Table Of ContentC
ENVIRONMENTAL ENGINEERING o
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t Second Edition
N a
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An Introduction to orgaa za | C
Ecological Economics rd u
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our planet to achieve a sustainable, equitable, and prosperous future. Ecological economics n o
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extends and integrates the study and management of both “nature’s household” and o d
la
“humankind’s household”—An Introduction to Ecological Economics, Second Edition, n
d
the first update and expansion of this classic text in 15 years, describes new approaches to Economics
achieving a sustainable and desirable human presence on Earth. Written by the top experts in
the field, it addresses the necessity for an innovative approach to integrated environmental,
social, and economic analysis and management, and describes policies aimed at achieving
our shared goals. E
c
Demands a Departure from Business as Usual o
A
The book begins with a description of prevailing interdependent environmental, economic, l
on
and social issues and their underlying causes, and offers guidance on designing policies and
g
instruments capable of adequately coping with these problems. It documents the historical I
in
development of the disciplines of economics and ecology, and explores how they have evolved c
t
so differently from a shared conceptual base. Structured into four sections, it also presents ar
o
various ideas and models in their proper chronological context, details the fundamental l
d
principles of ecological economics, and outlines prospects for the future. E
u
cc Robert Costanza
What’s New in the Second Edition: ot
i
no John H. Cumberland
• Includes several new pieces and updates in each section
n
• Adds a series of independently authored “boxes” to expand and update information o
in the current text mto Herman Daly
• Addresses the historical development of economics and ecology and the recent progress
i Robert Goodland
in integrating the study of humans and the rest of nature c
• Covers the basic concepts and applications of ecological economics in language accessible s
Richard B. Norgaard
to a broad audience
Ida Kubiszewski
An Introduction to Ecological Economics, Second Edition can be used in an introductory Second
undergraduate or graduate course; requires no prior knowledge of mathematics, economics,
Edition
Carol Franco
or ecology; provides a unified understanding of natural and human-dominated ecosystems;
and reintegrates the market economy within society and the rest of nature.
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Second Edition
An Introduction to
Ecological
Economics
Boca Raton London New York
CRC Press is an imprint of the
Taylor & Francis Group, an informa business
Second Edition
An Introduction to
Ecological
Economics
Robert Costanza
John H. Cumberland
Herman Daly
Robert Goodland
Richard B. Norgaard
Ida Kubiszewski
Carol Franco
Boca Raton London New York
CRC Press is an imprint of the
Taylor & Francis Group, an informa business
CRC Press
Taylor & Francis Group
6000 Broken Sound Parkway NW, Suite 300
Boca Raton, FL 33487-2742
© 2015 by Taylor & Francis Group, LLC
CRC Press is an imprint of Taylor & Francis Group, an Informa business
No claim to original U.S. Government works
Version Date: 20141027
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Contents
Preface .................................................................................................................xi
Acknowledgments .........................................................................................xiii
Authors ..............................................................................................................xv
Remembering Robert Goodland .................................................................xvii
1. Humanity’s Current Dilemma ................................................................1
1.1 The Global Ecosystem and the Economic Subsystem.................6
1.2 From Localized Limits to Global Limits .......................................7
1.2.1 First Evidence of Limits: Human Biomass
Appropriation ......................................................................8
1.2.2 Second Evidence of Limits: Climate Change ..................8
1.2.3 Third Evidence of Limits: Ozone Shield Rupture ........10
1.2.4 Fourth Evidence of Limits: Land Degradation
(Land-System Change) .....................................................11
1.2.5 Fifth Evidence of Limits: Biodiversity Loss ..................13
1.2.6 Latest Evidence of Planetary Boundaries ......................17
1.2.6.1 Ocean Acidification ...........................................17
1.2.6.2 Freshwater Use ..................................................17
1.2.6.3 Nitrogen and Phosphorus Cycles ...................18
1.2.6.4 Atmospheric Aerosol Loading ........................18
1.2.6.5 Chemical Pollution ............................................21
