Moral Foundations of Natural Resource Economics for the Ecozoic

MORAL FOUNDATIONS OF NATURAL RESOURCE ECONOMICS FOR THE ECOZOIC

A Thesis submitted to the Faculty of The School of Continuing Studies and of The Graduate School of Arts and Sciences in partial fulfillment of the requirements for the degree of Doctor of Liberal Studies

Daniel Spethmann, PhD

Georgetown University Washington, D.C.

April 22, 2018

MORAL FOUNDATIONS OF NATURAL RESOURCE ECONOMICS FOR THE ECOZOIC

Daniel Spethmann, Ph.D.

DLS Chair: Frank Ambrosio, Ph.D.

ABSTRACT

This thesis is about values - incommensurable value systems that are associated with two contrasting world views. Fundamental to the current dominant worldview is its core premise that human beings are the apex of creation, and that neo-Darwinian competition will inevitably stratify humanity, sorting out winners and losers while producing an ever-wealthier society. Neoclassical economics is modeled against this backdrop. To this mainstream worldview, a Technozoic paradigm, this thesis will juxtapose an Ecozoic worldview.

The Ecozoic value system is rooted in the belief that human beings are mere members of the Earth community, a community of interdependent parts - a value system firmly grounded in moral considerations, with respect for all of life. The point of juxtaposing the two is to demonstrate that the dominant neoclassical worldview has outlived its usefulness and now on a collision course with reality - the reality of eco- and social-system interconnectedness and planetary limits. Natural resource economics, as it currently exists, urgently requires a paradigm shift in order to transition from contributing to the current planetary ecosystem crises, towards providing solutions and alternatives. This evolution of economics will require reincorporating historical sensibilities and building on proven scientific reality. If humanity is to truly prosper in both the near and distant future, we must chart a new course, adopting a truly life-affirming value system and undertaking this new leap in economic evolution - now.

Table of Contents

ABSTRACT ...... i List of Tables ...... v List of Figures...... v Introduction ...... 1 Foundational Claims ...... 2 1st Premise ...... 6 2nd Premise ...... 11 3rd Premise ...... 14 4th Premise ...... 15 Roadmap – thesis framework ...... 16 Chapter 1.The Anthropocene - Technozoic versus Ecozoic Values ...... 18 Understanding the Anthropocene ...... 18 The first thesis premise ...... 19 The second thesis premise ...... 20 Technozoic Worldview – Neoclassical Economic Value System...... 20 Neoclassical Natural Resource Economics ...... 22 Market Fundamentalism ...... 24 Reduction of Economics to Finance ...... 26 Extirpation of Moral Consideration in Corporate Finance ...... 26 Neoclassical Underpinnings - Physics Envy ...... 27 Consequences of Technozoic Worldview ...... 31 An alternative to the Technozoic Epoch - an Ecozoic Epoch ...... 32 Thomas Berry’s Challenge ...... 34 Chapter 2. Environmental & Natural Resources Economics ...... 36 Natural Resource Economics – Neoclassical Framework ...... 37 Normative - Methodological Foundations and Public Policy Dimensions ...... 38 Ecological Economics - Contemporary Variant of NRE ...... 41 Earth Systems & Applied NRE - Current Technozoic / Anthropocentric Outcomes ... 42

Example - Land ...... 42 Example - Water ...... 43 Example – Atmosphere ...... 45 Example - Energy ...... 47 Chapter 3. Natural Resource Economics – Raison D'être...... 49 Natural Resource Economics - foundational proposition critique ...... 50 Desirability of Outcomes ...... 50 Identifying the Nature and Severity of Environmental Problems ...... 54 Earth Stewardship - Natural Resource Economics, Science, and the State ...... 57 Salient Overarching Natural Resource Economics Principles ...... 58 The Earth Estate – Natural Resources in the Context of Markets ...... 60 Role of the State -Earth Estate Stewardship ...... 61 Role of Science – Earth Estate Stewardship...... 63 Summary of Salient Overarching NRE Principles and Assumptions ...... 63 Chapter 4 – Natural Resource Economics Methodology in Action ...... 64 Tietenberg’s overarching NRE assertion ...... 64 NRE Response to Market Failures – Externalities & Public Goods ...... 65 First Example: NRE – Externalities, Assumptions, and Solutions ...... 65 Second Example: NRE – Protecting Public Benefits, Methods and Assumptions ...... 68 Discount Rate Selection ...... 74 Second Example: Background - Role of the State, 1972 Clean Water Act (CWA) .... 75 Second Example: NRE BCA – Chesapeake Bay Application ...... 80 CWA Two Step Approach – Important Variance in Results ...... 82 Second Example – Virginia Applied BCA ...... 84 Opequon Creek Watershed – TMDL BCA ...... 86 NRE – Evaluation Limitations ...... 87 Third Example – Land Commodification ...... 94 Green Revolution – Brief History ...... 94 GR Objectives – Claims ...... 95

