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It’s an environmentally directed study of economic activities, focusing on sustainability. Although the easy answer is not quite wrong, it is also not completely right. Actually, ecological economics is a multidisciplinary field (meaning a lot of different disciplines intermingle into it) that studies economy as a subsystem of applied natural sciences, vis-à-vis ecology, but also biology, chemistry, and, ultimately, physics. And has a sizable participation of mathematics, philosophy, sociology, anthropology, politics, and an awful lot of fields.

Georgescu-Roegen, a Nashville mathematical economist born in Romania and founding father of ecological economics, postulated that the economy must obey thermodynamics [1], and as such continuous economic growth is unsustainable. He proposed a new model of economy, the “Steady-state model”. Most of today’s economic activity is based on the liberal principle of continuous growth, and that would be the real source of environmental and inequality issues that are emerging today. Economic growth has the same limitations of any biosphere system, and ultimately obeys the same laws. That is the real reason for the field to be called ecological economics. It is not simply an economy that embodies ecological features, but a systematic use of mathematical and conceptual tools derived from ecology in economy.

However, this definition fails in capturing the social human dimension of economy. Passet stated that a theory of externalities must be examined before and not after a market equilibrium state [2]. In other words, one must examine the possible environmental and social impact of economic activity before considering its cost-benefit. Effectively, the ecology of economic production (including the biosphere and society) sets its limits. The enforcement of such a proposal includes Daly’s principles (1. the rate of renewable natural resources development should be equal to their rate of regeneration; 2. the emission rates of waste should equal the assimilation capacity of the environment in which it is deposited; 3. non-renewable natural resources should be exploited at the same rate at which they are being replaced with renewable resources), and Passet’s principle of “prescriptive constraint management”.

One of the key concepts in this framework is that of “maximum sustainable yield” (MSY), developed in the 30s regarding fisheries management [4]. However, the concept of sustainability appeared much more earlier, in the XVIIIth century works of Hans Carl von Carlowitz [5]. It can be related to a class of applied mathematical models. The key concept is that populations of organisms grow to replace losses and reach an equilibrium population size (carrying capacity), in the process producing a surplus that can be sustainably harvested. The simplest way to model MSY is modifying a logistic equation to account for continuous removal of individuals from the population. The equilibrium point is semi-stable, and small decreases in the population can lead to a positive feedback loop and extinction if harvesting is not reduced. Thus, harvesting at the MSY is unsafe, and the best regimen is approximating an optimum sustainable yield, the largest economical yield of a renewable resource achievable over a long time period without decreasing the ability of the population or its environment to support the continuation of this level of yield [6].

Again, this simplistic approach does not include the complexities of social interaction. Cavalcanti has insisted that well being of human populations has to be accounted for in any successful theory of sustainable economy [7]. Ecological economics is a new and growing multidisciplinary field, and has already driven a number of modifications in the way we perceive and relate to the environment as a society and as an economical species.

References:

1. Georgescu-Roegen, N. 1971, The Entropy Law e the Economic Process, Harvard Universidade Press.

2. Passet, R. 1979, L’Économique et le Vivant, 2nd ed. 1996, Economica, Paris.

3. Daly H.E. (1990). Toward Some Operational Principles of Sustainable Development, Ecological Economics, 2, 1-6.

4. Russell, E. S. (1931). “Some theoretical Considerations on the “Overfishing” Problem”. ICES Journal of Marine Science. 6 (1): 3–20.

5. Hans Carl von Carlowitz. 1713, Sylvicultura oeconomica, oder haußwirthliche Nachricht und Naturmäßige Anweisung zur wilden Baum-Zucht.

6. Clark, C.W. (1990), Mathematical Bioeconomics: The Optimal Management of Renewable Resources, 2nd ed. Wiley-Interscience, New York

7. Cavalcanti. C. (2010) Conceptions of Ecological Economics: its Relationship with Mainstream and Environmental Economics. Estudos Avançados. 24 (68): 53