Preface
One part of designing an economic system which is ecologically sensible and sustainable is the approach of assigning monetary values to "natural capital". Efforts are underway in various places around the world to do that. I believe those efforts are commendable and necessary, but there might be a problem that should be kept in mind.
............................
Will the Valuation be "de dicto" or "de re"?
http://www.isecoeco.org/wp-content/uploads/2020/06/ONeill-what_is_lost_through_no_net_loss.pdf
To value an object merely as a vehicle for "services" is to value it de dicto. The object is substitutable. To value it for its specific, intrinsic characteristics, for its inherent, essential nature is to value the object de re. It is not substitutable.
Valuing some objects de dicto is entirely appropriate. A case in point would be tools. To do so with other objects, such as living, sentient beings, is ethically questionable. In some cases, even the nonliving portion of a landscape may not be substitutable in terms of the well-being of various people.
One proposal in the natural capital valuation approach is to implement offsetting markets. If, for example, there's a loss of an ecosystem or a portion thereof in one area, then in another area one (of equal value) would be restored, or created, or preserved. Supposedly, there would be no net loss. But, what if the lost item is valued "de re" by the people in the area or region? Then there is a net loss, and the well-being of some people is reduced.
In the article at the link above, Professor John O'Neill gives a critique of the whole idea of natural capital valuation (including offsetting markets). The article at the link below is a slightly different version of the one above. He makes some very important points which need to be given serious consideration.
https://www.cusp.ac.uk/themes/m/m1-6/#1475182667098-0328ae0f-4bcbf2c7-159ee609-9652
I well remember when offsetting markets were created for air pollution. "Unused" carbon emissions could be sold to companies above their limits in order for them to keep polluting the atmosphere (for some limited time). No net gain in air pollution. Or, in exchange for being above their limits re emissions, polluters could buy tracts of forests and preserve them in order to reduce CO2 in the air. Only the good side of that scenario was promoted in the media; it still is today. So, the question is: how well has "cap and trade" (carbon offsetting) worked out for our atmosphere? In my view, not very well at all.
I'm not saying that natural capital offsetting markets are strictly comparable to carbon offsetting. Nevertheless, the latter is a cautionary tale.
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Conclusion
While I believe that natural capital valuation is a worthwhile endeavor, policy makers must be extremely careful as to how they use it. Markets rarely have been kind to nonhuman life. Nor have they been kind at times to the abiotic portion of the ecosphere. In particular, it's questionable whether or not offsetting markets could, or should, be utilized in all cases of natural capital. See the links above for a full discussion.
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Not only my opinion. Be Well
Showing posts with label Natural Capital. Show all posts
Showing posts with label Natural Capital. Show all posts
Saturday, August 8, 2020
Thursday, July 30, 2020
Free Book - "Beyond Growth" by Herman Daly
Below is a link to the online version of Beyond Growth - The Economics of Sustainable Development, by the renowned ecological economist, Herman Daly.
Some of the Figures/illustrations found in the regular book are not in this online text.
http://feineigle.com/static/books/2014/beyond_growth/Beyond%20Growth_The%20Economics%20of%20Sustainable%20Development-Herman%20E.%20Daly-(1997).pdf
........................
Be Well
Some of the Figures/illustrations found in the regular book are not in this online text.
http://feineigle.com/static/books/2014/beyond_growth/Beyond%20Growth_The%20Economics%20of%20Sustainable%20Development-Herman%20E.%20Daly-(1997).pdf
........................
Be Well
Friday, July 3, 2020
An Alternative to the Obsession With GDP
Preface
Mainstream economics is obsessed with gross domestic product (GDP) growth. Those who measure GDP growth are convinced that any amount of it is a good sign for the economy, and that's how it's presented to the public. Furthermore, any economy is considered to be separate from Nature (or worse, Nature is only a small part of the economy); also, sustainability of natural resources is rarely ever considered. The only resources taken into account during the bulk of economic planning are artificial--- railways, trucks, factories, ships, etc.--- or are humans (labor). A bit of consideration is given to natural resource availability, but usually not in any holistic way. To be more concise, mainstream economists value Nature only for what can be extracted from it, and for the amount of wastes that can be dumped back into it.
