The Economist who wants the field to account for nature(technologyreview.com)
technologyreview.com
The Economist who wants the field to account for nature
https://www.technologyreview.com/2023/12/26/1084603/gretchen-daily-economist-environment-accounting/
11 comments
If economics took externalities into account then our entire economic order would break down. Thus, it won't happen...until eventually the whole thing stops working.
Externalities have a long history in economics. The concept has always been a somewhat slippery and controversial, but remains an important analytical tool for discussing market failures and government intervention [0].
The prospect of ecological collapse has drawn a lot of attention to the idea of negative externalities, but it's worth mentioning that positive externalities are also important in economic theory. For example, positive externalities to knowledge creation have been modeled as the engine of long-term growth by endogenous growth theorists since the 1980s (starting with Paul Romer and Robert Lucas), based on precursory work from the 1960s (e.g. Kenneth Arrow and Hirofumi Uzawa), and ideas reaching-at least-back to the work of Alfred Marshall in the late 19th c.
Still, let's hope that the global economic order doesn't depend on what economists are doing in their models :)
[0] For a nuanced historical perspective, see this paper by Steven Medema: https://sites.duke.edu/sgmedema/files/2022/12/Medema-ExceptU...
The prospect of ecological collapse has drawn a lot of attention to the idea of negative externalities, but it's worth mentioning that positive externalities are also important in economic theory. For example, positive externalities to knowledge creation have been modeled as the engine of long-term growth by endogenous growth theorists since the 1980s (starting with Paul Romer and Robert Lucas), based on precursory work from the 1960s (e.g. Kenneth Arrow and Hirofumi Uzawa), and ideas reaching-at least-back to the work of Alfred Marshall in the late 19th c.
Still, let's hope that the global economic order doesn't depend on what economists are doing in their models :)
[0] For a nuanced historical perspective, see this paper by Steven Medema: https://sites.duke.edu/sgmedema/files/2022/12/Medema-ExceptU...
So long as we keep polluting unchecked, we are in big trouble. Staying below 1.5C is a pipe dream at this point, and we've already (briefly) hit 2C[1]. We're also producing and consuming more fossil fuels than ever before, and the pollution rate is increasing exponentially[2].
Exponential growth has a tendency to creep up on you, and then all of a sudden things are out of control. Plus, there are the significant lag effects, where we don't feel the effect of today's pollution until much later (which is usually decades later, depending on the nature of it).
People should be panicking about this, but most prefer to just pretend everything is fine or we'll somehow invent some magic technology that will defy the laws of physics.
[1]: https://climate.copernicus.eu/global-temperature-exceeds-2de...
[2]: https://gml.noaa.gov/ccgg/trends/
Exponential growth has a tendency to creep up on you, and then all of a sudden things are out of control. Plus, there are the significant lag effects, where we don't feel the effect of today's pollution until much later (which is usually decades later, depending on the nature of it).
People should be panicking about this, but most prefer to just pretend everything is fine or we'll somehow invent some magic technology that will defy the laws of physics.
[1]: https://climate.copernicus.eu/global-temperature-exceeds-2de...
[2]: https://gml.noaa.gov/ccgg/trends/
[deleted]
The environment has always been an element of economics, whether we like it or not.
Classical liberalism arose during one of the most enduring and powerful colonial exercises ever seen on the planet. So yes, indeed, a hole dug in the earth has more value than the earth itself, in that context. In a closed system, it boils out a little different, as we've been aware since at least the days of Malthus and Mill.
Granted, it's quite a bit harder to get that coveted "Highest Paid Professorship in Academia" when you're doing ecological economics, but money doesn't make something true. Counterpoint: there is a lot of money there to be made here, because things like drinking water and air have effectively infinite prices. Imagine saving the world . . then charging everyone rent. The "space parasol" versus global warming could even make this a reality for some deep-pocketed bastards.
I get so very, very tired of birdsie-woodsie environmentalists, when the hard-ass utilitarian arguments are so frickin' obvious . .
Classical liberalism arose during one of the most enduring and powerful colonial exercises ever seen on the planet. So yes, indeed, a hole dug in the earth has more value than the earth itself, in that context. In a closed system, it boils out a little different, as we've been aware since at least the days of Malthus and Mill.
Granted, it's quite a bit harder to get that coveted "Highest Paid Professorship in Academia" when you're doing ecological economics, but money doesn't make something true. Counterpoint: there is a lot of money there to be made here, because things like drinking water and air have effectively infinite prices. Imagine saving the world . . then charging everyone rent. The "space parasol" versus global warming could even make this a reality for some deep-pocketed bastards.
I get so very, very tired of birdsie-woodsie environmentalists, when the hard-ass utilitarian arguments are so frickin' obvious . .
> The organization’s open-source software model, called InVEST, combines data gleaned from thousands of researchers working with techniques such as satellite imaging, soil surveys, climate modeling, and human development mapping to quantify and place a value on natural resources.
Here: https://naturalcapitalproject.stanford.edu/software/invest
Here: https://naturalcapitalproject.stanford.edu/software/invest
“We can never capture the total value of a forest in terms of cultural and spiritual values or even biodiversity, but we can say that it has measurable economic values across dimensions that have not been considered before.”
So, in extreme summary, "the government has been selling the land for too cheap for too long."
So, in extreme summary, "the government has been selling the land for too cheap for too long."
> Gretchen Daily is working to make the environment more of an element in economic decision-making.
This is complete nonsense. There are a ton of environmental economists. It’s an active and vigorous field. There are “environmental and X” people for many other economics subfields, e.g., macro, development, structural, etc. There are a ton of people doing work on climate related topics.
By contrast I have never heard of this person. She’s not the first or the only or even an influential figure in the area of environmental economics.
Don’t assume the field doesn’t care about the environment just bc one article says so.
By contrast I have never heard of this person. She’s not the first or the only or even an influential figure in the area of environmental economics.
Don’t assume the field doesn’t care about the environment just bc one article says so.
Ecological Economics has been around since the '80s...
Note missing first word and corrected capitalisation since this is unrelated to The Economist!)l