1.3 Population and Poverty .................................................................21
1.4 Beyond Brundtland ........................................................................22
1.5 Toward Sustainability ...................................................................23
1.6 The Fragmentation of Economics and the Natural Sciences .......24
2. The Historical Development of Economics and Ecology ................25
2.1 Early Codevelopment of Economics and Natural Science .......28
2.1.1 Adam Smith and the Invisible Hand .............................30
2.1.2 Thomas Malthus and Population Growth ....................31
2.1.3 David Ricardo and the Geographic Pattern
of Economic Activity ........................................................32
2.1.4 Sadi Carnot, Rudolf Clausius, and
Thermodynamics ..........................................................34
2.1.5 Charles Darwin and the Evolutionary Paradigm ........40
2.1.6 John Stuart Mill and the Steady State ............................42
2.1.7 Karl Marx and the Ownership of Resources ................43
2.1.8 W. Stanley Jevons and the Scarcity of Stock
Resources ...........................................................................45
v
vi Contents
2.1.9 Ernst Haeckel and the Beginnings of Ecology .............46
2.1.10 Alfred J. Lotka and Systems Thinking ..........................47
2.1.11 Alfred C. Pigou and Market Failure ..............................48
2.1.12 Harold Hotelling and the Efficient Use
of Resources over Time ....................................................51
2.2 Economics and Ecology Specialize and Separate......................54
2.3 Reintegration of Ecology and Economics ...................................56
2.3.1 Ludwig von Bertalanffy and General System
Theory ............................................................................59
2.3.2 Elinor Ostrom and Garret Hardin: Open-Access
Resource Management and Commons Institutions .......62
2.3.3 Howard T. Odum and Nicholas
Georgescu-Roegen: Energetics and Systems ................65
2.3.4 Kenneth Boulding and Spaceship Earth and
Herman Daly and Steady-State Economics ...................69
2.3.5 C. S. Holling and Adaptive Environmental
Management ......................................................................71
2.3.6 Coevolution of Ecological and Economic Systems ..........72
2.3.7 Role of Neoclassical Economics in Ecological
Economics ..........................................................................77
2.3.7.1 Critical Connections .........................................79
2.4 Conclusions .....................................................................................84
3. Principles and Objectives of Ecological Economics .........................87
3.1 Sustainable Scale, Fair Distribution, and Efficient
Allocation. ..................................................................................90
3.1.1 From Empty-World Economics to Full-World
Economics ..........................................................................93
3.1.2 Reasons the Turning Point Has Not Been Noticed .........94
3.1.3 Complementarity, Substitutability, and
Fundamental Limits .........................................................95
3.1.4 Policy Implications of the Turning Point .......................96
3.1.5 Initial Policy Response to the Historical Turning
Point ..................................................................................101
3.2 Ecosystems, Biodiversity, and Ecosystem Services .................101
3.2.1 Biodiversity and Ecosystems .........................................104
3.2.2 Ecosystem Services .........................................................105
3.2.3 Defining and Predicting Sustainability
in Ecological Terms ..........................................................111
3.2.4 Ecosystems as Sustainable Systems ..............................114
3.3 Substitutability versus Complementarity of Natural,
Human, Social, and Built Capital ...............................................115
3.3.1 Growth versus Development .........................................116
3.3.2 Can Built Capital Substitute for Natural Capital? .......119
Contents vii
3.3.3 Natural Capital .................................................................119
3.3.4 Sustainability and Maintaining Natural Capital .......120
3.4 Population and Carrying Capacity ...........................................122
3.5 Measuring Welfare and Well-Being ..........................................126
3.5.1 Quality of Life, Happiness, Well-Being, and Welfare ....126
3.5.1.1 An Integrative Definition of Quality
of Life and Well-Being ....................................127
3.5.2 Gross Domestic Product and Its Political
Importance ..................................................................132
3.5.3 Gross Domestic Product: Concepts
and Measurement ...........................................................134
3.5.4 From Gross Domestic Product to Hicksian Income
and Sustainable Development ......................................139