iii

NRE – Evaluation Limitations ...... 99 Effective vs Efficient (Extractive) ...... 106 Chapter 5 – Moral Foundation of Natural Resource Economics for the Ecozoic ...... 107 Crossroads ...... 107 Rival Value Systems – Incommensurable Core Principles ...... 108 Contradictory Principle 1) - Anthropocentrism versus Ecocentrism ...... 108 Contradictory Principle 3) - Positive versus Normative...... 113 Natural Resource Economics - Ethical System ...... 114 NRE Utilitarianism...... 115 NRE operationalizes utilitarianism ...... 116 Factors, Foundations, Principals, and Values ...... 117 Deontological and Virtue Ethics – factors, foundations, principles, values ...... 119 Moral Factors and the Deontological Ethical Foundation ...... 119 Moral Factors and the Virtue Ethical Foundation ...... 124 Aligning Virtue and Deontological Ethical Systems...... 125 Virtue and Deontological Foundation Guidelines - Rules ...... 126 Ethical Foundations - Natural Resource Economics, Science, and the State ...... 130 Public and Private Goods ...... 132 Pure Private Goods ...... 132 Public Goods - Club Goods ...... 136 Public Goods – Common Pool Resources ...... 137 Pure Public Goods ...... 138 Chapter 6 – Ecozoic NRE Moral Foundations Applied to Examples ...... 140 First Example – CWA Chesapeake Bay TMDL (Public Goods Market Failure) ...... 141 CWA Chesapeake Bay TMDL: Opequon Watershed Benefit-Cost Analysis ...... 143 NRE Consequences – with and without moral factors ...... 149 Second Example – Soils (Pure Private Goods Externality Market Failure)...... 150 BCA – Assumptions ...... 151 Obligation ...... 157

The Claim - Moral Obligation ...... 157 Jonas – The Imperative of Responsibility ...... 161 References ...... 163

List of Tables

Table 1 - Utilitarian Ethical Foundation, Factors, Principles, Values ...... 117

Table 2 - Ethical foundation, principles, values, objectives, Economic mechanism ...... 118

Table 3 - Deontological Ethical Foundation, Factors, Principles, Values ...... 120

Table 4 - Deontological ethical foundation, principles, values, objectives - mechanism ..... 121

Table 5 - Virtue Ethics Foundation, Factors, Principles, Values ...... 124

Table 6 - Virtue ethics foundation, principles, values, objectives, Economic mechanisms . 125

Table 7 - Normative Factors, and related Ethical Foundations, Principles, and Values ...... 129

Table 8 - Variants of Public and Private Goods ...... 132

Table 9 - Deontological Ethical Foundation, Factors, Principles, Values ...... 133

Table 10 - Deontological ethical foundation, principles, values, objectives - mechanism .. 134

Table 11 - Moral Factors used to examine Opequon BCA results ...... 143

Table 12 - Moral Factors used to examine Industrial Agriculture NRE BCA results ...... 151

List of Figures

Figure 1 - Chesapeake Bay Watershed ...... 80

Figure 2 - Chesapeake Bay Water Quality – 2005 ...... 81

Figure 3 - Opequon Creek Watershed used for Benefit Cost Analysis ...... 85

Introduction

“There is yet no ethic dealing with man’s relation to land and to the animals and plants which grow upon it. The land-relation is still strictly economic, entailing privileges but not obligations. The extension of ethics to this element in human environment is…, an evolutionary possibility and an ecological necessity.” Aldo Leopold – A Sand County Almanac, 1949

“Our challenge is to create a new language, even a new sense of what it is to be human. It is to transcend not only national limitations, but even our species isolation, to enter into the larger community of living species. This brings about a completely new sense of reality and value.” Thomas Berry - “The Ecological Age,” in The Dream of the Earth, 1988

The globally dominant worldview of Western secular culture is leading humanity and the rest of life into planetary crisis. The living world is dying before our eyes, and one of the principal agents of its decline is the current economic system. In particular, in the field of natural resource economics, assumptions about how the human/earth relationship should work leads to and legitimates the unraveling of all of life’s prospects. The goal of this thesis is to examine how we might re-ground this discipline in an ethic based on an alternative worldview that is consistent with respect for all forms of life and is therefore capable of enabling a flourishing Earth. This ethic and its resulting economic expression must be based on and informed by, among other considerations, current understandings of the biogeochemical physical reality of Earth, and on the laws of science that govern the universe that are exhibited therein. This means that the goal of this thesis is to argue for

Moral Foundations of Natural Resource Economics for the Ecozoic.

This necessary rethinking of our relationship with life and the world has been sought by forward thinking individuals including Thomas Berry, Albert Schweitzer, Aldo

Leopold, Rachel Carson, Alfred North Whitehead, Baird Callicott, Peter Brown, Brian

Swimme, Tim Jackson, Evelyn Tucker and John Grim, Pope Francis, along with many others. Indeed, Native Americans and First Nations have historically held a worldview that places them at one with nature. Their culture perceives a balanced relationship between man and the environment. Their example, together with postmodern forward-looking thinkers, can provide guidance in the development of an ethic required for a new and re- grounded natural resource economics.

While many individuals over the past few centuries have been aware of the effects our way of life is having on the Earth community, as a society we have not been accounting for how our cumulative activities have impacted the larger community of life and those structures and systems that support it. The social and economic principles upon which we conduct our lives were largely developed in the “empty world” of the enlightenment (H. E.

Daly 1996, 7). This is a period driven by the mantra of ‘progress’ and the domination of nature. “Empty world” is a means of characterizing its relatively small human population, compared to the “full world” in which we now live, with the human population now overshooting the planet’s carrying capacity (Population Connection 2016). We now need to question and update our embedded economic assumptions, so they can be consistent with current understandings of planetary boundaries. This means developing principles for the continued development of the human story that accept our moral obligations to the rest of life, with which we share both our heritage and our destiny.

