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Biophysical Reviews and Letters Vol. 11, No. 2 (2016) 63–86 c World Scientific Publishing Company DOI: 10.1142/S1793048016300012

Historical and Critical Review on Biophysical

Yekbun Adig¨uzel Department of Biophysics, School of Medicine Istanbul Kemerburgaz University Kartaltepe Mah. Incirli Cad. No:11 Bakirkoy, Istanbul, Turkey [email protected]

Received 18 March 2016 Revised 25 April 2016 Accepted 3 May 2016 Published 21 July 2016

Biophysical economics is initiated with the long history of the relation of economics with ecological basis and biophysical perspectives of the physiocrats. It inherently has social, economic, biological, environmental, natural, physical, and scientific grounds. Biological entities in like the resources, consumers, populations, and parts of production systems, etc. could all be dealt by biophysical economics. Considering this wide scope, current work is a “biophysical economics at a glance” rather than a comprehensive review of the full range of topics that may just be adequately covered in a book-length work. However, the sense of its wide range of applications is aimed to be provided to the reader in this work. Here, modern approaches and biophysical growth theory are pre- sented after the long history and an overview of the concepts in biophysical economics. Examples of the recent studies are provided at the end with discussions. This review is also related to the work by Cleveland, “Biophysical Economics: From to and Industrial Ecology” [C. J. Cleveland, in Advances in Bioeconomics and : Essay in Honor of Nicholas Gerogescu-Roegen,eds. J. Gowdy and K. Mayumi (Edward Elgar Publishing, Cheltenham, England, 1999), pp. 125–154.]. Relevant parts include critics and comments on the presented concepts in a parallelized fashion with the Cleveland’s work.

Keywords: Biophysical economics; ; ecological economics; laws of ; ; ; ; ; ; resources’ depletion; energy ; sustainability.

1. Introduction

Economy is part of and takes role in its functioning. Material and energy always persisted as a part of the economy and they always will, despite that they were ignored by the at certain times in history. Economy is currently accepted mainly as a . For certain reasons, the early economists focused not only on the social but on the biophysical aspects of economics as well. Before the

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19th century, economists were questioning the source of wealth. The French Phys- iocrats were the first formal economics school and their work could be accounted as also the first biophysical economics studies. This could be accounted as a difference of biophysical economics from thermoeconomics, which is commonly considered to be the same as biophysical economics. Physiocrats focused on land and agriculture as the origin of wealth. Later, Thomas Malthus studied on population and pre- sumed its exponential growth. Malthus suggested that population size is required to be controlled due to the noncompliance with the linear increase in the agricultural production. focused on land and labor, as do the classical economists of the day. In the end, wealth was admitted to be an outcome mainly of these two factors. Afterwards, recognized inverse relation of the quality of the lands that were used in general and the population growth. further noted the decrease in the quality of agricultural land with time. In 1870s, Jevons, Menger, and Walras performed abstractions and ignored material and energy as the physical inputs and outputs. This consumption-focused, socially oriented approach wastermedastheneoclassical economics, which was barely mentioning the natu- ral resources. Use of a theoretical, mathematical language or utilization of physics without a biophysical perspective was not exceptions to this view. Besides ignoring the finite resources of the world and inconsistency with the thermodynamic princi- ples, treating humans as rational and the presentation of hypotheses that were not prone to testing were some other problems. The emergence of biophysical economics relied on recognition and formulation of the physical principles and reinvention of the energy and material dependent nature of the economy. Several academics and intellectuals contributed to this progress with their invaluable works. Facilitated flow of the present century contributed the recognition despite the hardness of bringing together several disciplines in the views of sole individual scholars, who are generally coming from distinct fractionated disciplines of their research fields. Biophysical economics may be criticized for having a passive stance by not presenting solutions to the resource scarcity but rather alarming for possible depletion of the resources. However, proper political actions of course are not guar- anteed by, but may be realized with the help of such right theoretical frameworks through the precise understanding of economic systems. In addition, evolution of the current approaches in biophysical economics is bringing the field as a much broader one to the extent that it can be about explaining citizens’ views and deci- sions, flow of people between workplaces and other locations of economic relation, and about the flow of wealth and the control on the flow of wealth, underpinned by the political systems, finance, and the democratic measures (see Sec. 3.4). This review attempts to highlight this transition, as well as providing an overall insight on the concept. Section 2 of the manuscript gives a historical outline with a chrono- logical order and brief comments, wherever possible. Section 3 discusses selected examples and tries to elaborate the concept while presenting further discussions. Section 4 is the conclusion. July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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2. Biophysical Economics at a Glance

Stemming of biophysical economics from classical approaches was not unexpected since the criticisms of the standard views focused on their ignorance of some obvi- ous facts like energy dependency and environment-sourced resources’ contribution to economics. This ignorance can partly be explained by the success of the classical approaches in meeting the requirement of theoretical ground for making reliable estimations and predictions. Conditional earlier success of the classic view also explains the source of stimulus in developing explanations of advanced and more comprehensive economic theories since standard theories did not meet the expectan- cies later due to the changing conditions of resources’ availability. So, the stimulus for new theories was the energy dependency (“increased reliance on imported oil”) after Industrial Revolution. That made the recognition of energy scarcity in the long run, which revealed itself by the energy price shocks.2,3 These were around 70s and 80s. Yet, maybe the earliest form of biophysical models is far earlier, dating back to 1750s. It was the physiocrats.

2.1. Physiocrats Physiocrats emanated in 1750s, before the Industrial Revolution. Francois Qesnay4 and his disciplines (Mirabeau, Dupont) led this first scientific economic thought school.1,5 This thought carried the natural resources to the center of the first disciplined approach. Preliminary to this advancement is the scientific progresses, which brought the era to the level that intellects could establish the first systematic thought of the first social discipline, namely economics. Agricultural society found its place in this thought through the means of wealth. Material wealth was sourced by fertile lands. So, agriculture was supposed to be the ultimate occupation and economy was believed to rely on the ‘Natural Law’, which had no grounds of human free will as long as the human acts in the moral order, compatible with the physical laws. Although they were not announced prominently later, Physiocrats belief in nature as the source of wealth has with the biophysical economics. As mentioned in the introduction, Physiocrats may be accounted as the point of dis- tinction between biophysical economics and thermoeconomics, which is regarded usually as the same as biophysical economics. What we see in relation to the rel- evant terminology that there is generally close intimacy together with deviation under certain circumstances.