3.5.5 From Gross Domestic Product to a Measure
of Economic Welfare .......................................................145
3.5.6 The Index of Sustainable Economic Welfare
and the Genuine Progress Indicator ............................149
3.5.7 Toward a Measure of Total Human Welfare ...............157
3.5.8 Alternative Models of Wealth and Utility ...................159
3.5.9 Sustainable and Desirable “Doughnut” ......................160
3.6 Valuation, Choice, and Uncertainty ...........................................162
3.6.1 Fixed Tastes and Preferences and Consumer
Sovereignty ......................................................................163
3.6.2 Valuation of Ecosystems and Preferences ...................166
3.6.3 Uncertainty, Science, and Environmental Policy ........167
3.6.4 Technological Optimism versus Prudent
Skepticism ...................................................................172
3.6.5 Social Traps ......................................................................175
3.6.6 Escaping Social Traps ......................................................176
3.6.7 The Dollar Auction Game ..............................................178
3.7 Trade and Community ................................................................179
3.7.1 Free Trade? .......................................................................181
3.7.2 Community and Individual Well-Being ......................182
3.7.3 Community, Environmental Management,
and Sustainability ...........................................................183
3.7.4 Globalization, Transaction Costs,
and Environmental Externalities .................................187
3.7.5 Policy Implications..........................................................189
4. Institutions, Instruments, and Policies .............................................199
4.1 History of Environmental Institutions and Instruments .......201
4.2 The Need to Develop a Shared Vision
of a Sustainable Society ................................................................214
4.2.1 Envisioning .......................................................................214
viii Contents
4.2.2 Scenario Planning ...........................................................217
4.2.2.1 The Great Transition Initiative ......................218
4.2.2.2 Four Futures for New Zealand: Work
in Progress (Taylor and Allen 2007) .............219
4.2.3 Overcoming Roadblocks ................................................220
4.2.3.1 The Components of Culture ..........................221
4.2.3.2 Change as an Evolutionary Process .............222
4.3 Successes, Failures, and Remedies ............................................225
4.3.1 The Policy Role of Nongovernmental Organizations ....226
4.3.2 Adaptive Ecological Economic Assessment
and Management ............................................................227
4.3.3 Redirecting Technology toward Sustainable
Solutions ...........................................................................229
4.3.4 Habitat Protection, Intergenerational Transfers,
and Equity ........................................................................230
4.4 Policy Instruments: Some Background .....................................233
4.4.1 Regulatory Systems ........................................................235
4.4.2 Incentive-Based Systems: Alternatives
to Regulatory Control .....................................................239
4.4.2.1 The Role of Economic Efficiency ...................239
4.4.2.2 Pollution Fees and Subsidies .........................240
4.4.2.3 Popular Critiques of the Incentives
for Efficiency Approach ..................................241
4.4.2.4 Advantages and Disadvantages
of Incentive-Based Systems of Regulation ......244
4.4.3 Three Policies to Achieve Sustainability .....................247
4.4.3.1 Natural Capital Depletion Tax ......................248
4.4.3.2 The Precautionary Polluter Pays Principle .....249
4.4.3.3 Ecological Tariffs: Making Trade
Sustainable .......................................................255
4.4.4 Toward Ecological Tax Reform .....................................256
4.4.5 A Transdisciplinary Pollution Control Policy
Instrument .......................................................................258
4.4.5.1 Cap and Trade ..................................................261
4.4.5.2 Implementation and Operational
Considerations .................................................264
4.5 Examples of Policies, Instruments, and Institutions ...............265
4.5.1 Expanding the “Commons Sector” ..............................265
4.5.2 Communication in Society ............................................270
4.5.2.1 Advertising .......................................................273
4.5.2.2 One- versus Two-Directional
Communication ...............................................280
4.5.2.3 Sustainability through Media .......................281
4.5.2.4 Electronic Democracy .....................................282