Foundational Claims

This introduction makes four foundational claims upon which the thesis is based. The first: mankind is at an historical crossroads, transitioning to a new geologic age (generally termed the Anthropocene) (Schwagerl 2014, vii), in which all planetary systems are being

2 significantly influenced by human activity. The second, that human society’s two currently competing worldviews are representative of rival value systems with significantly disparate undergirding principles. These value systems must be reconciled by adopting foundational principles that will provide a flourishing future for all life, and rejecting those that do not.

The third foundational claim is that NRE (collectively Environmental & Natural

Resource Economics) is unavoidably moral – it contains ethical prescriptions about how and when we should act and is therefore, despite protests of its proponents, an ethical system through and through. The fourth and final premise is that we have an ethical obligation to ourselves, and to future life, both human and non-human, to make a conscious decision regarding the choice of the worldview which will underpin natural resource economics assumptions consistent with an evolutionary worldview. The result of embracing these four points will be to focus social responsibility on first honing and then and living by a principled Ecozoic human/Earth relationship. That is the point of this work.

Natural Resource Economics (NRE), is closely akin, oftentimes interchangeably referred to as Environmental Economics. By way of distinction, Environmental Economics is primarily concerned with human induced environmental damages - Resource Economics is mainly concerned with extraction rate and use of ‘natural resources’, renewable and non-renewable (Hussen 2013, 2).

These are combined under the rubric of NRE in this thesis. This dissertation consists of an analysis of NRE methodology presented in Tom Tietenberg’s leading standard textbook, Environmental & Natural Resources Economics (Tietenberg 2015). The analysis will focus on specific neoclassical assumptions upon which the texts are based and will question and contrast these assumptions within the context of both the Technozoic and the Ecozoic worldviews. The Technozoic worldview is rooted in the belief that life has

3 evolved (or been created) principally for the exclusive benefit of mankind, and therefore is an anthropocentric conception (Berry 1999, 201) (Swimme 2011, 100-102).

The Ecozoic worldview subscribes to Leopold’s notion that man is a “mere member” of the community of life, positing obligations and responsibilities for the consequences of our actions to that community (Leopold, A Sand County Almanac: and sketches here and there 1949, 204) (Jonas, The Imperative of Responsibility 1984, 25-27).

This worldview is rooted in the hard sciences, built on current understanding, including physics and biogeochemical sciences - and their foundational interrelations (Capra 2015,

130). The Ecozoic worldview prioritizes the paramount goal of a flourishing future for life; the Technozoic worldview does not effectively embody this consideration (Heffern 2011)

(Williston 2015, vii-ix).

At the heart of this issue is the need to unpack embedded, unexamined economic assumptions, and to think them through in the context of current scientific biogeochemical research, and the rapidly changing circumstances of the Anthropocene. These economic assumptions were established and codified centuries before the advances in the Earth sciences that today form the basis of the modern current understanding of nature and the myriad integral relationships revealed by the evolutionary paradigm (Dicker 2013,

[Descartes]) (A. Smith 1801). Evolution itself has enjoyed both ratification and expansion in the second half of the 20th century and continues to be refined. It only requires thoughtfulness, a more fact-based perspective, to consider the impacts of these old, embedded assumptions, their consequences, and the potential alternatives (Arendt 1978,

56) (Jevons 1871) (Menger 1981) (Walras 1871).

The assumptions used in this thesis to illustrate this point are of course not exhaustive, rather they have been chosen to highlight the many potentially impactful unexamined ideas which shape and mediate current scientific understanding of the world around us. Examining neoclassical economics methodology in order to modify, and if necessary abandon misguided assumptions places us in a better position to consider alternatives and understand the consequences of our decisions.

Natural Resource Economics (NRE) is an extension of Western secular economics centered on instrumental values, values that are central to the Technozoic Worldview. The shortcomings of neoclassical economics therefore carry over into NRE. For example, the embedded assumption that all values are reducible to price used in both precludes consideration of all the interrelations on which life (and indeed planetary survival) depends.

We shall see in chapter three that the virtuous legislative effort to save the Chesapeake Bay from pollution codified over 45 years ago has been unsuccessful - largely due to NRE methods used to justify the effort in terms of monetary costs and market efficiency. The upstream biogeochemical effects on downstream life’s critical need for dissolved oxygen has not been included in the economic cost.

Ultimately the purpose of this thesis is to demonstrate the need for academia to rethink and re-ground the current Natural Resources Economics (NRE) curriculum in order to recognize the need for a NRE consistent with our current scientific, biogeochemical understanding of the planet, as well as the four foundational premises just proposed.

Following the four fundamental premises posited that are explored in more detail below, a roadmap will foreshadow the rest of the argument in the following six chapters.

1st Premise - Mankind is at an historical crossroads, transitioning to a new geologic age which will be even more significantly influenced by humans.

The geological timescale describes the last 550 million years in three eras;

Paleozoic (ancient times), Mesozoic (middle times), and the last 65 million years as

Cenozoic (recent times). These eras are divided into periods, and then epochs. The

Holocene epoch represents the last ~10,000 years, which in more recent times is being characterized as the Anthropocene - the age of man (The Encyclopedia of Earth 2017).

Earth is currently entering a new geologic era; the Cenozoic Era was terminated by the

Western-style industrialized human community in the late 19th, 20th, and early 21st century.