2.2. Industrial Revolution came afterwards. It was based on the formalization of the laws of thermodynamics.6,7 This formalization relies on the immense efforts of sci- entists like , Clausius, Thomson (Lord Kelvin), Maxwell, and Boltzmann, who took primary roles in the introduction of the heat concept, the first law of ther- modynamics, absolute temperature, dynamic theory, entropy, the second law of July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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thermodynamics, and ’ distribution. Carnot’s explanation on the steam engines was published in 1824.8 This was important for explaining how much useful work can be obtained from an , which is of direct relevance to economics.1 In this sense, the type and efficiencies of transformations that are of by both economic and physical means are those that end up in conversion into useful or services or the ones that end up in conversion into energy, which can be used for the production of useful goods or services. The Universal Laws of Thermodynamics recognized for its validity in both bio- logical and social dimensions of life. With a final increase in the entropy of the universe, social and biological evolutionary processes are both characterized by an unending fight for energy and resources that result in the continuous dissipation of energy and integration of matter as more coherent forms.9 In accordance, Ostwald concluded that the civilization is the control on energy that roots all transforma- tions in the natural environment.10 He further pointed at the increasing control on the energy and efficiency of the energy transformations.11 By economic means, this gives the emergence of insight on the factors that limit . In fact, the limitations to economic growth was pronounced earlier by Podolinsky.12 He stated that the economic growth limits were in the physical and ecological laws rather than the production relations. Moreover, he calculated the energy surplus through comparing the caloric values of the output food and the sum of those of the inputs, including those of the seeds and the human and animal workforces. This approach prepared the grounds of theoretic advancement of the following concepts that emerged about a century later, in the late 20th century: Energy flow analysis for efficiency determination,13–15 labor in relation to the energy that subsidizes the labor work,3 and energy surplus in energy supply processes.16–19 An interesting advancement in this energy flow analysis would be to include the core biological parameters such as the accessibility of the energetic content in our diets by implementing the total energy spent on to obtain unit energy in distinct types of the food that we consume. This biologically relevant phenomenon can have implications in biophysical economics and such studies would potentially have an impact in the field.

2.3. Early 20th century The beginning of 20th century was highlighted by more in-depth understanding of the relation of resources’ generation with the life processes and the rules of nature that govern them. This was revealed by the accumulation of literature. applied the laws of thermodynamics to economics and criticized standard economic theories of the day.20,21 He pointed at the role of transition from solar energy to fossil fuels that led to the change in the economic activities that resulted in growth. Solar energy was the driving force of agricultural processes like revenue while fossil fuels were serving as capital. Soddy further argued about the debt as the defect of economics with its rather speculative background compared to the solid July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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nature of wealth. He even claimed that mixing up of the dimensionless debt with dimensional wealth brought about the financial institutions, which were foreign to the laws of nature and the physical laws that govern the wealth and the associated activities. Debt can grow forever but wealth cannot, which is bearing a potential of collapse. Alfred Lotka was thinking with parallel terms in the sense that his evolutionary perspective of life and the battle for survival as a nonstop fight for energy was the centermost place to energy in the natural selection process.22,23 His view was inherently similar to that of the Spencer’s9 but Lotka did not apply his perspectives to economic measures. The early 20th century witnessed the emergence of a rather radical view, namely the Technocrats, who were led by Howard Scott. They were suggesting the replace- ment of politicians with engineers and scientists, and with energy certificates. Their view lost popularity in the 1940s and the World War II began soon before.24 While not sounding completely pointless, cost of replacing money with energy cer- tificates probably would have been more than its prospected benefit together with the high risk of its ending up being the same as money. In any case, this view implied the realization and appreciation of the power of science by proposing to change its stance as a tool of the rulers from being a tool of the academia.

2.4. The 1950s Within this era, social and economic aspects were well correlated with the energy quality concept while the period is marked with ever increasing accumulation of literature.16,25–30 In these terms, Cottrell emphasized first the surplus energy and secondly the labor productivity in relation to the energy quantity that subsidizes the labor productivity.16 These concepts were rooted by the views of Podolinsky12 that was enunciated about a century earlier. Mainly as a part of his second emphasis, Cottrell stated the revolutionary side of Industrial Revolution as the supplementa- tion of human labor with vast amount of energy by means of fossil fuels. Earlier, Soddy20,21 mentioned the role of this transition from solar energy to fossil fuels, as a transition from revenue-based to capital-empowered growth. These two perspec- tives are obviously not exclusive of each other. Besides, they indicate the increase in the efficiency of the revenue-based systems to the level of the capital-based ones due to the energy enhancement by fossil fuels. Cottrell further indicated the economic influence of time-dependent change in the energy surplus amount. This change is related to the physical of the resource in question and the technique for its extraction. The physical properties are the determining factors such that the increased surplus is limited by the energy content of the resource. Cottrell investigated the social and cultural outcomes of the energy quality and surplus. Other than that, he stressed the relation of energy capture and control with survival by means of patterns’ perpetuation. He mentioned that governing July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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the energy transformations involves in the persistence of patterns that are inherent to the human behavior as well. Therefore, survival of man similarly relies on the success of his control on the energy conversions. Cottrell noted on the relevant hypothesis of Lotka too. In the early 20th century, Lotka was also reserving the central place to energy maximization in the natural selection process22,23 and this view of Lotka was matching with that of Spencer’s.9 In the late 19th century, Spencer described evolution as continuous dissipation of energy and integration of matter as the more coherent form, which evolves from the less coherent one and survives after the struggle for existence.9 Another distinct person in the field was Hubbert, who was a geophysicist. He lived and worked around the same time as Cottrell. His remarkable con- tribution was gathering data on the rates of energy production, discovery, and consumption.31 He analyzed the lifetimes of fossil fuels and predicted expected life- times correctly.29,32,33 Like Soddy, he was also criticizing the speculative side of economics.34

