Ecology and valuation: Big changes needed

Ecological Economics has developed as a “transdisciplinary science,” but it has not taken significant steps toward a truly integrated process of evaluating anthropogenic ecological change. The emerging dominance within ecological economics of the movement to monetize “ecological services,” when combined with the already well-entrenched dominance of contingent pricing as a means to evaluate impacts on amenities, has created a “monistic” approach to valuation studies. It is argued that this monistic approach to evaluating anthropogenic impacts is inconsistent with a sophisticated conception of ecology as a complex science that rests on shifting metaphors. An alternative, pluralistic and iterative approach to valuation of anthropogenic ecological change is proposed.     

Economy-wide estimates of the implications of climate change - a rejoinder

[Ackermann, F., Stanton, E., 2008-this issue. A comment on economy-wide estimates of the implications of climate change: human health. Ecological Economics. doi:10.1016/j.ecolecon.2007.10.006] criticise our recent paper [Bosello, F., Roson, R., Tol, R.S.J., 2006. Economy-wide estimates of the implications of climate change: human health. Ecological Economics 58, 579-591] on different levels, calling it “mistaken” and “misleading”. We welcome the opportunity to respond. The critique of [Ackermann, F., Stanton, E., 2008-this issue. A comment on economy-wide estimates of the implications of climate change: human health. Ecological Economics. doi:10.1016/j.ecolecon.2007.10.006] is either misdirected or incorrect.     

Specifying “regime” — A framework for defining and describing regimes in transition research

It is more and more agreed by research and policy that a long-term sustainability of industrialized societies cannot be achieved without fundamental changes at the level of different societal subsystems, such as the agricultural, transportation or water management systems. This view has lead to an increase in the amount of research carried out about the so-called “transitions”. Transitions comprise long-term, fundamental change in societal subsystems and are seen as encompassing co-evolutionary and mutually reinforcing processes in the economic, technological, institutional and socio-cultural domains. Transition research aims at understanding transitions and at finding methods that facilitate change directed towards societal goals (so-called “transition management”).This paper adds to the growing body of concepts of this young research strand. It suggests a framework for defining and describing “regimes”, the systems resulting from the broad and interdisciplinary view taken by transition research. The concept “regime” is of central importance for transition research, since it defines the level of societal systems on which transitions are mainly analysed. What actually is “the regime” to be researched and possibly managed is however usually not given through clear system boundaries but is a matter of framing and deliberation. In order to guide processes of regime identification, the paper develops five defining characteristics of regimes and gives a definition based on them. Further a method useful to structure and graphically represent knowledge about a regime is introduced. Such a structuring of knowledge is an important first step to understand how a regime “works”.     

Ecological sustainability in policy assessments: A wide-angle view and a close watch

We give a perspective from two practitioners on some of the challenges of addressing sustainability concerns in environmental policy assessments. We focus on the ecological dimension of sustainability, which is closely related to the concept of “ecosystem resilience.” First, we discuss several recent benefit-cost analyses conducted by EPA that illustrate many of the practical difficulties analysts have faced when attempting to assess the ecological benefits of proposed regulations. Next, we discuss the importance of increased coordination of policy assessments among offices and agencies that traditionally operate more or less independently. We conclude by using a stylized model to illustrate how using an “adaptive management” approach to designing and evaluating policies can help to avoid some of the limitations of standard policy assessments highlighted in this special section of Ecological Economics and elsewhere.     

A new definition and framework for the development of a national technology strategy: The case of nanotechnology for Iran

In this research, we use the concepts of “national technology policy” as well as the “firm technology strategy” in defining a new definition for “national technology strategy”. Then, by examining several national technology strategies in a variety of fields in different countries the national nanotechnology strategy for Iran is developed. Furthermore, using capability-effectiveness matrix and SWOT analysis we identify strategies of nanotechnology development in Iran. Finally, considering other countries' strategies and the results of PROMETHEE Method, we prioritize different areas of nanotechnology for Iranian economy, and test for the validity of the extracted strategies.     

