Notes on Ecological Economics and Industrial Ecology

What is Ecological Economics?

  • Ecological economics examines the relationship between human economies and natural ecosystems.
  • Integrates various disciplines within natural and social sciences.
  • Emphasizes the concept of Natural Capital.
  • Economic definition of capital:
    • A STOCK of something that provides a FLOW of valuable goods and services.

The Five Forms of Capital

  • Human Capital:
    • Encompasses an individual's physical, intellectual, emotional, and spiritual capacities.
  • Manufactured Capital:
    • Refers to infrastructure, tools, equipment, machinery, and technology.
  • Social Capital:
    • Consists of social networks that bind families and communities.
  • Financial Capital:
    • Monetary assets viewed as a form of social capital.
  • Natural Capital:
    • Encompasses parts of the natural environment that are beneficial to humans, including resources, waste sinks, and ecosystem services.

Capital: Stocks and Flows

  • Human: Stock of knowledge/experience yields a flow of work skills.
  • Manufactured: Stock (e.g. circuitry in computers) yields flows of computing services.
  • Social: Stock of connections (friends, family) provides support and relationships.
  • Financial: Stock of money generates interest earnings.
  • Natural: Stock (trees, soil, microorganisms) yields timber, clean water, oxygen, and recreation.

Linking Capital and Sustainability

  • Economic Rule: Maintain capital intact to preserve the flow (income) of goods and services.
  • Traditional economics mainly focuses on human, manufactured, and financial capital, often neglecting social and natural capital.

Why is Natural Capital Overlooked?

  • Market Status: Some natural capital is marketed (e.g., oil, lumber), while much is non-marketed (e.g., waste assimilation).
  • Public Goods: Many natural capital forms are non-exclusive and non-exhaustive.
  • Historical Assumptions: Previously viewed natural capital as abundant, with a belief in substitutability by human/ manufactured capital.

The Result of Ignoring Natural Capital

  • Overemphasis on manufactured and financial capital leads to policies favoring these at the expense of natural capital.
  • Indicators (e.g. GDP) often count depletion of natural capital as positive.
  • Consequences: Natural capital is now the scarce factor of production, with the economic focus shifting to investing in it.

Investing in Natural Capital

  • Ecosystem Valuation: Attempt to monetize public good ecosystem services granted by natural capital.
  • Management Guidelines:
    • Harvesting renewable natural capital should match regeneration rates.
    • Pollution should not exceed assimilation capacity.
    • Use funds from non-renewable depletion to enhance renewable alternatives.
    • Focus on technological development enhancing resource efficiency.
    • Allow replenishment of over-depleted stocks.

Policy Implications of an Ecological Economic Approach

  • Alternative Progress Indicators: Measures in addition to GDP, reflecting genuine societal well-being.
  • Tax Structure Modification: Shift incentives from natural capital liquidation to investments in its preservation.
  • Public Recognition: Reward owners of ecosystems for providing public goods.
  • Broaden Focus: Highlight quality (development) over mere economic growth.

Industrial Ecology Overview

  • Definition: Study of material flows in industrial systems.
  • Concerned with impacts on resources, sustainability, and waste management.
  • Comparison to Natural Ecosystems:
    • Natural systems recycle materials and energy, whereas industrial systems traditionally do not.

Linear vs. Cyclic Industries

  • Linear Production:
    • Steps: Extraction, Processing, Distribution, Consumption, Disposal.
    • Generates high waste levels.
    • Average waste: 4.3 pounds per person per day (in the U.S.).

Problems with Linear Production Systems

  • High material wastage (over 95% becomes waste before reaching consumers).
  • High fossil fuel demand at every production stage.
  • Increased waste disposal issues with landfills generating methane emissions.

Moving Towards a Cyclic Society

  • Industrial Ecology: Operate systems like natural ecosystems.
  • Waste Equals Resource: Promote reusability and sustainability in design.

Case Studies

Subaru's Zero-waste Automobile Plant
  • Plant achieved significant waste reduction, emphasizing eco-friendliness.
Kalundborg, Denmark
  • An eco-industrial park exemplifying waste exchange among industries, maximizing resource efficiency.
  • Characteristics of success include proximity of companies, material sharing, and the presence of anchor tenants.
Conclusion
  • Emphasis on integral relationships between human systems and ecological health is vital for sustainable future policies in economics and production.