2.5. The 1970s and later In the 1970s, the social and cultural atmosphere led to environmental movements. Together with the petroleum supply and price shocks, the energy and resources became a hot, debated topic. Odum analyzed the energy flows systematically and coined the ‘maximum power principle’ by combining his successors’ views on the requirement of energy maximization to be used in useful work, for natural selection, according to Darwin’s evolutionary theory.17 He described the need for the use of energy at an optimum rate as a superior energy consumption strategy, and stressed its validity not only for the ecologic but also for the economic systems. As a more in- depth understanding of energy quality, he pointed at the importance of considering the quality of energy in use to be matching with the economic task of interest. For instance, electricity is proper for running electronic devices and for lightening but coal and wood are better than electricity for heating. Counter flow of energy and money is an important concept that he contributed. Accordingly, economy serves as a feedback system, wherein a purchase stimulates energy flow towards the site of purchase for production of more of the goods that have been acquired. In this formulation, money circulates in a closed system and energy enters from outside. This design is inherently related to the debt versus wealth conflict that was put forth by Soddy and supported by Hubbert later. When a purchase draws all the money in the system and stimulates more money and more purchases of its kind, extra money can be produced to meet the demand and lead to purchasing with debt. That can go forever but the energy and material resource for the production that will be drawn from outside is not endless and it would eventually limit the whole process. Odum was supported by Costanza through empirical studies on the embod- ied energy and dollar goods, which were found to be statistically related.35 July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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Energy calculations were covering the energy contributions of labor and government services that were involved in the production. This made Costanza to derive the term ‘embodied energy.’ He also argued that valorization of goods with proper mar- ket prices should be in accordance. This could even be used to value nonmarket .36 A geologist, Cook, was keen on matters such as exhaustion of the resources and environmental threat associated with the energy use, together with the societal perception of the economic growth, accompanied by an ignorance of the pinpointed hazards.37,38 He stated that denial of resource scarcity was sourced by a belief in the economic regulations and a supreme technological progress that would still drive economic growth. Belief in the technological progress was right in the sense that it proved itself later in the communication technologies and driving the transition from industrial society to information society. However, technological progresses in general are accelerating the depletion of the nonrenewable resources, except for those tackling for developing alternative energy sources or increasing the efficiencies of the available ones’ energy surpluses or work outputs. Based on his analysis, Cook also suggested taking precautions like adjusting the lifestyles. A devoted work with the same purpose came by Bruce Hannon and the others at the Energy Research Group at the University of Illinois. Hannon suggested to establish an ethic that would stop the excess energy consumption.39,40 Surely, such a saving practice is contrary to limiting the expenditures in order to be able to spend on other goods, the energy equivalents or the embodied energies of which would ultimately compensate for the energy that has been kept. Hannon proposed the use of energy coupons instead of money as well, such as Technocrats. In those years, Ayres founded a material-energy balance model2 and criti- cized the standard economics in terms of its incompatibility with the First Law of Thermodynamics.41 The whole process requires an increase in the entropy of the energy and matter that can be explained by the embodied energies that are taking the externalities into account as a persistent nature of the processed matter we use.42 Ayres used the Second Law of Thermodynamics to describe the resource qual- ity as high-quality negentropy stocks that can easily be searched, discovered, and extracted, or low-quality stocks that are more demanding. As the high-quality stocks are exhausted, the remaining stocks’ depletion is accelerated due to the of more of the energy obtained from them in their own search and pro- cessing events. A new term, exergy, was also coined to describe the organization degree of a material or energy resource in its low entropy state, compared to its random, unorganized state with higher entropy. The latter state is represented by the state of the energy or matter of concern with the typical abundance on earth. Exergy is proposed to be used as a measure of technical efficiency or ecotoxicity in cases of low or insufficient energy conversion and so.43,44 Daly criticized the standard economic view in a parallel fashion with his heirs. The notion of circular flow assumes a self-feeding and self-renewing flow of services July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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and products from firms to and back to firms, respectively as the national product and income. This conception expels the natural resources and wastes. Daly proposed the steady-state economy concept as a resolution for the risk of depleting natural sources and environmental hazards in such systems. The model he offered required keeping the resources and population constant with control.45,46 Georgescu-Roegen criticized this view for the reason that earth is a closed system and material supply cannot be kept at a steady state. Resources’ depletion would thus only be delayed but not be prevented even if the population is kept at a con- stant size.47,48 Georgescu-Roegen’s emphasis was directed to the material quality, such that he even formulized this as the Fourth Law of Thermodynamics or the Law of Matter Entropy, which was dealing with the degradation of the organiza- tional state in the matter.49 He was referring to the material-dependent nature of the since matter is needed for all type of activities at some point, including energy transducers. Matter is also depleting in a closed system such as earth by means of its constant use and degradation as waste. This view was crit- icized, not by the possibility of its partial prevention by a recycling process in a constant-sized population but by the fact that the planet is comprised of minerals, which can be extracted once there is sufficient energy to make it possible. However, this perspective is inherently related to that of Ayres’, mentioned above, wherein Ayres used the Second Law of Thermodynamics to define the resource stock qual- ity as high or low. The high-quality stocks can be searched, discovered, and mined easily but the low-quality stocks cannot.

