Ecological Economics: Basic concepts

Lecture 03
 On treatment of resources

an environmental/natural resource deserves economic treatment

Environmental Economics

only if it is ‘relatively scarce”.

In both cases we need human

participation (co-operation) for better
management. In addition, economist,
ecologist & environmental experts
need to sit together for a consensus.
Ecological Economics

the ecological economics treats almost all the ecological

resources as equally important in their analysis, irrespective
of whether a resource is ‘economically’ scarce or not.
 On economic valuation

Environmental Economics

Convert all values to monetary terms if possible.

In both cases we need

multi-disciplinary approach

Ecological Economics

Some values, particularly inherent value, cannot be expressed in monetary

terms. However, recent advances in ecological economics made it possible
to put monetary value.
 On resource scarcity and maintaining capital
stock
Environmental scarcity on economic growth can be overcome by
Environmental Economics

incurring additional cost in the economy. Environmental economics

considers ecosystems as a “closed” system.

In both cases we need

multi-disciplinary approach
Ecological Economics

the irreversibility and other bio-physical limits of the ‘closed’

ecosystem would constraint the growth of economic sub-system
 On role of technology

Innovative technologies can reduce the potential constraint on

Environmental Economics

economic growth imposed by the resource scarcity.

In both cases we need

multi-disciplinary approach
Ecological Economics

the ecological economists are skeptical about the role of technology in solving
ALL the environmental problems. It is argued that not only that the technology
had not solved many of the past environmental problems but also it had
created several new problems imposing social costs on the economies.
 Key message

❑ Both environmental economics and ecological economics

aim at understanding the issues involved in “human–
economy-environment” relationship in order to redirect
the economies towards sustainability.

❑ While the environmental economics has progressed within a

narrowly, but sharply, focused neoclassical analytical
approach, the ecological economics has expanded by adopting
a ‘diversified approach’, which led to widen the gap between
the two.