Note--- these topics are not "flashy", but understanding them is crucial to the continued organized existence of human beings. The path we're still on is leading to species suicide. That's not hyperbole.
.............................
The Flaws in Mainstream Economic Thinking
1. Herman Daly and other Steady-State economists astutely have pointed out the probability of growth beyond an optimal scale that is uneconomic. In other words, growth in which the costs outweigh the benefits. Mainstream economists don't agree. That's because they don't know the overall practical value of Nature to economics and human well-being. Nor do they appear to understand the true costs of ecosystem damage inflicted by human mainstream economic activity. To them, ecosystems merely are a tiny part of the economy. That's especially true now that financialization has become a larger part of economies. So, I imagine this quip from a mainstreamer: "We don't need Nature. To increase GDP, all we have to do is shuffle more papers (so to speak).".
2. The practical value of natural capital and ecosystem services is often somewhat invisible to, and thus vastly underestimated or ignored by, mainstream economists. Here's a short introduction to the topic:
https://www.youtube.com/watch?v=wMIUglBligI .
Here's another, with E.O. Wilson:
https://www.youtube.com/watch?v=duOzXGTuUrA .
3. Mainstream economists fail to recognize that GDP as a measurement of economic health (and human well-being) is incomplete in the long run, and thus misleading.
Gross Ecosystem Product (GEP) Approach
From the Natural Capital Project at Stanford U.---
https://naturalcapitalproject.stanford.edu/news/accounting-nature-economies
For those of you who may be at a more advanced level regarding this subject, here's the link to the full study--- (which also is embedded at the link above as "Proceedings of the National Academy of Sciences").
https://www.pnas.org/content/117/25/14593 .
This ecological approach, developed by the Natural Capital Project, already is being tested in China. The EU has something similar: Mapping and Assessment of Ecosystems and their Services (MAES).
.............................
Conclusion
The philosophy and policies of neoliberalism/mainstream economics have brought us to where we are today: environmental degradation; little to no concern for the importance of ecosystem services; little concern for industrial waste disposal (especially if it's into the atmosphere); the unsustainable use of natural capital; and a false belief in unlimited growth, overconsumption, GDP as a complete measure of economic health, and corporatism. If all that isn't bad enough, we're on the brink of the largest, most severe ecodisaster in human history. Meanwhile, the Super-Rich are laughing all the way to the bank, most politicians are doing a lot of talking and not much else, and the corporatist propagandists are running amok.
A ray of hope---
A shift to ecological economics, as well as the continued development of the GEP approach to economic measurement, and the adoption of ecoethics is the best path forward... and it's all possible.
............................
Not only my opinion. Stay Well
Mainstream economics is obsessed with gross domestic product (GDP) growth. Those who measure GDP growth are convinced that any amount of it is a good sign for the economy, and that's how it's presented to the public. Furthermore, any economy is considered to be separate from Nature (or worse, Nature is only a small part of the economy); also, sustainability of natural resources is rarely ever considered. The only resources taken into account during the bulk of economic planning are artificial--- railways, trucks, factories, ships, etc.--- or are humans (labor). A bit of consideration is given to natural resource availability, but usually not in any holistic way. To be more concise, mainstream economists value Nature only for what can be extracted from it, and for the amount of wastes that can be dumped back into it.
Note--- these topics are not "flashy", but understanding them is crucial to the continued organized existence of human beings. The path we're still on is leading to species suicide. That's not hyperbole.
.............................
The Flaws in Mainstream Economic Thinking
1. Herman Daly and other Steady-State economists astutely have pointed out the probability of growth beyond an optimal scale that is uneconomic. In other words, growth in which the costs outweigh the benefits. Mainstream economists don't agree. That's because they don't know the overall practical value of Nature to economics and human well-being. Nor do they appear to understand the true costs of ecosystem damage inflicted by human mainstream economic activity. To them, ecosystems merely are a tiny part of the economy. That's especially true now that financialization has become a larger part of economies. So, I imagine this quip from a mainstreamer: "We don't need Nature. To increase GDP, all we have to do is shuffle more papers (so to speak).".