The Anthropocene defines Earth's most recent geologic time period as being human- influenced, or anthropogenic, based on overwhelming global evidence that atmospheric, geologic, hydrologic, biospheric and other earth system processes are now altered by humans. (The Encyclopedia of Earth 2017)(accessed 8/28/2017)

Geologists have yet to formally accept this assertion. Professor Jan Zalasiewicz, geologist at the University of Leicester, says, “Our stratigraphic colleagues are very protective of the geological time scale. They see it very rightly as the backbone of geology and they do not amend it lightly. But I think we can prepare a pretty good case.” His colleague Chris Rapley, a climate scientist at University College, London, adds that “It is highly appropriate that geologists should pay formal attention to a change in the signal within sedimentary rock layers that will be clearly apparent to future generations of geologists for as long as they exist. The ‘great acceleration’ constitutes a strong, detectable and incontrovertible signal” (Carrington 2016) (International Commission on Stratigraphy

2017). Unlike past transitions from one geological era to the next, mankind has had a direct

6 impact in this one, and has great potential to influence its characteristics, and even survivability (P. G. Brown 2009) (Carson 1962) (Francis 2015) (Whitehead 1938).

In fact, we will choose to transition from the Holocene epoch to either the “Ecozoic” or “Technozoic” epoch, determined by human society’s dominant worldview. Each is directly linked to a specific value system, and the choice made will have a direct bearing on the outcome of the human, and indeed, all life’s story (Berry 1991) (Swimme 2011).To refine the two concepts a bit, the core conception of the Technozoic is based on the presumption that humanity exists above or outside of the community of nature, conversely, the Ecozoic conception presumes man is not only a member of this community, but is dependent on it (Leopold, A Sand County Almanac: and sketches here and there 1949, 204)

(Berry 1999, 55) (P. G. Brown 2009, 86).

Thomas Berry’s conception of the Ecozoic epoch versus Technozoic epoch is the key premise upon which this thesis is built (Berry, The Ecozoic Era 1991). Humanity is at a crossroads and this important distinction needs to be drawn; the choice of a Technozoic epoch implies that humanity views itself separate and above natural systems, with the ability to engineer and produce increasing output, or any needed substitutes, to meet the demands of increasing population (compounded by increasing appetite per capita)

(Tietenberg 2015, 532). It denies the reality of a finite world of natural resource - where all the natural, raw materials that support life (like water and soil) come from - and sinks, the capacity of our soils or oceans, etc. to assimilate and absorb waste. Value in this worldview is always defined anthropocentrically. However, science (and common observance) makes it clear that the physical reality of finite planetary resources, when coupled with an unbridled appetite for increased consumption by an ever-increasing

7 population, is putting humanity on a collision course with a sobering new world (A. D.

Barnosky 2016, 9-27) (Schwagerl 2014, 1-10) (Williston 2015, 1-12). As thought leaders across a spectrum of vocations have broadcast; including Herman Daly, Peter Brown, Pope

Francis, Paul Crutzen, and many others - this will be a planet where human society will have to deal with the simple inability of our remaining resources and sinks to meet the necessities for human survival and will include extremely negative consequences for all lifeforms. This is the path mankind is on and is the default condition that will continue unabated if no conscious choice or action is taken to avert it. The inexorable destruction of life will continue until external forces - such as irreversible climate change and the associated interruption of Earth systems - bring this Technozoic epoch to its conclusion.

At that point, human intervention will no longer be a viable option (Stearn 2006) (Ehlers

2006).

It will be demonstrated in detail that by staying on the current course, humanity runs significant risk of “structural changes” in planetary life support systems. Positive feedback loops currently in play will push planetary equilibrium past tipping points, creating circumstances that are potentially inconsistent with, as Peter Brown and Geoff

Garver state in Right Relationship, “a household conducive to life’s flourishing.” The alternate option of an Ecozoic epoch will require more than a default mode; humanity’s demonstrated values will have to change radically from those expressed in our current economic and political behaviors. A major impediment to such change is that the dominant institutions of western secular economics, nation-states and corporations, do not embody the ethical dimension necessary to anchor and enable an Ecozoic worldview (Ver Eecke

2008, 247-255).

This thesis will develop a conception of the moral foundation and ethical dimension for NRE, revisiting the classical notion of economics as a moral science. The choice of a different foundational worldview will put to the test whether humanity is capable of organizing itself around principles that do not place humans at the pinnacle of the natural world and assume all else exists merely to serve us. Based on the posited moral foundation, principles can be developed and implemented that recognize ourselves as members, not masters, of the nature community. A next generation of NRE consistent with scientific reality will have to be constructed in order for life’s commonwealth to thrive within our planetary limits (P. G. Brown 2008, 187).

The next generation of natural resources economics will require accounting for economic throughput in a closed material system - in contrast with the current assumptions of free and unlimited resources and waste absorption capacities. Microeconomic analytics are one thing; but the macroeconomic concepts of entropy and dynamic systems analytics demonstrate more shortcomings in the current economic paradigm. They have proven the dynamic interrelations within the biogeochemical aspects of the natural systems on which life depends. Human beings rely on these natural systems for life support; however, this will continue only if we start to practice consideration and respect for the myriad functions natural systems provide for all life. As Peter Brown and Fritjof Capra have pointed out, the new economics will require a view of the planet Earth as a commons for everything dependent on it, recognizing and addressing the interrelatedness of all life and life support systems (P. G. Brown 2008, 69-76) (Capra 2015, 48).