生态经济学对传统经济学的挑战、继承与定位

生态经济学从诞生之日起对传统经济学提出了严峻挑战。认为生态经济学对传统经济学的理性经济人的假设、物的可替代性假设、价值观和财富观四个方面提出了挑战;在此基础上探讨传统经济学缺陷的根源,辩证分析生态经济学与传统经济学的关系,指出生态经济学与传统经济学的各自运用范围;最后对生态经济学定位和分类进行了探讨。     

On S-curves and tipping points

In his discussion in this journal of Kurzweil's The Singularity is Near, Modis criticizes Kurzweil's loose characterization of the “knee” of a growth curve. Likewise, the “tipping points” described by Gladwell (The Tipping Point) are clearly relevant to forecasting systems, but Gladwell did not mathematically identify such points. Both concepts refer to a point on the curve where growth accelerates dramatically and sustains itself. What can be said in a rigorous way about knees and tipping points in growth systems?The answer has to do with the number of parameters of the growth curve, and the (probabilistic) model underlying the growth curve. Using probability theory and computational experiments, this paper clarifies these points for the logistic and Bass curves (identifying an unambiguous tipping point for the latter), and explores the merits of a 3-parameter model of innovation adoption. It concludes that if forecasters are to deal scientifically with the now-established management notion of “tipping points,” a 3-parameter model is needed. The paper also resolves four minor but annoying paradoxes in the growth curve literature.     

Game-theoretic definitions of fairness and the contractualistic foundations of justice

We discuss game-theoretic interpretations of Rawls's theory of justice with special reference to the choice of the most appropriate solution concept. We show that Core-like solution concepts, as the one proposed by Laden (1991,Philosophy and Public Affairs,20, 189–222), have undesirable implications in this context. The “Bargaining Set” has more satisfactory properties for any contractualistic approach.     

Between a rock and a soft place: Ecological and feminist economics in policy debates

The field of ecological economics includes both economic analysis on the one hand, and discussions of normative values and visions for society, on the other. Using feminist insights into cultural beliefs about the relative “hardness” and “softness” of these two sides, this essay discusses how ecological economists can use this unique “between” space in order to better inform policy. The current crisis of global climate change, it is argued, requires that economists move beyond modeling and measurement, while ecological thinkers need to re-examine beliefs about markets and profit.     

Amenity driven price effects and conservation reserve site selection: A dynamic linear integer programming approach

Most conservation reserve design models presented in the literature are static and ignore the dynamic economic aspects of site selection. Typically conservation programs operate under time-related (e.g. annual) budgets and purchase land over time in a sequential manner. The uncertainty of land development has been incorporated in a few dynamic reserve selection formulations using stochastic dynamic programming. However, the existing formulations do not explicitly deal with inter-temporal price and location linkages. We address this issue here and present a two-period linear integer programming model for conservation reserve design that incorporates amenity driven price feedback effects inherent in the reserve development problem. In addition, the model includes spatial and ecological criteria. We then use this model to answer the question “How suboptimal is ignoring amenity driven price effects in reserve design models?” We apply the model to artificially generated data sets and compare the results with the results of an iterated static model that considers only one period at a time. We find that the dynamic model with price feedback effects selects sites at a lower per-site cost. The policy implication of this finding is that conservation programs should avoid purchasing land in the same neighborhood over multiple time periods.     

Search and Knightian uncertainty

Suppose that “uncertainty” about labor market conditions has increased. Does this change induce an unemployed worker to search longer, or shorter? This paper shows that the answer is drastically different depending on whether an increase in “uncertainty” is an increase in risk or that in true uncertainty in the sense of Frank Knight. We show in a general framework that, while an increase in risk (the mean-preserving spread of the wage distribution that the worker thinks she faces) increases the reservation wage, an increase in Knightian uncertainty (a decrease in her confidence about the wage distribution) reduces it.     

