the socioeconomic system as a part of the overall ecosphere, emphasizing carrying capacity and scale issues in relation to the growth of the human population and its activities, and the development of fair systems of property rights and wealth distribution. The belief of many that we can continue on the same path of expansion, that technological progress will solve all energy, resources, and environmental limits, and that there is infinite substitutability between human-made and natural capital is considered to be a dangerous one, given the huge uncertainty. This blind faith in technology may be similar to the situation of the man who fell from a ten-story building, and when passing the second story on his way down, concluded “so far so good, so why not continue?”

Instead, it is recognized that uncertainty is fundamental, large, and irreducible, and that particular processes in nature are essentially irreversible (Costanza this volume; Clark and Munro this volume). Instead of locking ourselves in development paths that may ultimately lead to destruction and despair, we need to conserve and invest in natural capital, in the sense of keeping life support ecosystems and interrelated socioeconomic systems resilient to change (Hammer et al. 1993; Holling this volume; Jansson and Jansson this volume; Perrings this volume). Hence, ecological economics has an explicit concern for future generations and long-term sustainability, and works with a broader range of values than the limited perceptions of the current generation of humans (although these perceptions are certainly not ignored). Ethics and equity issues are explored, as well as differences and similarities between worldviews and cultures (Turner et al. this volume; Berkes and Folke this volume).

As an open, dynamic subsystem of the overall, finite global ecosphere, the human population and its socioeconomy is an integral part of the life-supporting environment, physically interconnected by the flows of energy and matter at various scales in time and space (Daly this volume; Ehrlich this volume; d’Arge this volume). Therefore, human exploitation of natural resources and disposal of wastes are not separate activities, but take place in the same environment, and both activities impact on the life support functions provided by natural ecosystems (see Figure 2.1 in Daly this volume). The life support environment is the basis, and healthy ecosystems are a precondition for human welfare. Hence, the ecological economic world view treats humans as a part of and not apart from the processes and functions of nature (Costanza 1991). After all, we humans did not create the globe, but evolved from it and with it. Viewing the economic subsystem in its proper perspective relative to the entire system is crucial for achieving a sustainable relationship with the environment, and assuring our own species’ continued survival on the planet.

Natural Capital

Ecological economists speak of natural capital, human capital (and/or cultural capital), and manufactured capital when categorizing the different kinds of stocks that produce the range of ecological and economic goods and services used by the human economy (Daly this volume; Berkes and Folke this volume). The latter two are sometimes referred to together as human-made capital (Costanza and Daly 1992). These three forms of capital are interdependent and to a large extent complementary (Daly this volume). As a part of nature, humans with our skills and manufactured tools not only adapt to but modify natural capital, just like any other species in self-organizing ecosystems (Holling this volume; Ehrlich this volume; Jansson and Jansson this volume).

Natural capital consists of two major subtypes: non-renewable resources such as oil, coal, and minerals; and renewable resources such as ecosystems. Environmental or ecological services, which describes a wide range of ecosystem processes and functions, such as maintenance of the composition of the atmosphere, amelioration of climate, operation of the hydrological cycle including flood control and drinking water supply, waste assimilation, recycling of nutrients, generation of soils, pollination of crops, provision of food from the sea, maintenance of species, a vast genetic library and also the scenery of the landscape, and recreational sites, in addition to aesthetic and amenity values are the flows that result from natural capital (Ehrlich 1989 this volume; Folke 1991; de Groot 1992 this volume).

Ecological economists argue that natural capital and human-made capital are largely complements (rather than substitutes), and that natural capital is increasingly becoming the limiting factor for further development (Costanza and Daly 1992, Daly this volume). Therefore, in order to sustain a stream of income, the natural capital stock must be maintained. This does not mean an unchanged physical stock, but rather an undiminished potential to support present and future human generations. A minimum safe condition for sustainability (given the huge uncertainty) is to maintain the total natural capital stock at or above the current level (Turner et al. this volume). An operational definition of this condition for sustainability means that the physical human scale must be limited within the carrying capacity of the remaining natural capital; technological progress should be efficiency-increasing rather than throughput-increasing; harvesting rates of renewable natural resources should not exceed regeneration rates; waste emissions should not exceed the assimilative capacity of the environment; and non-renewable resources should be exploited, but at a rate equal to the creation of renewable substitutes (Barbier 1987; Costanza and Daly 1992).

A working definition of this statement points to maximizing the net benefits of economic development, subject to maintaining the goods, services and quality of the natural environment over time (Pearce et al. 1988). This requirement ensures that we observe the bounds set by the functioning of the natural environment in its role of support system for the economy (Pearce and Turner 1990; d’Arge this volume). The bounds refer to the carrying capacity of the environment to support human activities (Daily and Ehrlich 1992; Ehrlich this volume; Rees and Wackernagel this volume), at various scales. This capacity is dependent on the resilience of ecosystem and the behavior of the economy-environment system as a whole (Common and Perrings 1992; Perrings this volume; Holling 1992 this volume; Jansson and Jansson this volume; d’Arge this volume; Costanza et al. 1993).

Substitution and Complementarity

Solar energy drives the generation of all renewable resources and ecological services. Industrial energy is used through the processes within the industrial economy to sustain socioeconomic activities and to upgrade natural resources into consumable commodities (Zucchetto this volume). The upgrading process is called “production” in economic terminology. This means that economic production of any commodity needs natural resources, and the transformation of natural resources from discovery, extraction, an...

Table of contents

• ABOUT ISLAND PRESS
• ABOUT ISEE
• Title Page
• Copyright Page
• Table of Contents
• CONTRIBUTORS
• FOREWORD
• PREFACE
• 1 - INVESTING IN NATURAL CAPITAL—WHY, WHAT, AND HOW?
• PART ONE - Perspectives on Maintaining and Investing in Natural Capital
• PART TWO - Ecological Economic Methods and Case-Studies on the Significance of Natural Capital
• PART THREE - Environmental Management and Policy Implications: Adjusting Economic, Technical, Socio-Political, and Cultural Systems
• INDEX
• ISLAND PRESS BOARD OF DIRECTORS