1. Announcements Bookstore has ordered more copies of blue book (F&B) Two copies available on reserve later today (different cover, same content) E-mails to me must have cdae 61 in subject, not cdae 061, cdae61, etc. etc. The only HW to be turned in via e-mail is biographical statement, sent to me. Too many students in class to make exceptions. I won't reply to e-mails asking questions on syllabus

2. Why Ecological Economics?

3. Back to the roots

4. Oikos “the household” Study of nature’s household = ecology Managing the human household = economics Production of real goods and services: bounded and natural Ecological economics = management of human household based on knowledge of nature

5. Chrematistiké- study of numbers Retail trade, finance, speculation, how money begets money Not bounded or natural –E.g. International financial flows dwarf the trade in real goods and services

6. Coevolutionary economics Hunter-gatherer economics –Accumulation = death Economics of early agricultural societies –Depended on technological advance –Advent of property rights Industrial market economics –Use of non-renewable resources Ecological economics –Driven by the growing scarcity of natural capital

7. From Empty World to Full World

8. What is scarce? In agriculture? –Not enough tractors and pesticides, or not enough water, arable land, and climate stability? In natural resources? –Not enough boats, or not enough fish? –Not enough chain saws, or not enough forests? In community development? –Too few roads and houses, or too few social connections? –Too little food, or inadequate distribution?

9. So what distinguishes ecological economics from conventional (neoclassical) economics? Pre-analytic vision, Physics, Ecology, Ethics and Practice

10. The pre-analytic vision of ecological economics

11. The sustaining and containing system

12. The Ecological-Economic System is Extremely Complex Feedback loops Highly non-linear change Emergent phenomena Surprise Chaotic behavior Uncertainty and ignorance more common than risk

13. Negative Feedback Loops

14. The Pre-analytic Vision of Neoclassical Economics

16. The Economic System is Simple Human behavior is very simple The market system is simple We can model the system mathematically, and solve for an optimal equilibrium Risk dominates uncertainty and ignorance

17. Physics: The Laws of Thermodynamics

18. 1rst Law: Matter energy cannot be created or destroyed We can’t make something from nothing, and we can’t make nothing from something Natural resources are essential to economic production Natural resources also provide vital economics services The opportunity cost of economic growth is a reduction in the flow of goods and services from nature

19. 2 nd Law: Entropy increases in the universe All economic production becomes waste One way flow from natural resource-> human made economic service-> waste IRREVERSIBILITY Economic production degrades the environment Opportunity cost of economic growth: waste emissions further reduce the flow of goods and services from nature Throughputs, not inputs

20. Economic Implications of the EE vision Diminishing marginal returns, opportunity costs, and uneconomic growth

21. So What? Sustainable growth is an oxymoron Ever continuing growth in material consumption is an impossible goal BUT welfare is a psychic flux, not a physical flux. Economic development is possible, but not continuous economic growth

22. Ethics: the desirable ends

23. The desirable ends How do we provide a high quality of life for this and future generations? Consumption is only one narrow component of human needs

24. Sustainable Scale Ethical assumption: Future generations matter Scale= the size of the economic system relative to the ecosystem that contains and sustains it There is a finite limit to the physical size of the economic system The limits to economic growth are determined by ecological constraints. Macro level opportunity costs of economic growth do not provide economic signals

25. Just Distribution Ethical assumption: current generations matter –Does it make sense to care about the well-being of people not yet born and ignore the well-being of those alive today? Is sustainability possible without more equal distribution? –Do hungry people care about the future? –Can Americans continue to consume 25% of the Earth’s resources? Is depleting the earth’s resources fair to future generations? How do we decide on a ‘Just’ distribution?

26. Efficient Allocation Instrumental ends, not an end in itself