Options available at this time are either to steer a course toward an Ecozoic Epoch, a period characterized by agriculture in cooperation with nature, sustainable forestry,

9 energy sourced without destructive consequences, and respect for all life and the limits of

Earth. Alternately, as already stated, the default option is to stay the current course and enter a Technozoic Epoch, a period characterized by a dominant worldview that humanity can engineer its way out of the planetary resource constraints, which is problematic given that over-reliance on technology and human-centered economics caused the crises we face in the first place. The Ecozoic worldview necessarily incorporates the intrinsic values of nature, the existence values that are an end in themselves, not only a means to an end. In contrast, the Technozoic worldview continues to view nature principally for its instrumental value, value measured in terms of anthropocentric use as a means to an end, supporting consumption without regard for the irreversible destruction of the intrinsic, existence values. This foundational principle precludes explicit consideration for non- human life and future generations’ choices regarding an integrated value system.

To be clear, for this thesis the term “intrinsic value” is used in direct contrast with a narrow interpretation of “instrumental value,” confined to its meaning as having value to human beings. In the context of interrelatedness of all forms of life, there are elements/objects/biology that have instrumental value in the broader sense, beyond the instrumental value to humans. E.g. consider the aphid and ant symbiosis; the ant provides the aphid a home guardian and consumes the aphid’s ‘honeydew’ (mutually instrumental).

The interpretation given here intends to impart a broader view of intrinsic value, not only intrinsic in the philosophical sense (“in itself,” or “for its own sake,” or “as such,” or “in its own right”), but also intrinsic in the sense that the living community has inherent

(intrinsic) value, with non-human instrumental value entwined within the interrelationships of life.

2nd Premise - Competing worldviews represent value systems that are generally conflicting and at times incommensurable. The mainstream technological value system must be replaced, adopting principles geared to provide a flourishing future for life.

A worldview represents a mental model of reality. Worldviews incorporate beliefs, values, and behaviors of individuals and, collectively, of cultures. The term is used here to characterize and distinguish between the Technozoic and Ecozoic worldviews, either leading to a different epoch in the Anthropocene. Each subscribes to a specific value system associated with the natural world. Humanity requires a worldview with a foundation in

Ecozoic core principles, but that of retains recognition of and respect for the technological abilities humans have developed to capture the instrumental values we need. Applied technical power must, however, be bounded in planetary reality, including biogeochemical boundaries and the conservation of energy. These thresholds must be understood in context with the state of Earth systems sciences and guided with humility by the Precautionary

Principle. As set out by the Resilience Center of Stockholm University;

The planetary boundaries concept, first published in 2009, identifies nine global priorities relating to human-induced changes to the environment. The science shows that these nine processes and systems regulate the stability and resilience of the earth system – the interactions of land, ocean, atmosphere and life that together provide conditions upon which our societies depend. 1. Climate change 2. Change in biosphere integrity (biodiversity loss and species extinction) 3. Stratospheric ozone depletion 4. Ocean acidification 5. Biogeochemical flows (phosphorus and nitrogen cycles) 6. Land-system change (for example deforestation) 7. Freshwater use 8. Atmospheric aerosol loading (microscopic particles in the atmosphere that affect climate and living organisms) 9. Introduction of novel entities (e.g. organic pollutants, radioactive materials, nanomaterials, and micro-plastics).

Transgressing a boundary increases the risk that human activities could inadvertently drive the earth system into a much less hospitable state, damaging efforts to reduce poverty and leading to a deterioration of human well-being in many parts of the world, including wealthy countries. In this new analysis, we have improved our quantification of where these risks lie. (Steffen 2015, 736)

Recognizing Technozoic and Ecozoic worldviews as rival value systems requires choosing one or the other, and then acting on that choice. Taking this rational alternative will require a paradigm shift away from the current, mainstream Technozoic worldview.

There are factors within the Technozoic worldview which can be incorporated into an

Ecozoic value system to make this transition easier, such as applying science and technology to benefit of all life. For example, applied biogeochemistry may be used to define planetary thresholds; geospatial systems may be applied to raw data collection for

Earth sciences, digital networking can be used to advance dissemination of information, and NRE analytics can be based on knowledge of planetary thresholds.

An alignment of these two worldviews with adoption of fundamental Ecozoic core values will be required to establish a foundation of values that accepts humanity as members of the overarching natural community of life. Such values will regard mankind’s technological power, mastery of nature if you will, with respect for our limits of knowledge, and these values will incorporate an alignment of restraint with respect for the future flourishing of all life - including consideration of nonhuman agency, ‘standing’ for the lifeforms with whom we share Earth, and planetary respect for the limits by which we are all bound. This effort should match technological ability with an equal measure of maturity, self-restraint, and wisdom, and achieving it will require a “compassionate retreat”.

A revised – though by no means new – view of the relationship between humans and the rest of life and the world. In framing this part of the argument, we are drawing on 12

Aristotle’s distinctions between scientific knowledge (epistȇmȇ), technological know- how (technȇ), and practical wisdom (phronȇsis). (P. G. Brown 2010, 266)

Peter Brown and Jeremy Schmidt, authors of An Ethic of Compassionate Retreat, argue for a ‘revised perspective’ for natural resource management in order to consider how ethical behavior might show recognition of the human impacts that have resulted in the

Anthropocene. They also urge critical re-evaluation of the Western narrative, which privileges human welfare above all and advocates pressing technology limits. In positing an alternative approach, these two authors suggest the practice of “compassionate retreat,” which has two central tenets. First, it requires a modest mindset that recognizes the limits of human knowledge and uncertainty with respect to natural systems; and “The second enumerates humanity’s duties of respect and reciprocity as an increasingly influential and potentially responsible member of Earth’s living communities” (P. G. Brown 2010, 266).