Dynamically stable preferences

In the framework of dynamic choice under uncertainty, we define dynamic stability as a combination of two assumptions prevalent in the literature: dynamic consistency and the requirement that updated preferences have the same “structure” as ex ante ones. Dynamic stability also turns out to be a defining characteristic of the multiplier preferences of Hansen and Sargent (2001) [24] within the scope of variational preferences. Generally, for any class of invariant preferences, dynamic stability is shown to be connected to another independent property — consequentialism.     

From ecological footprint to ecological rent: An economic indicator for resource constraints

This paper takes as a starting point a combination of an input-output model with a national Ecological Footprint account for Germany in the spirit of Wiedmann et al. [Wiedmann, T., Minx, J., Barrett, J., Wackernagel, M., 2006. Allocating ecological footprints to final consumption categories with input-output analysis. Ecological Economics. 56, 28-48]. Footprint as well as Biocapacity is dealt with at the industry level. Gross output of each industry and final demand for each industry can then be split up into a share that is reconcilable with Biocapacity and another share that corresponds to the ‘Ecological Deficit’. The Ecological Footprint concept is extended in this study by introducing the additional biocapacity necessary for sustaining the given level of economic activity. It is assumed that each industry had to rent the corresponding areas and to apply a given technology in order to make this additional land biophysically productive. That results in an additional technology for each industry leading to an increase in costs and prices. The new price level is directly linked to the share of output that corresponds to Biocapacity overshooting, which is defined by the ‘Ecological Deficit’. Economic indicators can be derived by measuring the income difference brought about by the price increase. This difference corresponds to a Ricardian rent which is due to resource constraints on output growth.     

Trading spaces: Calculating embodied Ecological Footprints in international trade using a Product Land Use Matrix (PLUM)

Nations import and export biophysical resources. With many ecosystems worldwide under mounting stress, countries may be increasingly interested in knowing the extent and origin of their ecological imports and dependencies. In this paper the Ecological Footprint is used as a tool to measure the biophysical (as opposed to financial) value of international trade flows. This paper attempts to answer the following question: How large of an Ecological Footprint does a given country exert inside the borders of each of its trading partners? Records in the UN COMTRADE bilateral trade database are multiplied by a matrix of per-product Footprint yield coefficients to translate from values in dollars and tonnes to units of hectares. The results show that the largest interregional flows are from Latin to North America, and from North America to Asia-Pacific. Grouping countries by GDP, high and middle income countries appear in Footprint terms to trade predominantly with other high and middle income countries and much less with low income countries.     

Not measuring sustainable value at all: A response to Kuosmanen and Kuosmanen

In their article in this issue of Ecological Economics, Kuosmanen and Kuosmanen [Kuosmanen, T. and Kuosmanen, N., this issue. How Not to Measure Sustainable Value (and How One Might). Ecological Economics.] aim to criticise the measurement of Sustainable Value as proposed in our previous research. By adopting a production perspective and based on a productive efficiency analysis, they claim that the proposed way of measuring Sustainable Value represents an invalid simplification that rests on restrictive and unrealistic assumptions. Our response is to show that their argument rests on a fundamental misspecification of the Sustainable Value approach. We identify three conceptual misfits: a mismatch in the perspective of the analysis, a misspecification of opportunity costs and the irrelevance of production functions. Ultimately, Kuosmanen and Kuosmanen's train of thought rests entirely within the realm of productive efficiency analysis, whereas Sustainable Value builds on the foundations of financial economics and consequently adopts a macro rather than a firm perspective. It is thus not surprising that the findings of Kuosmanen and Kuosmanen appear to contradict the Sustainable Value approach. However, this is due to their fundamental misspecification of the Sustainable Value approach. As a result, rather than providing novel insights into how Sustainable Value might be measured in a better way, they do not measure Sustainable Value at all.     

