Integrating Economics, Ecology and Thermodynamics

255 Pages·1993·7.074 MB·English

by  Matthias Ruth (auth.)

INTEGRATING ECONOMICS, ECOLOGY AND THERMODYNAMICS
Ecology, Economy & Environment
VOLUME 3
The titles published in this series are listed at the end of this volume.
Integrating Economics,
Ecology and Thermodynamics
by
Matthias Ruth
Center for Energy and Environmental Studies,
and Department of Geography,
Boston University,
Boston, Massachusetts, U.S.A.
Springer-Science+Business Media, B.V.
Library of Congress Cataloging-in-Publication Data
Ruth, Matthias.
Integrating economics, ecology and thermodynamics 1 by Matthias
Ruth.
p. cm. -- <Ecology, economy & environment : 3l
Includes bibliographical references and index.
ISBN 0-7923-2377-7 <HB : acid-free paperl
1. Economic development--Environmental aspects. 2. Human ecology.
3. Thermodynamics. I. Title. II. Series.
HD75.6.R88 1993
333.7--dc20 93-24816
ISBN 978-90-481-4298-9 ISBN 978-94-017-1899-8 (eBook)
DOI 10.1007/978-94-017-1899-8
Printed on acid-free paper
Ali Rights Reserved
© 1993 Springer Science+Business Media Dordrecht
Originally published by Kluwer Academic Publishers 1993
No part of the material protected by this copyright notice may be reproduced or
utilized in any form or by any means, electronic or mechanical,
including photocopying, recording or by any information storage and
retrieval system, without written permission from the copyright owner.
Table of Contents
Foreword ix
Acknow ledgment Xl
Part I. Introduction 1
1. Economics, Ecology and Thennodynamics 3
1.1 The Relevance of Economy-Environment Interactions
for Economic Systems 3
1.2 Towards a Consistent Representation of
Economy-Environment Interactions 5
1.3 Economic System, Ecosystem, and Thennodynamics 9
1.4 Organization of the Study 11
Part II. Core Concepts in Economics, Ecology and Thermodynamics 15
2. Core Concepts in Neoclassical Economics 17
2.1 A Delineation of Economic Activities 17
2.2 Opportunity Costs, Substitution, and Time Preference 19
2.3 Economic Decisions and Time 20
2.4 Discount Rate and Resource Use 24
2.5 Dynamic Economic Models of Nonrenewable Resource Use 27
2.5.1 Optimal Extraction of Nonrenewable Resources 27
2.5.2 Empirical Evidence for Increasing Resource Scarcity 30
2.6 Dynamic Economic Models of Renewable Resource Use 31
2.7 Summary 34
3. Core Concepts in Ecology 35
3. 1 Basic Characteristics of Ecosystems 35
3.2 Changing Components of Ecosystems 38
3.2.1 Equilibrium versus Nonequilibrium Hypotheses 38
3.2.2 Change on the Community and Population Levels 41
3.3 Evolutionary Processes 43
3.4 Summary 46
4. Core Concepts in Thennodynamics 48
4.1 Thennodynamic Systems Analysis 48
4.2 First Law Analysis 51
4.3 Second Law Analysis 53
4.4 Entropy and Information 56
4.5 Summary 59
Part III. Integrating the Core Concepts of Economics, Ecology and
Thennodynamics 61
5. Integrating Core Concepts of Thennodynamics into Economics 63
5.1 From Analogies to the Physical Functioning of
Economic Processes 63
vi
5.2 The Laws of Thennodynamics in Economic Models 65
5.2.1 Economic Activity and Conservation of Mass and Energy 65
5.2.2 Production, Thermodynamic Constraints and Economic
Optimization 68
5.3 Thermodynamics, Resource Use, and Technical Change 70
5.3.1 Economy-Environment Interactions in a Dynamic Context 70
5.3.2 Energy, Material, Time and Information Trade-Off in
Production 71
5.4 Summary and Conclusions 75
6. Ecology and Thennodynamics 76
6.1 Ecosystems and Ecosystem Components as
Thennodynamic Systems 76
6.2 Entropy, Evolution, and Growth 79
6.3 Implications of the Ecology-Thennodynamics Interface for the
Economy as an Ecosystem Component 82
6.3.1 The Economic System as an Ecosystem Component 82
6.3.2 Sustainability of Economic Activities 84
