Ecological Economics (DP IB Environmental Systems & Societies (ESS))
Revision Note
Ecological Economics
The relationship between economy and environment
Ecological economics is a way of looking at how the economy fits into the bigger picture of the Earth's biosphere
It sees the economy as just one part of the larger natural world
Unlike environmental economics, which focuses on how economic activities affect the environment, ecological economics goes further
It sees the economy as a subsystem of the Earth's biosphere
The social system, including human societies and economies, is considered a smaller part of the bigger global ecological system
Flows of energy and matter in the biosphere
In ecological economics, the biosphere is seen as a system fuelled by solar energy
This solar energy sustains natural resources like air, water and soil
These natural resources then flow into the economic subsystem
The economy uses these resources to produce goods and services
However, this production also generates waste and releases low-grade thermal energy back into the biosphere
Generation of waste:
When industries or human activities produce goods and services, there are often by-products or waste materials created in the process. For example:
Factories manufacturing goods might produce chemical waste or packaging materials that are not reused or recycled
Agriculture can generate agricultural runoff, which includes pesticides and fertilisers, polluting water sources
Industries use water and release polluted water back into rivers. This affects not only the environment but also communities relying on clean water sources
Release of low-grade thermal energy:
When energy is used in economic activities, not all of it gets converted into useful forms like electricity or mechanical energy
Some of this energy dissipates as heat, known as low-grade thermal energy
Examples include:
Burning fossil fuels for energy production in power plants—while some energy is converted into electricity, a significant portion is lost as heat during the process
The operation of vehicles and machinery also generates heat as a by-product
Once waste materials and low-grade thermal energy are generated in economic activities, they are released back into the biosphere, which includes the Earth's atmosphere, land, and water bodies
This can have various impacts on the environment, such as pollution of air, water and soil, as well as contributing to climate change
Sustainable use of natural resources
Ecological economics emphasises the importance of using natural resources sustainably
This means ensuring that we don't use up all our resources, leaving nothing for future generations
For example, many companies are increasingly adopting sustainable practices like using renewable energy sources or reducing waste to protect natural resources
This approach applies the precautionary principle
This means being cautious and taking preventive action before extracting or using natural resources, particularly if the full impact of the particular activity is not known
This can help minimise the unforeseen environmental and social impacts of economic activities
Value of natural capital
Ecological economics doesn't just focus on traditional forms of capital like money, land or property
It also considers natural capital, human capital (like skills and knowledge), and physical capital (like machinery)
In ecological economics, natural capital—things like forests, oceans, and biodiversity—is considered just as valuable as human-made resources like electronic gadgets, clothing or other products
Recognising the full value of natural capital helps make decisions that benefit both the economy and the environment
National parks and reserves are examples of how countries prioritise protecting natural capital for the benefit of future generations and biodiversity conservation
Valuation of Ecosystem Services
While environmental economics also considers the economic value of ecosystem services, ecological economics places even more emphasis on this
Ecosystem services are the benefits that people receive from nature, like clean air, water, and food
Global resource dynamics
In ecological economics, it is recognised that there is an unequal distribution of natural resources between different countries
Some countries have lots of resources, while others have fewer
"Resource-depleted" countries might pay "resource-rich" developing countries to protect their natural assets (also ensuring the protection of the valuable ecosystem services they provide)
This sometimes happens when developing countries risk using up their resources for economic development
For example, Norway pays Brazil to help protect the Amazon rainforest, which provides vital ecosystem services like carbon sequestration and biodiversity preservation
Another example might be wealthy nations in Europe paying nations in Africa to conserve wildlife habitats, such as savannahs and grasslands, to preserve biodiversity and support ecotourism
This helps prevent the overexploitation of natural resources in these developing countries, whilst also promoting conservation efforts and sustainable development
Looking beyond material value
Ecological economics sees natural assets and resources as having value beyond just the material goods that can be extracted from them
For example, ecological economics sees forests as having value beyond just the timber they provide
Forest also provide ecological services, like habitat for wildlife, carbon storage and erosion protection
They also have aesthetic value for tourism and recreation, and ethical value for biodiversity conservation
This can have economic benefits
For example, the tourism industry in countries like Costa Rica benefits from the preservation of their natural assets, including forests and biodiversity, contributing significantly to their economy
Tensions between countries
Paying for ecosystem services can create tensions between countries
Countries that have depleted their natural assets in the past may pay others to preserve theirs
This can lead to debates about sovereignty and fairness
Disputes often arise between developed countries, who are seeking to conserve global biodiversity and slow down climate change, and developing countries, who are prioritising their own economic development
Issues Caused by Payments for Ecosystem Services
Issue | Explanation | Example |
|---|---|---|
Sovereignty | Some nations may view external interventions, such as payments from other countries, as infringing on their sovereignty—their right to govern themselves without interference | For example, they might argue that decisions about their natural resources should be made independently, without external influence |
Fairness | Questions about fairness can emerge regarding who benefits from these transactions and who bears the costs | For example, if a wealthy nation pays a developing country to preserve its forests, there may be concerns about whether the payments are enough to compensate for the economic opportunities missed by the developing nation. Additionally, local communities within the developing country may feel that they are not adequately compensated for their role in preserving the natural assets |
Distribution of benefits | There can be debates about how the benefits of preserving natural assets are distributed within a country | For example, if payments for ecosystem services mainly benefit national governments or large landowners, marginalised communities and indigenous groups may feel excluded from the benefits of conservation efforts |
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