Practicing compassionate retreat dictates the need for a clear concept and acceptance of planetary limits. It would require commitment to a form of NRE that respects limits and therefore would require strong consideration for the consequences associated with exercising human power over resources, both now and in the future. Since such consequences bear on the survival of all life, both now in the future, it also requires a type of technological mastery that is grounded in this ideal: ‘because we can, does not mean we must’.

This thesis therefore will explore the transition from the mainstream Technozoic worldview toward a worldview based on a value system in tune with reality. The resulting worldview will require recognition of the fact that humans are members of a community that includes all of creation, which represents a fundamental shift from the Technozoic worldview. Such a change, however, creates the need to craft a transition from the current 13 default worldview to one based on Ecozoic principles. This paradigm shift is very timely, and as many individuals and organizations today agree, necessary.

3rd Premise - Natural resource economics is unavoidably moral – it contains ethical prescriptions about how and when we should act, and is therefore an ethical system through and through.

Economics instructs our decision processes. Neoclassical economics is bound to the enlightenment period, its birth underpinned by the mantra of continual human and economic progress. The decline of economics as a moral philosophy will be described in order to track the extirpation of moral considerations in modern positivistic economics, as well as to characterize the resultant foundation of the dominant worldview of Western secular capitalism. Further, it can be demonstrated that this current form of mainstream and natural resource economics that underpins capitalism, is without the moral considerations necessary for the survival of complex life. The assumption embedded in the neoclassical economic tools, including NRE, contain implied normative judgment regarding right and wrong. While economists extol the virtue of unbiased analysis, the fact remains that judgements required for assumptions always reflect engrained bias; this is not to say that the bias is right or wrong, merely that it exists. When, for instance, we choose a discount rate for the purpose of a cost/benefit analysis, we have weighted the result in favor of an alternative. This choice reflects a worldview, a mental model of reality, a framework of ideas and attitudes that forms a comprehensive system of beliefs about the world, ourselves, and life. These choices reflect moral judgements, judgements rooted in beliefs that reflect the underlying worldview which is why it is easy to demonstrate that economics is unavoidably moral.

4th Premise - We have an ethical obligation to ourselves, and to future life, to make a conscious decision regarding the choice of the worldview which will dictate natural resource economics assumptions consistent with an evolutionary worldview.

This premise is based on the definition that freedom is an internal attribute of man, that this freedom is integrally tied to responsibility, and that there are obligations as a result; these obligations are consistent with a covenant, or promise, and are non-negotiable (Weil

1981). In contrast, people are afforded liberty externally and in this context the conversation shifts from a moral construct to a legalistic framework. Liberty and freedom are not synonymous. So, for example, defined legal rights derive from liberty. These rights are consistent with contracts versus covenants and provide for freedom of choice. They are negotiable, and as a morally neutral notion they carry no positive obligations. However,

“The notion of obligations takes precedence over that of rights, which is subordinate and relative to it” (Weil 1952, 3). In his seminal work, Hans Jonas supports the notion - given that freedom is an internal attribute of man, there does exist the human obligation to protect the future freedom of mankind, the future existence of mankind (and life more generally), this is a non-negotiable obligation (Jonas 1966). The notion of obligation is developed further building on Phillip Pettit’s definition of Consequentialism.

Consequentialism is the theory that the way to tell whether a particular choice is the right choice for an agent to have made is to look at the relevant consequences of the decision; to look at the relevant effect of the decision on the world. (Pettit 1993, xiii)

This thesis postulates that our obligations extend to the protection of intrinsic, existence values of nature, which will be demonstrated to be a prominent feature of an Ecozoic worldview (Morris 2013, 23). Consequences of choices recommended by current NRE are

15 examined in detail to characterize the contribution these economics to the ecological conditions of the planet.

The ethical systems with which these obligations can be met are characterized with the formulation worked out for premise three: moral foundations for the Ecozoic and the

Technozoic alternative. Ultimately, human kind are obligated to a conscious decision regarding the pathway forward and the associated consequences of that decision. Making no choice is, as stated, a decision to accept the default Technozoic worldview.

Roadmap – thesis framework

Therefore, chapters one and two characterize these two competing worldviews, tracing the genesis of the current mainstream in terms of NRE. A deeper look into embedded assumptions involves examining specific applications of NRE methods and consequences and is the focus of chapters three and four. Chapter five develops a model for moral foundations missing in current NRE with strict utilitarian ethical underpinning.

The final chapter, six, offers an alternative which will change the implicit foundations of

NRE in recognition of the consequences associated with continuing with its current embedded neoclassical pretexts. The first five chapters analyze a standard Natural

Resource Economics texts, Natural Resource Environmental Economics 10th edition by

Tom Tietenberg and Lynn Lewis, which was selected because it is a widely used standard academic Natural Resource Economics (NRE) text.

The discussion format follows a four-step process. The first is to detail key NRE assertions and identify the underlying neoclassical assumptions. The second step is to provide a specific example of an NRE application and tease out its embedded assumptions.