Toward an experimental foundation for benefit-cost analysis

Empirical results from experimental economics and neuroscience have uncovered regularities in human behavior that may provide a base for new approaches to welfare theory and economic policy. These empirical findings do not challenge basic economic concepts but they do imply that our assumptions about “rational behavior”, “opportunity cost”, and “social welfare” should be revised using sound scientific evidence and methods. This research has the potential to make benefit-cost analysis more reflective of how people value gains and losses, and more responsive to considerations of environmental and social responsibility.     

Democracy and Opinion Falsification: Towards a New Austrian Political Economy

Hayek's view of democracy as a process of forming opinion is taken as a starting point for inquiring into issues largely neglected by Public Choice and Constitutional Economics. In an Austrian perspective, fallible individual knowledge, political entrepreneurs and dissenting minorities attain a distinctive role in the process of political competition. Based on the observation that political opinions consist of preferences and theories, the concept of opinion falsification is introduced. It is a spontaneous result of social interaction creating preference falsification - the disguise of true feelings, but also knowledge falsification – the discovery of false beliefs. Democratic constitutions can limit the scope of preference falsification and increase the potential for knowledge falsification, thus supporting Hayek's view that it is in its dynamic, rather than its static, aspects, that the value of democracy proves itself.     

Differences and similarities between ecological and economic models for biodiversity conservation

In this paper we investigate an important obstacle which substantially complicates co-operation between ecologists and economists but which has received little attention so far: differences between the modelling approaches in economics and ecology. To understand these differences, 60 models addressing issues relevant to biodiversity conservation have been selected randomly from eight international economic and ecological journals. The models have been compared according to a number of criteria including the models' level of generality; the mathematical techniques employed for formulation and solution of the models; the level of complexity and the way time, space and uncertainty are taken into account. The economic models sampled are formulated and analysed analytically, tend to be relatively simple and are mostly used to investigate general questions. Furthermore, they often ignore space, dynamics and uncertainty. Although some ecological models have similar properties, there is also a substantial number of another type of ecological models that are relatively complex and analysed by simulation. These models tend to be rather specific and often explicitly consider dynamics, space and uncertainty. The integrated ecological-economic models are observed to lie “in the middle” between ecological and economic models. An unexpected result is that they are not more complex than ecological and economic models (as one could have expected from a simple “merger” of models from both disciplines), but have an intermediate complexity.     

基于结构方程模型的黄土丘陵区商品型生态农业系统耦合关系分析

黄土丘陵区生态环境脆弱,农民增收与生态恢复是该区域的2大主要需求。商品型生态农业能够使满足这2个需求的"行为过程"有机结合,实现产业与资源的耦合。商品型生态农业系统要素之间存在复杂的耦合关系,为此引入"结构方程模型"。通过对典型流域(村)124户农户资料的分析与建模,结果表明:农业产业对商品型生态农业系统耦合态势具有直接影响作用,即农业产业构成了农户商品型生态农业建设的主体,而"耦合态势"却决定了农户对生态环境和社会发展的认识;在"系统运行过程中",农业资源、农户环境与农业产业具有两两相关性,且农业资源与农户环境的变化通过产业的发展传递并影响到农户生态经济系统耦合态势。这一结果与商品型生态农业的理念相吻合。为此,必须提高农户对社会经济发展的感知程度,合理、有效的利用农业资源,促进产业与农业资源的优化耦合。     

Testing threats in repeated games

Under most game-theoretic solution concepts, equilibrium beliefs are justified by off-equilibrium events. I propose an equilibrium concept for infinitely repeated games, called “Nash Equilibrium with Tests” (NEWT), according to which players can only justify their equilibrium beliefs with events that take place on the equilibrium path itself. In NEWT, players test every threat that rationalizes a future non-myopic action that they take. The tests are an integral part of equilibrium behavior. Characterization of equilibrium outcomes departs from the classical “folk theorems”. The concept provides new insights into the impact of self-enforcement norms, such as reciprocity, on long-run cooperation.