Ecological Economics and Conservation

If there is a branch of economics that traditionally has been related to, and contributed to conservation is Ecological economics.

But What is Ecological Economics?, How different it is from Environmental economics?, and How is it applied to Conservation?

Ecological economics in a nutshell

Strong link with natural sciences

One thing that sets apart Ecological economics from other economic branches discussed in this post series is its strong roots in natural sciences. For instance, in the literature, it is common to find references to system thinking or energy flows.

Economic system as a subsystem of the ecosystem

Ecological economics assumes that economic systems are intrinsically embedded in larger socio-ecological systems. In other words, the economy is just a human-made subsystem in a global ecosystem.

(This might also come as a surprise to some of my fellow economists but yes, not everything is centered about economics).

So, according to Ecological economics, economics necessarily operates within the ecological constraints of nature and natural resources.

Nature has an intrinsic value

EE considers that nature has an intrinsic value, independent of human-made economic systems. This means that according to Ecological economics, natural capital, cannot be substituted by any other form of man-made capital, like technology.

This is important as it is in frank opposition to those that think that technology can compensate for the damage that our economic systems make to nature. For example, it is against those that flag that “we can fix climate change with technological solutions”, instead of addressing the source, which from my perspective lays in our current systems of production and consumption.

Focus on the valuation of nature

Ecological economics has long contributed to the valuation (in monetary and non-monetary terms) of natural resources. The valuation of ecosystem services (not necessarily the payment) is core to ecological economics. However, the aim is not so much to put a price to natural resources but to show the value of natural resources (traded, untraded, monetized, and not monetized) to make informed choices, hopefully in the direction to more protection of the natural world.

The above mentioned four characteristics of Ecological economics are in clear contrast with the assumptions of Environmental economics. Yet, they are often considered by many, one and the same. So, what are their main differences?

Differences between Ecological economics and Environmental economics

These two branches of economics deal with human-nature interaction. And both of them had been interested in the valuation of natural “capital”. But that is more or less where their similarities stop. Their assumptions and methods differ substantially.

The differences between ecological and environmental economics have been excellently discussed here. But suffice to say that Environmental economics:

1. Is strongly rooted in neoclassical principles of rationality, perfect information and maximization of profits
2. Puts the economic system at the center and, consequently
   • It is (almost exclusively) concerned with growth
   • Is very anthropocentric
3. Considers that Nature has instrumental value and consequently
   • The environment is turned into a commodity that then enters the normal supply/demand function
4. And assumes that the loss of natural capital can be “compensated” by human-made capital. In down-to-earth words, it means that we can destroy nature in the pursuit of growth in so far we develop technologies to compensate for the adverse impact of growth on nature.

The economic instruments that are derived from Environmental Economics aim at “marketizing” the environment. Any environmental problem is due to:

• Incorrect prices, and thus the solution is to adjust them by using taxes or subsidies.
• Missing markets so, the solution is to create a market. For example, using tradable permits to address pollution.
• Imperfect property rights, that need to be amended. For example by privatizing the access to nature.

Applications of Ecological Economics in conservation

Large conservation organizations, like IUCN have ecological economists (and some environmental ones) in their staff, doing all the nitty-gritty calculations needed for planning conservation actions and for assessing the impact of those conservation interventions.

One clear application of ecological economics is on the valuation of different alternatives for reforestation taking into account not only the ecological aspects but the economic aspects as well. By being able to value different conservation alternatives, managers can opt for the most cost-effective option to reach a similar conservation objective considering both the biological and the economic aspects of the different conservation alternatives.

In the end, donors wouldn’t like their funding to be spent in a very expensive intervention if there is a more cost-effective solution, with equivalent results in biological terms.

Other applications of Ecological economics in conservation is on the valuation of different land or sea use. For example, estimating the value of the land if it is being used for cattle instead of conservation, taking into account the value of all the ecosystem services that the land could provide under alternative uses.

Or the value of the marine resources being used for industrial fishing instead of restricted sustainable touristic activities or artisanal fishing compatible with certain types of marine protected areas.

And there is, of course, the valuation of protected areas, which includes the direct value of protected area ecosystem services (like jobs, business, resources, and tourism revenues) and the indirect or non-use values like carbon storage, aesthetic values and cultural and religious values.

Beyond valuation

But, what if you do not see yourself doing valuations of ecosystem services or land-use alternatives?

Still there is plenty of room for contributions of Economics to Conservation, like analyzing value chains, evaluating the socio-economic impact of protected areas, studying regional transformations, or looking at alternatives to improve the livelihoods of the communities surrounding protected areas, just to name a few.

These are examples of projects in which development economists or innovation economists could definitively contribute.

Read the next blog of this series about Economics and Conservation: Innovation economics and conservation