2. The practical value of natural capital and ecosystem services is often somewhat invisible to, and thus vastly underestimated or ignored by, mainstream economists. Here's a short introduction to the topic:
https://www.youtube.com/watch?v=wMIUglBligI .
Here's another, with E.O. Wilson:
https://www.youtube.com/watch?v=duOzXGTuUrA .
3. Mainstream economists fail to recognize that GDP as a measurement of economic health (and human well-being) is incomplete in the long run, and thus misleading.
Gross Ecosystem Product (GEP) Approach
From the Natural Capital Project at Stanford U.---
https://naturalcapitalproject.stanford.edu/news/accounting-nature-economies
For those of you who may be at a more advanced level regarding this subject, here's the link to the full study--- (which also is embedded at the link above as "Proceedings of the National Academy of Sciences").
https://www.pnas.org/content/117/25/14593 .
This ecological approach, developed by the Natural Capital Project, already is being tested in China. The EU has something similar: Mapping and Assessment of Ecosystems and their Services (MAES).
.............................
Conclusion
The philosophy and policies of neoliberalism/mainstream economics have brought us to where we are today: environmental degradation; little to no concern for the importance of ecosystem services; little concern for industrial waste disposal (especially if it's into the atmosphere); the unsustainable use of natural capital; and a false belief in unlimited growth, overconsumption, GDP as a complete measure of economic health, and corporatism. If all that isn't bad enough, we're on the brink of the largest, most severe ecodisaster in human history. Meanwhile, the Super-Rich are laughing all the way to the bank, most politicians are doing a lot of talking and not much else, and the corporatist propagandists are running amok.
A ray of hope---
A shift to ecological economics, as well as the continued development of the GEP approach to economic measurement, and the adoption of ecoethics is the best path forward... and it's all possible.
............................
Not only my opinion. Stay Well
Saturday, June 13, 2020
A Brief Introduction to Ecological Economics - The Sane Path Forward
Preface
If we are to avoid an ecological catastrophe, then a relatively rapid paradigm shift must occur in a number of key areas. One of those areas is economics, specifically, the neoliberal/neoclassical economic system that currently is dominant worldwide. In this essay, I'll explain why I think the shift should be to ecological economics (EE). The Intro here shall be bare bones; subsequent posts will cover in some depth various aspects (including criticisms) of the subject.
For two-plus decades, I've been puzzled (baffled, really) as to why neoliberal thinking views the economic system as separate from Nature. Any economic system is embedded in the natural world - in ecosystems, in biogeochemical cycles, and is subject to the Laws of Nature, so to speak. Do we not extract timber, other plant products, common minerals, rare earth minerals, water, fish, etc. from the natural world? Do we not all breathe air? Are not all businesses (and consumers) sometimes subject to the whims of flooding, storms, droughts, natural vectors of disease, and the like? Obviously, the answer to each question above is YES. Consequently, it makes no sense to me for anyone to believe that any economic system is not a smaller piece of the natural world. In a very real sense, even though this planet has innumerable ecosystems, Earth itself is one giant ecosystem. No artificial system is separate from or larger than that.
..................................
Why Ecological Economics (EE) is the Sane Path Forward
William Rees, founding member and past president of the Canadian Society for EE, wrote a brilliant piece five years ago for the Great Transition Initiative: https://greattransition.org/publication/economics-vs-the-economy In that essay, he makes the point that EE recognizes the economy as "an open, wholly dependent subsystem of the ecosphere...". [Emphasis added.] Natural resources are extracted from, and wastes are injected back into, Nature. Any material transformations in these processes are subject to Natural Law (e.g., the Laws of Thermodynamics). In other words, any economy is not outside of or separate from the natural world.
The neoliberal economic paradigm operates as if the opposite were true. As a result, our world is now mired in a plethora of ecological disasters: loss of biodiversity, which is damaging ecosystem services to humanity and nonhuman life; habitat destruction causing (among other things) disease proliferation; crucial ecosystem damage (e.g., to wetlands & their critical functions of flood control and removal of toxic substances from water); acidification of the ocean; the sixth mass extinction event on Earth; air pollution; water pollution, and unsustainable use of water; climate disruption; and more.