2.6. Biophysical growth theory 2.6.1. The classical approach Fix discussed the economic growth theory recently from a biophysical perspective.50 He was listing the assumptions of neoclassical growth theory as the possibility of decoupling economic outputs from energy inputs, no connectedness of economic distribution and growth, triviality of large institutions for growth, and insignif- icance of labor force structure for growth. There have been many criticisms to these assumptions than mentioned until here.51–59 However, abandoning neoclas- sical model seemed not convincing probably due to the reason that it seemed to work. This was based on the good fitting of the historical GDP data to aggregate production functions. Yet, it was argued by Fix that a simple exponential function would be well fitting and it would be unreasonable to deduce that growth is cer- tainly a function of time. We should not even bother capital and labor inputs if that was the case. There is a technological improvement term, which is an exponential function of time, within practically all aggregate neoclassical production function. This exponential function is allocated to a residual in conventional Cobb–Douglas equations. Georgescu-Roegen’s criticism for the conventional economics was also explained through the flaw in the Cobb–Douglas production function, which equal- izes the output as a multiplication of the exponentials of capital stock, labor supply July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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per time period, and natural resources’ flow. Natural resources’ flow is only related to the output, capital stock, and labor supply per time period in this formulation. Therefore, its changes should be regulated only by those. However, this is practically impossible, namely the output cannot be kept constant by capital stock (and labor supply) when the natural resources’ flow is ended.41,60–63 Besides, approaching of capital stock to infinity would drive rapid diminution of the natural resources.64 Fix was listing the weaknesses of neoclassical growth theory as insufficient explanatory power, which is discussed above as the • arousal of the goodness of fitting due to one term’s being an exponential function of time, • problems related to the measurement of the basic variables (output and capital input) by means of monetary value that requires subjective decisions due to inadequately defined price, • contradiction of the inherent assumptions with the empirical evidences, • empirical support’s being the outcome of “tautological relation between the pro- duction function form and an algebraic transformation of the identity” rather than an exposition of the underlying technical norm or so.

2.6.2. The biophysical approach The biophysical approach mentioned by Fix was that offered by Bardi and Lavacchi.65 It was an adaptation of Lotka–Volterra equations that are usually used to model prey–predator dynamics for modeling resource exploitation. The equation

R˙ = −k1TR (1) relates the biophysical growth in the form of resource-harvesting rate (R˙ )tothe efficiency of resource extraction (k1), technological infrastructure stock (T ), and resource stock (R). The harvested resources are transformed to technology, as dic- tated by the following equation

T˙ = k2TR − k3T (2) wherein T˙ is the rate of technology transformation, TR is the rate of resource harvest, k2 is the efficiency of the transformation process, −k3T is the entropic decay, and k3 istherateofentropicdecay. Fix was suggesting that the economic growth was occurring when the rate of energy flow in the form of resources’ flow increases within the economy. The model was generating a bell-shaped resource extraction curve in time, which is in line with the peak and decline consequence. In addition, resources are limiting in this model, as the external, biophysical constraints. Therefore resources will be acting on the long-run behavior while the internal, social constraints should normally be determining the short-run behavior. The analysis by Fix revealed that expansion of energy consumption is a signif- icant feature of growth; distribution is associated with growth; large institutions July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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take vital part in growth; and change in labor structure is indispensable. More specifically, when the energy use per capita rises, large institutions increase their employment; employment increases; and agricultural employment declines. Further, when the energy use per capita growth rate increases, the production-value increases relative to the energy price; share profit in national income increases; debt claim diminishes relative to the production-value; and downward income distribu- tion occurrence is more likely.

2.7. Information society, ecological economics, biophysical economics Shifting from an industrial society to information society is reflected by the recog- nition of the necessity of information and time in addition to energy for managing all the economic activities mentioned here and that are yet to be mentioned. Partly, those are the events that involve relationships between processes. These processes lead to dissipation of high-quality energy and degradation of material resources for revealing the surplus energy to perform work by the other processes that capture high-quality energy and change materials from less ordered to more ordered states in the form of products. Szilard recognized the interrelation among energy, time, and information, and their crucial role in upgrading the materials in the first half of the 20th century and the others applied this relation to industrial processes in the 1990s.66–70 Despite that information itself involves in the relation that drives the processes, gather- ing knowledge, its preservation, and application is such a process as well. This is due to the fact that this knowledge is not directly embodied in the human body such as in case of the genetic makeup. It rather persists in the goods, capitals, institutions, and specialized repositories for information deposition and preserva- tion like libraries, databases, and computers.71 The relation of time is such that the generation of resource stocks relies on conversions that are under the control of nature and which are considerably slow processes considering the high demands and consumption rates of the industrial processes of the current economy. Relevant measures that were established with these considerations evolved into the ecological economics and industrial economics, which do not rely necessarily on the nonphysi- cal factors. Industrial ecology investigates the economy related features of industrial activities with or without regional constraints while attempting to find the means to minimize or eliminate the environmental burden that can be sourced at any stage. Ecological economics considers the earth as a thermodynamically closed sys- tem together with humans and their economy related activities as a subsystem. Yet, it desires a full comprehension to build reliable models and to find means for a sustainable future for this world and the humans, without sacrificing the biodi- versity in natural habitats. However, biophysical economics differs from ecological economics whenever and wherever nature is moved to the boundaries of economic systems rather than the other way around.72 Hall and Klitgaard described such July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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kind of ecological economics as attaching a dollar value to nature. Besides, current biophysical economics is not offering fixes or reliefs to the standard model but is suggesting modeling economic growth and ongoing relations of our economic sys- tems by accounting for the dependency on the availability and quality of the energy and material resources that change in time, upon use. As Hall and Klitgaard states, biophysical economics tells us to “start with the essential process, value it on its owntermsandonitscontributiontothewelfareofallcreaturesonthisplanet (including humans) and think about money only much later.” This seems a more plausible perspective of biophysical economics in the sense that human civiliza- tion brought about not only economic activities and technological advances until today but other factors like arts and cultural products, which can be valorized far beyond their embodied energy values. Moreover, some other human acts (i.e. war and related activities) that are not necessarily serving for the welfare of ‘all’ creatures persist in the economy with quite huge shares and their implementation would be conflicting with the defined-expectations of the biophysical economics in the sense that welfare of creatures would be limited to certain narrow-sized popu- lations or sub-populations under such occasions.

