Principles and Economic Problems of Ecological Economics

In essence Ecological Economics is a historical product. It does not provide static answers. It asks dynamic, constantly changing set of questions. It advocates trans-disciplinary vision of the scientific endeavor. The interdependent goals of Ecological Economics are as follows.

1 Sustainable scale

2 Fair distributions

3 Efficient allocations

 These interdependent goals require the integration of three elements as follows.

1. A practical, shared vision of both the way the world works and the sustainable society we wish to achieve.
2. Methods of analysis and modeling that is relevant to the new problems and questions this vision requires.
3. Institutions and instruments based on the method of analysis, which adequately enable to implement the vision.

Main basic points of consensus in Ecological Economics vision are as follows.

1. Earth as a thermodynamically closed and non-materially growing system, with the human economy as a sub system of the whole ecosystem. That is, it recognizes the limits of throughput of resources from the ecosystem through the economy and back to the ecosystem as waste.
2. The future vision of a sustainable planet with high quality of living for humans and all the species within the material constraints imp[osed by the ecosystem
3. A precautionary stance because of the complexity of ecosystems and economy. As well, recognizing the uncertainty is large and irreducible.
4. Proactive than reactive stance and designing simple, adaptive policies based on sophisticated understanding of the underlying systems and uncertainties

The meaning of sustainable scale, fair distribution and efficient allocation

Neoclassical economics deals extensively with allocation, secondarily with distribution but not at all with scale. However, Ecological economics deals with allocation, distribution and scale. Ecological economics accepts neoclassical economics regarding allocation. It differs with Neo-Classical economics in respect of taking in to consideration scale as an important problem.

 In the Neo-Classical economics allocation mean the same in Ecological Economics. That is, allocation refers to the allocation of resource use for alternative product uses. The good and efficient allocation is the one which is matched with individual preferences and weighted by the individual’s ability to pay. In Neo-Classical economics as wel in Ecological economics  same policy instrument that brings about efficient allocatio is determined by supply and demand by relative prices in competitive markets.

Distribution refers in Ecological economics to the relative division of resource flow, which is in the final goods and services among alternative people. That is, how much goes to you, me, or others and for future generations. In Ecological economics perspective a good distribution is the one, which is fair or just or at least the inequality is within acceptable range.  It is not too unequal. In this respect, Ecological economics uses the policy instruments of taxes and welfare payments to address the distribution problem.