Ecological Economics Lecture 2 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Doctoral Program and Advanced Degree in Sustainable Energy Systems Doctoral Program in Mechanical Engineering Doctoral Program in Environmental Engineering

Ecological Economics vs. Environmental and Natural Resource Economics Ecological Economics –The basis is the environment/ecosystems –Ecocentric –“Top-down”, Pro-active –Ecology and Economics Environmental Economics –Interaction between environment and economics –Anthropocentric –“Bottom-up”, Reactive –“Just” Economics

Intrinsic vs. Existence Value Choice and knowledge Compensation Risk vs. Certainty Economic vs. Intrinsic value

Syllabus I Scale (ecology), distribution (ethics), efficiency (economics), constraints (thermodynamics) Formal analogy –Microeconomics and thermodynamics –Biophysical valuation –Industrial ecology, industrial metabolism Substantive integration –Thermodynamics and ecology: DEB –Thermodynamics and economics: Ayres Epistemology and sociology of science Ethics and welfare Static vs. intertemporal optimisation –Lagrangian multipliers –Maximum principle

Syllabus II Microeconomics –Review of consumer theory –Review of producer theory –Review of market structures –Game theory –Evolutionary and institutional economics Pollution economics; pollution control instruments

Market Equilibria and Externalities y MPC MPB MSC Market equilibrium Social optimum

Syllabus III Ecological and economic networks –Life Cycle Analysis –Input-Output Analysis –Computable General Equilibrium Models –Indicators of environmental responsibility Economic valuation methods Intertemporal choice and uncertainty –Discount rate –Cost-benefit analysis;

Syllabus IV Sustainable development –Weak vs. strong sustainability –Economic growth theory Neoclassical and endogenous Ayres –Economic theory of sustainable development –Biophysical and other indicators of sustainable development Index of sustainable economic welfare Ecological footprint Human Appropriation of Net Primary Production EcoIndicator95, EcoIndicator99 –Environmental Kuznets hypothesis

Next Lecture ASSIGNMENTS –Chapter 3, problem 5 –Chapter 15, problem 1, 2 READINGS: Varian, Intermediate Microeconomics –Choice: chapter 5 (appendix) –Demand: chapter 6 (appendix) –Market demand: chapter 15 –Equilibrium: chapter 16 –Producer theory: chapters 17, 18, 19, 20, 21, 22