3. Examples of Current Studies and Further Discussions

Additional examples are handled in this section with no specific chronological order. Criteria are the relation of the examples with the field and their being rel- atively recent, not being among the former studies. The emphasis was placed on demonstrating the actual broadness of the concept, and its application and analy- sis schemes, with no further restrictions. With the first example, it is shown that the perspectives of Lotka and Georgescu-Roegen, who had significant contribu- tions to development of biophysical economics, are similar while Georgescu-Roegen expanded the concept.73 They were both holistic in their representation and con- cerning about the future of human beings due to their energy irrespective attitude towards thermodynamic facts that simply tells that degradation of resources is a part of nature, which is evidently accelerated with our current economic regimes. The second example presents a neo-Ricardian view on the economy environment relationship, which is presenting the means of consolidation between prevailing eco- nomic understanding and biophysical economics, or an implementation of inwards flow of natural resources within economic systems.74 The third example is actu- ally an editorial but it was selected for making a worthy summary of the reasons of contemporary ecologists’ and economists’ not addressing the energy scarcity.75 This issue is a widely mentioned and argued concept among biophysical economics scholars. Further discussions are also brought about from the concerns mentioned in this editorial but not discussed in this paper until then. For instance, the rise in the number of papers collecting the terms like development, economics, ecology, energy, limits, and thermodynamics in their topics together with sustainability is analyzed as an indication of research in those fields. Due to its relation to the concept in July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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question there, which is sustainability, the study titled “Sustainability and place: How emerging mega-trends of the 21st century will affect humans and nature at the landscape level” is also mentioned under the third example.76 The fourth example is a good representation of the application of biophysical economics perspective in the analysis of stability in nations.77 Maintenance or increase of fairness in nations was offered to provide a means to achieve stability. This example is revealing the fact that biophysical economics is not bounded by the concerns of energy flows any more, it is also about the flows and distribution of wealth within nations, wherein fairness brings stability to the nations that are capable of managing it. The fifth example highlights the importance of semantics and proper understanding of prob- lems before taking decisions.78 Although functionality of the approach was demon- strated by evaluating the performance of power-supply systems, the approach is unique and its claims are such infusing that it can probably be apprehended and adapted as a universal scheme for any decision-making and evaluation process in a facile manner. The sixth example presents and details a biophysical approach on global energy modeling, which is abbreviated as GEMBA.79,80

3.1. Example 1 — A comparative approach Bobulescu recently published a work that was comparing Lotka’s biophysics and Georgescu-Roegen’s bioeconomics by sorting out the similarities and differences.73 Lotka founded a very delicate term, ‘exosomatic evolution’, for the economic activ- ities of humans as a continuation of their biological processes in the biophysical world. Georgescu-Roegen’s adoption of earlier concepts founded by Lotka had sim- ilarities and diversities in the form of advancements. To mention about the parts that were indicated above, similarities are specifically the holistic view, open sys- tem interpretation, relying on the laws of thermodynamics, physics reception as a principle in economy and biology rather than being a tool, “the law of evolution as a maximal principle,”81 and Veblenian understanding of human addiction to lux- ury. More specifically, they were both making use of the evolutionary concepts and sharing the idea of energy struggle between species. Defining the economic activity as exosomatic evolution that boosted adaptation of human to unfavored, diverse environments is also related to the Veblenian view of human addiction to luxury, a different characteristic of human beings than those of animals. Namely, man make tools and these tools enable him to live in environments that he would not be able to survive otherwise. However, this ability also roots to the production and con- sumption of luxury items and faster deterioration of the energy and resource stocks in the nature, which may eventually lead to the extinction of man. Separate from the shared items or the traces of Lotka’s thinking in that of Georgescu-Roegen’s, contribution of Georgescu-Roegen to the concept was the enlargement of economic domain with incorporation of the exosomatic evolution and rejection of the energy- value concept. In this sense, he led the transition from biophysics to bioeconomics, with the warnings on the resource depletion, physical limits to production, and July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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pollution. Georgescu-Roegen addressed the incapability of the neoclassical eco- nomics and the markets in dealing with these issues. As a result, parallelization was drawn between Lotka’s and Georgescu-Roegen’s works meanwhile providing the essence of the holistic nature of seemingly distinct disciplines. It is nicely shown that the experts’ works are built on former ideas to bring advancements to the prevailing concepts. Such parallelization is useful since it is not forcing to make connections but is merely revealing the unrecognized or previously unspoken facts.

3.2. Example 2 — A neo-Ricardian view on the economy environment relationship Kemp-Benedict made a resemblance between the neo-Ricardian model and the inverted pyramid view that was originally suggested by .74 In a neo- Ricardian view on the economy environment relationship, Kemp-Benedict stated initially that natural resources contribute only minor to the grand domestic product (GDP) but are fundamental to the functioning of economy according to the ecologi- cal economics perspective. The natural sources are “pictured as sitting at the base of an inverted pyramid” in ecological economics. GDP is the pyramid, which is based on a minor (5–6%) added value by the extractive sector that provides raw materials to the rest of the economy while the rest (∼ 95%)sitsontop.Thisisinherently a “vertically integrated” model of the economic output. Accordingly, GDP is the sum of economy-wide markups on the costs of the external inputs, including labor and raw materials. In other words, GDP is written as the sum of the wage bill and resource rents multiplied by economy-wide vertically integrated coefficients, or economy-wide markups. Inverted pyramid is told to be emerging naturally when the prices are set by this markup. Economy-wide markup on the resources would be higher than that of wages. This is due to the fact that resources enter early in the production chains but the labor at all stages. Plus, economy-wide markups can be larger than that of firm- or sector-level markups and altered for different inputs. Economy-wide markups are larger than the sectoral markups because they capture the markup across production chains. The author resembled this model to the side of a Kaleckian markup model wherein the natural resource inputs enter the cost calculations in some sectors. Different than the environmentally extended input–output models, this model allowed fundamental changes in the economic structure and also it did not model a specific economy despite being simple. The use of the model is demonstrated in the study by examples. For instance, a minimum value of 3.6 for resource return on investment (RROI) was estimated to support sustainability. This is similar to a minimum value of 3, which was estimated by Hall, for energy return on investment (EROI) to support civilization. Kemp-Benedict indicated that this neo-Ricardian view on the economy environment relationship is linking ecological economics to the Post- and the other heterodox theory. Based on Post- Keynesian cognition that “workers have different consumption and saving behavior July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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from investors and the owners of natural resources”, labor, material, and energy were treated as distinct inputs despite their being interrelated. It is stated that the energy productivities of sectors are consistent among each other if the energy for labor production is considered. The analysis represents the adaptation of the understanding and informative but the issues dealt by biophysical economics are concerning the resources scarcity and depletion problems heavily. Relating those concerns to the view of an inverted pyramid would thus be of significance. Never- theless, the approach might be elaborated to include such analysis. One limitation of the model is the exclusion of finance, trade, and government expenditure. This was justified as the need to focus on the connection between the neo-Ricardian and biophysical economic theories. Another limitation is reported as that the capital investment was not treated explicitly, which could be overcome. As exemplified by the author, if land in one form enters the production and leaves in other form with some nutrients removed, a more comprehensive neo-Ricardian biophysical can be established.

