Principles and Economic Problems of Ecological Economics
The different economic models of analysis of Ecological economics, which is complementary to Neo-Classical Economics.
In Ecological economics the economic problem of allocation efficiency, fair distribution and scale are considered as an interrelated problem but they are separate in their own right. They can addressed by different policy instruments. For example, there can be a number of efficient allocation, but only one for each distribution and scale. That is, efficient allocation cannot solve sustainability or guarantee sustainability. In ecological economics prices must not determine distribution or fair distribution and scale. It must be determine by social decision reflecting ecological limits. The prices only determine, subject to these economic decisions of distribution and scale, the allocation of rights trading individualistically in the market
It totally rejects Homo economicus or pure social being as in collectivist theory. It recognize individuals or individual identity but in a social relation, which is external and internal in nature and changes when relations among them changes.
In other words, we are not only related by nexus of willingness to pay, but also by the relationship of trusteeship for the poor and the future generation and other species. That is, we are by our experience persons in community.
As well, in ecological economics distribution and scale is not subsumed under allocation because of unwanted trade-off between these economic issues. That is, each economic problem of allocation efficacy, scale and distribution is addressed by separate policy instrument. It does not assume, if allocation efficiency is addressed then distribution and scale is automatically achieved as in neoclassical economics. It considers the distribution and scale as an ethical and social decision and not a problem of willingness to pay or personal preferences, tastes and income.
It is clear from the above analysis; the economic problems must be dealt in a particular order. That is, in ecological economics first one must determine the scale considering ecological limits by social decision. Then address distributional issues using a system of property rights and transfers. This can be a system of property rights pf individuals, government ownership and intermediate system of common ownership. As well, dividing the ownership of particular resources according to special neefs. Third once the scale and distribution is determined, market based instruments can be used to achieve allocation efficiency in to alternative resource use to meet end users.
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