6.4 Summary and Conclusions 90
7. Economics and Ecology 92
7.1 The Economics-Ecology Interface 92
7.2 Economic Principles in Ecology 93
7.3 Economy-Environment Interactions and Evolutionary Theories
of Economic Change 97
7.3.1 The Role of Core Concepts of Ecology in Economic
Theory 97
7.3.2 Evolution and Economic Change -From Analogies to
Economic Functioning 102
7.3.3 Socioeconomic Evolution, Creativity and Novelty 106
7.4 Summary and Conclusions 108
8. Economics, Ecology and Thennodynamics III
8.1 Treating Economy-Environment Interactions in Accordance
with the Core Concepts of Economics, Ecology and
Thennodynamics III
8.2 Infonnation, Knowledge and Technology 114
8.3 System Boundaries and Reference Environment 120
8.4 An Anthropocentric Approach to Economy-Environment
Interactions 123
8.5 Summary and Conclusions 124
vii
Part IV. Nonlinear Dynamic Simulation of Natural Resource Use:
Thermodynamic Limits and Endogenous Technical Change 127
9. Thermodynamic Implications for Nonrenewable Resource Extraction
with Endogenous Technical Change 129
9.1 Introduction 129
9.2 A Production Function for Nonrenewable Resource Extraction
with Thermodynamic Limits 130
9.3 Endogenous Technical Change in the Mining Sector 137
9.4 Optimal Resource Extraction with Endogenous Technical
Change 142
904.1 The Institutional Framework for Optimal Resource
Extraction with Endogenous Technical Change 142
9.4.2 Centralized Decision on Optimal Extraction of a
Nonrenewable Resource 143
9.4.3 Data Sources for the Illustration of the Model of
Optimal Nonrenewable Resource Extraction 148
9.5 Simulation of Optimal Time Paths 150
9.6 Sensitivity Analysis 155
9.7 Summary and Conclusions 161
10. A Comprehensive Model of Economy-Environment Interactions 164
10.1 Introduction 164
10.2 System Components of the Model of Economy-Environment
Interactions 168
10.2.1 The Mining Sector 168
10.2.2 The Manufacturing Sector 170
10.2.3 The Agricultural Sector 173
10.204 Human Organisms 176
10.3 Nonlinear Dynamic Optimization for a Multi-Sector Economy
with Endogenous Technical Change and Thennodynarnic
Constraints 177
10.3.1 The Objective Function for a Simple Society 177
10.3.2 Optimal Time Paths 181
lOA Nonlinear Dynamic Simulation 186
1004.1 Data Sources 186
1004.2 Simulation Results 188
10.5 Summary and Conclusions 196
viii
Part V. Summary and Conclusions 199
11. Methodology and Findings 201
11. 1 The Methodological Background of the Study 201
11.2 The Models of Optimal Natural Resource Use 206
Appendix A: Glossary 211
Appendix B: Nonlinear Dynamic Simulation Program for the
Nonrenewable Resource Model 214
Appendix C: Initial Conditions and Parameter Values for the
Simulation of the comprehensive Model of Chapter 10 219
References 221
Index 248
Foreword
by Clark Bullard and Bruce Hannon
Here is a scientist-author, young, courageous, intelligent and
ambitious. He sets into motion a line of thought that should revolutionize
both ecology and economics. This book is the first step in the modern effort
to identify and combine at a fundamental level the principles of ecology,
economics and thermodynamics into a well-described model of a human
community.
The book succeeds very well. It stands economics on the resource
base rather than on the consumer. It weaves ecology and economic activity
together in a novel and meaningful way and it bases its relationships on the
bedrock of thermodynamics. The book builds the case for its new view in
careful stages, leading to a comprehensive dynamic model of a simple but
realistic society interacting explicitly with its environment. Much remains to
be done but the template is here.
Clark Bullard, Professor, Mechanical Engineering
Bruce Hannon, Professor, Geography
University of Illinois
Urbana, February 1993
ix