3.3. Example 3 — An editorial and a brief discussion on sustainability Within their editorial for Ecological Engineering, Hall and Day mentioned about the reasons of contemporary ecologists’ and economists’ not addressing the energy scarcity.75 Several issues were highlighted there. That was a good collection of the highlights summarizing the core issues. To mention one that was not spoken here until now, we could say that they were pointing at the possibility of the sudden removal of the present energy sources as well. This was not something Hall and Day stressed in their editorial but it is worth to mention here that this is a fact which is as probable as the high expectations for the resolution of the energy scarcity problem by technological advancements. There is of course considerable amount of studies and advances at present on the alternative energy sources. However, those are still far from compensating the amounts that are required for our daily needs and gross production purposes. We also do not know if the problem would already be resolved when the depleted resources are encountered. In the same edi- torial, Hall and Day were mentioning about the study of Burger and co-workers on sustainability,82 which was indicating that 23,535 papers were published about sustainability between the years 1980 and 2010, according to web of science. This is the outcome of new programs that were established in universities, probably due to the growing trend towards and the need for systematic scholar work in that specialty. Those papers were including the term sustainability in the title, abstract, or keywords. 48% of those were including development or economics; 17%, ecol- ogy or ecological; 12%, energy; 2%, limits; and less than 1%, thermodynamic and steady state. Figure 1 shows a similar comparison for year-based evaluations of the publications on sustainability that include the terms development, economics, ecology, ecological, energy, limits, thermodynamic, and steady state, separately, in July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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Fig. 1. Comparison for year-based evaluations of the publications on sustainability that include separately the terms development, economics, ecology, ecological, energy, limits, thermodynamic, and steady state within their topics. The publications contained the term sustainability in the title. The search was performed through web of science, between the years 1980 and 2014. There were 16,710 publications with the term sustainability in the title. Total numbers of publications that additionally contain the specified distinct terms in their topics are provided at the end of the data name in the figure. NOP stands for number of publications.

their topics. However, this time the publications that contained the sustainability term in the title was searched for between the years 1980 and 2014. There were 16,710 publications with the term sustainability in the title. About 30% of those were including development; only 3%, economics; 3%, ecology, and 10%, ecological; 14%, energy; 6%, limits; less than 1%, thermodynamic, and again less than 1%, steady state in their topic. Day and co-workers published a study titled “sustainability and place: how emerging mega-trends of the 21st century will affect humans and nature at the landscape level.”76 This work was also cited in the editorial by Hall and Day.75 In their paper, Day and co-workers suggested that the areas with higher materials and energy flows from the environment would be more sustainable since these flows sup- port the economy and are not distributed evenly on the land. This was told to be the fundamental conclusion of biophysical economics. The neoclassical and biophysical were also compared. False notion of unlimited capital assumption in the was told to lead to absolute substitutability idea of human capital, manmade capital, and for one another. Economic growth as the primary objective of growth was told to end up in globalization. It was high- lighted that the maintenance of energy, materials, and ecosystem services’ flows that are originated from the natural world is threatened not just by the decrease in the fossil energy supply but by the impacts of the human and the changing climate on the ecosystem. It was indicated that both biophysical and ecological economics July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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recognize ‘’83 as the outcome of outgrowing of marginal costs compared to the marginal benefits as a result of growth. Leaded gasoline, nega- tive energy resources, greenhouse gases and global warming are examples of such costs to the society. While neoclassical economics is externalizing the cost of pollution, policymaking is currently the major address to reduce adverse human interventions on the ecosystem.