EE also takes into consideration the concept of ecological constraints on what Bucky Fuller long ago called "Spaceship Earth". Except for incoming solar energy (and some meteorites), we live in a finite, closed habitat. It's not growing larger. Fortunately for life here, there are many, many ongoing regenerative and biogeochemical cycles of materials on this ship. When we interfere with those cycles beyond sustainability, we threaten our life support system's proper functioning. When we do not properly manage industrial wastes, and when we overharvest natural resources beyond sustainability, essentially we are committing species suicide. EE recognizes these problems, but neoliberal economics mostly ignores them.
In addition to those mentioned above, key elements of EE include the following:
1. a transition to a steady-state (not stagnant), sustainable economy, rather than the current unlimited growth model;
2. the incorporation and evaluation of natural capital and ecosystem services in the economic system;
3. socially fair distribution of goods & services;
4. sustainable development and growth;
5. local/regional procurement of goods & services whenever possible;
6. reduction of material "throughput" in the economy;
7. a transition away from fossil fuels; and,
8. the incorporation of ecoethics into economics and the economy in general.
..................................
Conclusion
As we navigate through the Anthropocene geologic time period, we must face up to a few facts that we've been avoiding.
1. As Rees and others have pointed out: the finite ecosphere in which we live has highly variable, but limited, regenerative and waste assimilating capacities.
2. Our current economies around the globe, and all the activities associated with them, are destroying significant sections of our natural life support system.
3. That destruction primarily is due to the pursuance of unlimited growth, unlimited development, and over-consumption.
4. The main driver of the above pursuits is essentially unlimited population growth.
5. Despite some positive applications, our technology has not slowed the pace toward impending, massive ecocatastrophe. Arguably and overall, it has instead increased that pace.
6. To avert disaster, we are in need of a rapid cultural and ethical evolutionary change in our thinking and behavior.
7. A significant part of that change should be the shift away from neoliberal economics.
8. After much examination of the factors involved, I believe we should adopt and implement some version of ecological economics in as many countries as possible. That would be a big step toward improving and preserving organized human existence on Spaceship Earth.
................................
Not only my opinion. Be Well
If we are to avoid an ecological catastrophe, then a relatively rapid paradigm shift must occur in a number of key areas. One of those areas is economics, specifically, the neoliberal/neoclassical economic system that currently is dominant worldwide. In this essay, I'll explain why I think the shift should be to ecological economics (EE). The Intro here shall be bare bones; subsequent posts will cover in some depth various aspects (including criticisms) of the subject.
For two-plus decades, I've been puzzled (baffled, really) as to why neoliberal thinking views the economic system as separate from Nature. Any economic system is embedded in the natural world - in ecosystems, in biogeochemical cycles, and is subject to the Laws of Nature, so to speak. Do we not extract timber, other plant products, common minerals, rare earth minerals, water, fish, etc. from the natural world? Do we not all breathe air? Are not all businesses (and consumers) sometimes subject to the whims of flooding, storms, droughts, natural vectors of disease, and the like? Obviously, the answer to each question above is YES. Consequently, it makes no sense to me for anyone to believe that any economic system is not a smaller piece of the natural world. In a very real sense, even though this planet has innumerable ecosystems, Earth itself is one giant ecosystem. No artificial system is separate from or larger than that.
..................................
Why Ecological Economics (EE) is the Sane Path Forward
William Rees, founding member and past president of the Canadian Society for EE, wrote a brilliant piece five years ago for the Great Transition Initiative: https://greattransition.org/publication/economics-vs-the-economy In that essay, he makes the point that EE recognizes the economy as "an open, wholly dependent subsystem of the ecosphere...". [Emphasis added.] Natural resources are extracted from, and wastes are injected back into, Nature. Any material transformations in these processes are subject to Natural Law (e.g., the Laws of Thermodynamics). In other words, any economy is not outside of or separate from the natural world.