The third step is to dismember the assumption, detailing the underpinning root and

16 associated conflicts and consequences. Step four is to address these consequences and to offer alternative considerations and expected adjustments. In each chapter of three through five, specific NRE methods, assumptions, and consequences will be illustrated with actual examples and applications. In chapter six, an alternative Ecozoic-based approach will be considered, using the same examples to contrast outcomes with neoclassical NRE. This will provide guidance in the exercise of thoughtful consideration of methodological principles at work, and recognition of embedded assumptions. The goal is to underscore the consequences resulting from choices made based on unquestioned embedded assumptions and to contrast them with those based on alternatives. This responsibility, to properly assess the consequences of our discipline’s action, has become vital.

Chapter 1. The Anthropocene - Technozoic versus Ecozoic Values

This chapter distinguishes between the possible Technozoic and Ecozoic epochs that characterize the Anthropocene era. The Anthropocene will be defined by one or the other, and the first premise of this thesis highlights the fact that humanity has arrived at this crossroads, and that either choice will entail discrete value systems and consequences.

The second premise of the thesis will discuss the ways in which the value systems and underlying principles of each of the two pathways forward are rivals. In fact, in most respects, Technozoic and Ecozoic values are antithetical - Anthropocentric versus

Ecocentric value systems.

In view of this, Technozoic worldview values must be elaborated and its principles viewed through the lens of its economics undergirding. A conceptual overview of the

Ecozoic worldview is provided to contrast the Technozoic worldview. The chapter concludes with Thomas Berry’s challenge, a commitment to ontological integrity, which will require a truthful and realistic assessment of the necessity to conduct human society with respect for all life.

Understanding the Anthropocene

The Anthropocene Epoch is widely considered the emerging geologic age. The term Anthropocene was coined by Eugene Stoermer and popularized by Paul Crutzen

(Crutzen 2000, 17-18) in recognition of the impact that the “scale and intensity of human interactions with Earth systems” has had over the course of the last 300 hundred years, increasing dramatically in recent decades (Chin 2013, 1-2).

…founded on the assumption of the inevitable advance of progress - the Anthropocene is a very unwelcome rupture, not so much a regression but a radical breakdown of any idea of advance to a higher stage [of evolution]. The Anthropocene is a new anthropogenic rift

in the natural history of the planet Earth rather than a further development of an anthropocentric biosphere (Hamilton 2015, 72)

Thomas Berry made a distinction between choosing a Technozoic or an Ecozoic

Era as human kind transitions toward this new Anthropocene Epoch (Berry, 1991, xx).

The Great Work now, as we move into the new millennium, is to carry out the transition from a period of human devastation of the Earth to a period when humans would be present to the planet in a mutually beneficial manner. (Berry 1999, 3)

The first thesis premise concludes that mankind is now at this historical crossroads, transitioning to a new geologic age which will be significantly influenced by human action.

Berry is more specific; the transition will be significantly influenced by the dominant human value system. The choice of the Technozoic or Ecozoic pathway is the choice of our ethics and value systems, values which are always embodied within the associated economic ideology. The Technozoic worldview is currently exemplified by Western secular neoclassical economics. This worldview is rooted in an instrumental, extrinsic value system that rests on a deeply held belief that the Earth and all its resources exist exclusively for anthropogenic use. This exclusive use is supported by jurisprudence devoid of consideration for nonhuman agency, planetary thresholds, or any moral considerations, other than those of property. The Ecozoic worldview, in contrast, is grounded in an inclusive value system, with a belief that objects, and life forms are ends in themselves and worthy of respect in their own right. “The difficulty is that with the rise of the modern sciences we began to think of the universe as a collection of objects rather than as a communion of subjects” (Berry 1999, 16). The Ecozoic worldview is historically consistent with Native American (First Nations) worldviews.

Indigenous peoples are caretakers of Mother Earth and realize and respect her gifts of water, air and fire. First Nations peoples’ have a special relationship with the earth and

all living things in it. This relationship is based on a profound spiritual connection to Mother Earth that guided indigenous peoples to practice reverence, humility and reciprocity. It is also based on the subsistence needs and values extending back thousands of years. (Assembly of First Nations 2013)

The second thesis premise posits that these competing worldviews represent incommensurable value systems. It also lays out the rational and non-suicidal goal that should guide society’s choice between them. Human beings must adopt whichever value system is based on principles that will provide a flourishing future for life. This chapter delves into the two worldviews under consideration and their expressed values, as revealed by their associated economic ideologies. This provides insight into their principles and guidance toward the value system and associated worldview that will provide for the possibility of a flourishing future for humanity and other life.

This is the vision of the economy of the commons, wherein resources fundamental to our well-being, like water and land and forests, are commonly held rather than commodified. Properly managed, the commons approach maintains abundance, not scarcity. These contemporary economic alternatives strongly echo the indigenous worldview in which the earth exists not as private property, but as commons, to be tended with respect and reciprocity for the benefit of all. (Kimmerer 2013, 375-376)

Technozoic Worldview – Neoclassical Economic Value System

The conception of Technozoic is based on the presumption that humanity exists above the community of nature. Value is defined anthropocentrically (Tietenberg 2015,

47). The Technozoic worldview represents a view of nature as instrumental, which means it is a belief system that values natural systems exclusively for what they provide for humans. Human beings are considered the apex of nature; for everything else exists to service us. The Technozoic worldview is based on a presupposed cornucopian reality characterized by the belief that humanity can “overcome the limits of the planet through technological inventions” (Wells, 1997, xx). That is, that continued progress and provision

20 of material items for mankind can be met by similarly continued advances in technology.