3.4. Example 4 — Dynamic model of society deciders and fairness in nations As a different application of biophysical perspective, Flomenbom recently pre- sented a dynamic society-deciders model to elucidate the conditions of stability in anation.77 Stability or the collapse of a nation, which is comprised of two groups (deciders, who occupy high rank positions in general, and the society), was found to depend on just two coefficients that are related to sociological or economic indica- tors. Namely, the interrelation between the society and deciders groups of a nation leads to stabilization or collapse and either of the outcomes is suggested to rely on two respective coefficients of the sociologic and economic indicators. Fairness was defined as a new socio-. Fairness measures the stability in a soci- ety and its responses to change are determined accordingly. This approach is offered as a means to solve the crises that are unresponsive to or as a permanent approach compared to the increased governmental spending or cuts with regulations. It was suggested that long-lasting crises could be resolved in free and democratic nations by increasing fairness, for example, by applying measures that break monopolies or new taxes on the deciders group that constitute only about 1% of the nation, to shift wealth towards the society. It was also mentioned in the beginning of the Flomen- bom’s paper that knowledge in biology, chemistry, and physics can help to build “models from socio-econo-biophysics together with concepts, ideas and approaches from sociology and economics (that) should help characterizing and explaining the behaviors of nations and should help creating fair nations.” The knowledge in the listed fields of science would not necessarily be serving to generate fair nations. Things can work the other way around as well but the work of Flomenbom sug- gests that the crises would persist, become chronic, and even may lead to extinction (of the nation) in that case. The Lotka–Volterra approach was used for the model. The Lotka–Volterra model in ecology describes the dynamics among the popula- tions of prey and predators. According to the adapted model by Flomenbom, the predators are deciders and they risk extinction if they do not show sensitivity to the society, which are the prey. There is also interaction among the deciders and society groups and the dynamics of society has an explicit random noise. In the model, the society is characterized with temperature and its minimization indicates stability. Further, it is the sum of the total opinion of deciders (with units in temperature) and the Brownian motion that represent all influential occurrences in the nations, wherein the noise is included in the model. The tunable external coefficients are the July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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noise strength and the temperature of stability, and fairness is calculated as a ratio. Fairness was calculated for several nations including USA, Egypt, India, Libya and Tunisia. It was found that India is the best among the 15 most populated nations and USA loses its rank among Western democracies. The other three nations that are mentioned here were found to have improved their rankings. This study is an interesting one in the sense that it is formulizing a concept that almost everyone has at least a gut feeling of its soundness. As mentioned in the very beginning of this work, biophysical economics is practically becoming a much broader field with approaches like this one. It brings together the views and decisions of citizens and flow of people among workplaces and locations. Therefore, this work well highlights the expansion of the applications in biophysical economics.

3.5. Example 5 — “Grammar” for evaluating the performance of power-supply systems Diaz-Maurin and Giampietro reported a distinctive approach in characterization and comparison of the power supply systems.78 Differently, their approach was based on a hierarchical understanding of the energy systems by characterizing their parts and the whole. It was depicted as a ‘grammar’ for its being “a set of expected relations over semantic characteristics of analyzed energy systems — that can be formalize “a la carte” by tailoring the chosen protocols on specific questions and sit- uations.” The approach was not offering a mathematical protocol. Applying math- ematical formalism without the semantics of an analysis of energy systems was suggested to bear the risk of reducing the quality of analysis. Semantics of analysis was inclusion of informed discussion about the pre-analytical choices. An informed discussion on sustainability and energy systems seemed not to essentially require a mathematical formalism. It was offered that the pre-analytical choices of the ana- lysts should be visible so that the steps that lead to a certain result can be tracked back through the decisive steps. Diaz-Maurin and Giampietro used such an analy- sis scheme for comparing nuclear energy and fossil fuels. Semantic categories were different forms of energies that were used in the processes. The inputs and outputs referring to the semantic categories were expressed in their own units. Semantic cat- egories were linked to the formal categories, which were the relative quantifications of those energies. The linking was achieved according to a set of production rules, the technical coefficients determining “transformities” among various energy flows. The pre-analytic decisions were about the set of structural and functional elements as the modular elements, in addition to the semantic and formal categories’ set. The latter set comprised of sources, energy carriers, and produc- tion factors. They were used to express the characteristics of performance, fund and flow elements that are used to describe the network of transformations. When the systemic ambiguity was tamed, a double assessment referring to the internal and external constraints were made. Internal constraints were the production factors’ needs such as labor, power capacity, and internal consumption of energy carriers to July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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make energy carriers. External constraints were the consumption of primary energy sources, and the generation of waste and pollution. In short, the analysis was “(i) a hierarchical understanding of the functioning of energy systems through the char- acterization of their parts and the whole; (ii) a combination of semantic and formal categories to describe the network of energy transformations; (iii) looking at eter- nal and internal constraints using different indicators ... to generate an integrated assessment of the overall performance of energy systems by adding more relevant information in an integrated way”. As a result, compared to the fossil fuels, nuclear energy was found to necessitate about two times more power capacity and 5–8 times more labor for the electricity production, based on the internal constraints. Besides, the uncertainty and variation levels of the nuclear energy were higher. Considering external constraints revealed similar outcomes. As weaknesses of the approach, it was indicated that the viability of the systems cannot be measured by this means, the payback times cannot be evaluated, and varied conditions would require differ- ent assessments. This work reveals the importance of proper systematic handling of cases rather than applying mere mathematics or physical formulations in a sys- tematic manner. In this sense, this example in the field of biophysical economics is valid through any decision-making and assessment process.