The neoliberal economic paradigm operates as if the opposite were true. As a result, our world is now mired in a plethora of ecological disasters: loss of biodiversity, which is damaging ecosystem services to humanity and nonhuman life; habitat destruction causing (among other things) disease proliferation; crucial ecosystem damage (e.g., to wetlands & their critical functions of flood control and removal of toxic substances from water); acidification of the ocean; the sixth mass extinction event on Earth; air pollution; water pollution, and unsustainable use of water; climate disruption; and more.
EE also takes into consideration the concept of ecological constraints on what Bucky Fuller long ago called "Spaceship Earth". Except for incoming solar energy (and some meteorites), we live in a finite, closed habitat. It's not growing larger. Fortunately for life here, there are many, many ongoing regenerative and biogeochemical cycles of materials on this ship. When we interfere with those cycles beyond sustainability, we threaten our life support system's proper functioning. When we do not properly manage industrial wastes, and when we overharvest natural resources beyond sustainability, essentially we are committing species suicide. EE recognizes these problems, but neoliberal economics mostly ignores them.
In addition to those mentioned above, key elements of EE include the following:
1. a transition to a steady-state (not stagnant), sustainable economy, rather than the current unlimited growth model;
2. the incorporation and evaluation of natural capital and ecosystem services in the economic system;
3. socially fair distribution of goods & services;
4. sustainable development and growth;
5. local/regional procurement of goods & services whenever possible;
6. reduction of material "throughput" in the economy;
7. a transition away from fossil fuels; and,
8. the incorporation of ecoethics into economics and the economy in general.
..................................
Conclusion
As we navigate through the Anthropocene geologic time period, we must face up to a few facts that we've been avoiding.
1. As Rees and others have pointed out: the finite ecosphere in which we live has highly variable, but limited, regenerative and waste assimilating capacities.
2. Our current economies around the globe, and all the activities associated with them, are destroying significant sections of our natural life support system.
3. That destruction primarily is due to the pursuance of unlimited growth, unlimited development, and over-consumption.
4. The main driver of the above pursuits is essentially unlimited population growth.
5. Despite some positive applications, our technology has not slowed the pace toward impending, massive ecocatastrophe. Arguably and overall, it has instead increased that pace.
6. To avert disaster, we are in need of a rapid cultural and ethical evolutionary change in our thinking and behavior.
7. A significant part of that change should be the shift away from neoliberal economics.
8. After much examination of the factors involved, I believe we should adopt and implement some version of ecological economics in as many countries as possible. That would be a big step toward improving and preserving organized human existence on Spaceship Earth.
................................
Not only my opinion. Be Well
Friday, May 15, 2020
Myopia and Deep Denial by Too Many People
Continuing on with the Introduction to Ecological Liberalism---
Any informed, reasonable assessment of the current state of humanity on finite Earth surely would conclude with the following.
1. The Powers-That-Be and too many Main Street people apparently believe we humans are separate from and superior to Nature... and thus not subject to the Laws of Nature.
2. As a consequence, we have been and continue to be on a path of subduing Nature, rather than extracting natural capital in a sustainable manner.
3. The results have been: overuse, degradation, and dangerous disruption of our natural habitat... plus, pollution in the extreme.
4. Much of the above is due to propaganda, a lack of knowledge concerning natural science (especially ecology), economics, & ethics, and a deep denial of readily apparent facts.
5. Too many people have bought into the fallacies of unlimited population and economic growth, expanding consumption/consumerism, and the ability of technology to overcome any problem whatsoever.
Fortunately, amidst all the short-sightedness and denial, many institutions and people are working hard to provide valuable education toward a sustainable, ecological path forward. Here are a few of them---
https://naturalcapitalproject.stanford.edu/
https://mahb.stanford.edu/blog/never-let-a-good-crisis-go-to-waste/
https://mahb.stanford.edu/
https://psmag.com/magazine/fallacy-of-endless-growth
http://williamrees.org/on-herman-dalys-economics/#more-261
https://thetyee.ca/Analysis/2020/04/06/The-Earth-Is-Telling-Us-We-Must-Rethink-Our-Growth-Society/
If you really want to educate yourself, you're going to have to read and/or watch relevant videos. Twitter is great, but 140 characters only points the way. 😊
Not only my opinion. Everyone Be Well
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