DeCal Highlights: Seminar in Ecological Economics
Recently, Professor William Nordhaus was awarded the Nobel Prize in Economics for “integrating climate change into long-run macroeconomic analysis.” Environmental economists today stand on his great shoulders—I certainly do. Yet in the 1990s, he argued against immediate action against global warming because the estimated costs exceeded benefits. Again in 2007, Professor Nordhaus critiqued the Stern Review that called for immediate action as inconsistent with current real interest and savings rates. Did he integrate the environment into economic analysis enough?
One could argue that it is an improvement from Professor Robert Solow having infamously said in 1974: “The world, can, in effect, get along without natural resources.” For those of us who care deeply about sustainability, Professor Solow’s words are rather unnerving. Natural resources are finite and precious—they are integral to human life. The infamous quote ends perhaps dramatically: “so exhaustion is just an event, not a catastrophe.” To provide some perspective, Solow was referring to the level of substitutability between exhaustible resources and renewable resources and not implying the independence of the economic process from natural resources. Professor Solow’s words and Professor Nordhaus’ conclusions are troubling even in their own contexts.
The theoretical foundations of the DICE model and Solow growth model—in fact, much of modern economic theory— are not grounded in the biophysical reality of the world. According to Professor Solow, the world can get along without natural resources as long as the technology is advanced enough such that we can easily substitute factors of production. A discipline with theoretical grounds that ignore essential biophysical realities can hardly be the only solution to problems surrounding the environment itself. Environmental economics still operates within such a theoretical framework. This is none more evident than the idea of externalities, where we conceive environmental and social damages as something that is outside of our markets. Where then, do these externalities lie?
The idea that the environment is separate from our economic system is hardly the truth when our economic system is so deeply embedded in our social and biophysical environment. Although environmental damages are not external to our lives, markets as they are do not work well enough to represent such environmental damages within it. Society needs to restructure markets to incorporate environmental and social sustainability. The reality is that our economic system lies within a larger societal and biophysical reality. Without natural resources, our economic system certainly cannot exist. In 1971, Barry Commoner, a founder of modern ecology, puts it succinctly: “Everything is connected to everything else. There is one ecosphere for all living organisms and what affects one, affects all.”
Seminar in Ecological Economics, part of the SERC DeCal fellowship, explores the alternative field of Ecological Economics to provide students with intuition and context for economic analyses of environmental problems. It presupposes that the economy is not independent of the environment, but lies within it. From that lens, we view the economic process as a physical one that cannot be self-sustaining. In particular, we see it as perhaps a more linear than a circular process that emits waste.
The seminar does not try to convince students to denounce economics. In fact, I encourage students to learn more about environmental economics and use it, but to keep in mind to what extent results from certain methodologies can tell you. We intentionally cover a broad range of topics that sometimes contradict each other. Professor R.B. Norgaard in Berkeley prescribed methodological pluralism for the Ecological Economics discipline in 1997. The course forces students to make peace with contradicting explanations of the world and to understand the epistemological and methodological variety of the different explanations that we have. A singular understanding is not sufficient for the scale of our problem; we need a diverse patchwork of knowledge and perspectives if we want to stand a chance. This is similar to the holistic framework that the decal’s faculty sponsor, Professor Brown suggests in her book Buddhist Economics, which is based on the interdependence of people with each other and with the planet. She points out that there is no silver bullet to solve our problems of inequality and climate change, and argues for a plethora of policies and lifestyles that support a meaningful life in a sustainable world.
But perhaps more importantly, the DeCal hopes to impart a sense of urgency—and hope—into students. After all, our goal is to conserve the “unique flux, the flux of enjoyment of life” that comes from our economic process (Georgescu-Roegen 1986, 8). To propose radical solutions to questions requires something beyond conventional solutions. Radical solutions start with a different perspective of the world, and I hope the students find that in this seminar.
Jun Wong is a 4th year economics major interested broadly in climate change, energy, landscapes, and inequality. This decal is his attempt to convey an alternative framing of the economy to understand its (un)sustainability and how to address it. You can find him eating or playing tennis somewhere.