3.6. Example 6 — A biophysical approach of global energy modeling: GEMBA Dale, Krumdieck, and Bodger wrote two complementary papers on global energy modeling.79,80 The first paper was discussing the previous energy-economy models of the biophysical economics together with a historical introductory review. The second paper was presenting the GEMBA model as a new energy model for bio- physical economics, wherein GEMBA stands for the “global energy modeling using a biophysical approach.”84 Its novelty was “a lifetime evolving function for the dynamics of the energy return on investment EROI,” which was incorporated into the GEMBA model. It was proposed by the authors that the growth of renewable energy sector could influence investment in distinct fields of economy and stymie economic growth. In their first paper,79 the authors were defining the biophysical economics as a discipline that uses the laws of the physical sciences as the concepts that constrain the choices available to an economic agent. By this means, biophysical economics utilizes the basic thermodynamic and ecologic principles to analyze the economic process. Authors were also making the parallelization between the economic activity and energy consumption as the strong correlations in both the macroeconomic measures and the microeconomic indicators. The solid association of exergy with the economic growth in the 20th century, until the last decade, was additionally mentioned. Among those that were not mentioned in the upper sections of this review, we can remark the followings. Dale and co-workers mentioned that Cook was analyzing the economic processes in terms of the interacting perspectives of social, July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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physical, and that involve in the economic decision-making. The analysis by each perspective could lead to distinct decisions sourced by their own values and weights on the possible outcomes. Energy analysis would be the basis of physical perspective, wherein the use of fossil fuels with decreasing quality forces us to choose between believing in an omnipotent technological advancement, which would save us from the energy run-out, and adjusting lifestyles according to the present fact, as the second choice. The two options of the present condition that Dale and co-workers mentioned are revealing the actual demand in the sense that one is not a real option or a possible solution but to believe. At around the same times like Cook, Odum was working on similar concepts. What he offered was an energy theory of value that was suggesting the low entropy energy as the ultimate source of energy. Georgescu-Roegen did not agree that all economic value was dependent on such energy flows because the eventual end of the economic processes is not physical, it is the “life satisfaction enjoyed by the members of the society.” From here, based on these further concepts that Dale and co-workers emphasized in addition to those that were not mentioned here, one could say that the semiotic analysis of economic concepts85 and processes would be of great value but unfortunately that would be the topic of another study. Still, we can adopt here the delicate term that was founded by Lotka, ‘exosomatic evolution’, to describe the economic processes as processes that involve ‘exosomatic semiosis’. In the following parts of their paper, Dale and co-workers mentioned about the unification of the following concepts by Hall and co-workers. These are the surplus energy notion from Cottrell, the resource quality issue from Ayres, and the ‘net energy yield’ and EROI. The ratio of net energy yield to the energy needed to obtain this yield is the net energy ratio (NER) or EROI and is a measure of the accessibility (or usefulness) of the energy produced,86 which was investigated for its influence on the economy upon changes. The authors also mentioned the critics of Gever87 about the impossibility or unpracticality of using the standard theories on predicting the consequences of reduced oil production because its production is supposed to be determined only by the economic condition itself. As mentioned, the authors wrote two papers to introduce the GEMBA model as a new energy model for biophysical economics. The other models were mentioned prior to describing their own model. The earlier models were termed as the partial equilibrium energy-economy models. They are partial because “ are balanced in one sector of the economy.” The examples of such models are MESSAGE, WEM, and MARKAL. MESSAGE stands for the model for energy supply strategy alternatives and their general environmental impact, WEM stands for the world energy model, and MARKAL stands for the MARKet ALlocation.84 These models determine a reference energy system (RES), which are comprised of energy chains that link the primary energy sources to end-users through energy carriers. GEMBA, the biophysical model was implemented in VenSim, a system dynam- ics software package. Its novelty, as stated, was “a lifetime evolving function for July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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the dynamics of the energy return on investment (EROI),” which was incorpo- rated into the GEMBA model. The model was suggesting that the “availability of energy resources is not the limiting factor for energy production. Instead the limit- ing factor seems to be allocating resources to building the capital to extract energy from renewable resources. Within the GEMBA model, such allocation of industrial output into the energy sector stymies the reinvestment of capital toward growing the rest of the economy which curtails growth in energy demand. ... Supplying a greater amount of industrial output towards increasing energy supply entails a decline in the size of the rest of the economy and a subsequent decline in energy demand.”80 Therefore, it was proposed by the authors that the growth of renewable energy sector could influence investment in distinct fields of economy and stymie economic growth. The GEMBA model was also used to investigate the EROI before and after the decline of the resources’ quality. Before the decline, EROI increases by technolog- ical learning, market growth, and capital investment. It then reaches a peak and declines as the most accessible resources are depleted and scarcity is initiated. EROI can be required to be diminished due to the environmental concerns as well. Higher fraction of output is fed back to the energy production when the EROI of resources decline. Net energy that fuels the rest of the economy thus decreases and this can obstruct the economic growth. However, renewable sources seem compulsory if the nonrenewable ones will be depleted even if the renewable sources will hamper eco- nomic growth due to these reasons. It was written in the abstract of Dale’s thesis that “modern society currently uses approximately 500 exajoules (EJ = 1018 J) of total primary energy supply (TPES) each year. This energy consumption has been increasing at roughly 2% per year for the past 200 years. TPES is currently domi- nated by three nonrenewable energy sources: coal, oil and gas which, together with energy from nuclear fission of uranium, make up around 85% of the energy market. Consumption of finite resources at a continuously growing rate is not sustainable in the long-term.”84 Here, we might conclude that transition to the renewable sources is required maybe not for a sustainable growth but definitely for a sustainable world, which would still be habitable by humans.

4. Conclusion

The early economists were aware of the actual determinants in our societies but economy evolved into a more human centered understanding as civilization devel- oped with man-made artefacts of production, , and communication sys- tems. Strict relation of economy with changing activities of man drew economy away from its nature-dependent appearance. Capability of shaping our own environment could have led us to the misconception of manipulating the economy in a similar manner but actually such operations are always limited with the point that there has to be something to be shaped initially for one to be able to mold it. In the meantime, increased scientific understanding on almost everything, including thermodynamics, July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001

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probably stimulated the need to realize the fact that our economies are bound to energy no matter what percent of the economy is constituted by its extraction from nature. It is generally only a minor percent since nature is not asking for any price for its goods that are becoming deprived mainly due to our consumption rates. The seeming condition to have the nature’s resources is to have the lands and technol- ogy, wherein the economic measures start involving; and obviously, this condition is not depending on nature itself. The biophysical economics perspective was initiated by telling us that degradation of resources has to be accounted for in the economic theories since the means and expenses to extract the resources as resources become more and more scarce. The same fact also affects the struggle of having lands. There were of course additional ecological, environmental, humanistic aspects; our respon- sibilities to the other species in nature and to our own species, if we would like to continue populating this world. Namely, there are inherently ethical concerns that will be emerging as solid distresses and probably disasters to our heirs if they are not concerned by us now. These and the other factors mentioned throughout this work like the criticisms towards the classical approaches and economic crises led to the emanation of the biophysical economics that is currently proving itself with applicability to distinct concepts of economy and society. Eventually, only a mere insight was attempted to be provided here by some particular examples after a his- torical summary of the field. The number of examples kept small since the area is broad but it is believed that upcoming studies would well be eliminating the absence of valuable works that were missed here. We would not say that the present work is a comprehensive review of the full range of topics that are of concern. Such efforts could mostly achieve their aims in book-length works. Though regional studies and examples are of importance, such works, for instance, applications of biophysical approaches or analysis by biophysical perspectives in Turkey87–104 and considering the role of involvement of information are left as future works.105,106

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