The current state of the pure Technozoic Worldview was expressed with this remark captured by Elam Altvater in ‘The Capitalocene, or, Geoengineering against Capitalism’s

Planetary Boundaries’ (Moore 2016, 138).

“We have started a new kind of evolution: technology.” Through this development, says the former chief engineer of Google, Ray Kurzweil, the human progress that started with biological evolution could continue “until the whole universe is in our hands”.

Today, the Technozoic epoch represents the default path as the geologic epoch of the Holocene yields to the Anthropocene (Moore 2016, 2-3). The reach of human activity has outstripped natural systems’ recovery capacities. We are currently in a transition of planetary life with the “potential to transform Earth rapidly and irreversibly into a state unknown in human experience” (A. D. Barnosky 2012, 52).

Neoclassical economics and the Technozoic worldview are intimately interrelated, having coevolved with common core principles, especially their shared notions of progress and human dominance. The Technozoic worldview, a philosophical conception grounded in the belief that humanity is at odds with nature, is predicated by Cartesian dualism, the concept that humans are separate from nature. This deep-seated value system is stringently anthropocentric. The value of nature’s services, so-called ‘natural capital’, are defined narrowly as instrumental. Nature’s value is measured in terms of contribution to human production and consumption exclusively. These natural capital values are measured and expressed in pecuniary terms. The very term ‘natural capital’ affirms the notion that humans are the apex of planet Earth and all its life’s’ evolution. Progress, the mantra of

Technozoic and neoclassical thinking, is defined in terms of increasing power over natural systems for current anthropocentric benefit.

The Kurtzweil quote above makes it clear that the presumed raison d'être for mankind is the total domestication and commodification of the planet using human ingenuity, exemplified by technology, science, and analytical reductionism. Thus, with progress we will continue to control and conquer nature.

Neoclassical Natural Resource Economics

In economics the system of measurement is anthropocentric, which simply means human centered. All benefits and costs are valued in term of their effects (broadly defined) on humanity. (Tietenberg 2015, 18)

Neoclassical economics, a term first coined by Thorsten Veblen over 100 years ago, evolved from classical economics to become the dominant economics today. It is the mainstream school of economics in modern Western secular society (Samuelson 2010, 4)

(Weintraub 1993). In ancient Aristotelian thought economics was concerned with house- holding, with how people made a living (the virtuous good life) in the context of their community (Polis). These concepts evolved though the Medieval School (Aquinas), to the

Physiocrats and Mercantilists, then to the Enlightenment and the so-called Modern

Classical School (Adam Smith). Neoclassical economics, however, although rooted in modern classical economics, evolved away from contextual analysis to more abstract deductive analysis (Ricardo 1817) (Mill 1879) (Walras 1871). In contrast with origins concerned with house holding and the community, standard textbooks today define

Economics as "The science of how people make choices for the allocation of scarce resources to satisfy their unlimited desires”. This statement reframes economic issues as being primarily concerned with "the problems of scarcity” (HGI 2017).

Modern Classical economists originally sought to understand principles underpinning production and distribution of wealth - ‘the wealth of nations’ (A. Smith

1801). The production function involves three key input factors: land, labor, and capital.

Land includes all physical materials and natural functions. Labor is the result of human inputs, physical and intellectual. Capital is wealth used in the process of production, wealth defined in material terms, produced by labor, meeting human desire, and fungible, that is, mutually interchangeable. Production is a process whereby human activity creates goods and services. Instrumental value is the quantity of labor, goods, or money people are willing to exchange for production outcomes.

Current economics is generally not concerned with distribution, rather its focus is on production efficiency. Markets are believed to be the optimal arbiter of economic efficiency, and price is the single market metric used to measure efficiency. Alfred

Marshall (1842–1924) is often regarded the father of neoclassicism and credited with introducing the analytical concepts of supply and demand, price-elasticity of demand, marginal utility, and costs of production, with his influential text Principles of Economics

(Marshall 1890). These concepts have been further applied by Leon Walrus (1834-1910) to develop models of dynamic equilibrium of markets for goods and services, with his magnum opus, Elements of Pure Economics (Walras 1871). This work was completed independently of, and contemporaneously with, Stanley Jevons and Carl Mengers. Each of these three developed a theory of general marginal utility presumed to facilitate the market as the optimal economic organizing mechanism - The Theory of Political Economy (Jevons

1871) and Principles of Economics (Menger 1981).

While transitioning from classical economics’ focus on house-holding and community to the frame of scarcity, neoclassical economics retained some engrained and unquestioned classical assumptions. These include the inherent entitlement of a ‘chosen

23 people’ driven by the concept of manifest destiny, an Enlightenment conception with significant implications in the application of property rights. In addition, the concept of

Cartesian dualism continued, the separation of humanity relative to the natural environment. The overarching goal of progress carried over, undergirding the unbounded growth ethos assuming endless resources. Another presumption of Enlightenment period is the assertion that the power of a laissez faire market system will assure full employment of economic resources, consistent with its overarching goal to achieve efficiency.

Market Fundamentalism

Market fundamentalism refers to an ideology that posits that the markets, unfettered by regulation, will provide the optimally efficient allocation of resources for humanity. To those embracing this ideology, the so-called “free market” is believed to be the solution to most social and economic problems. The concept of the ‘market society’ promoted today pursues an expanded, political ideology, whereby all aspects of social life are relegated with a system of self-regulating markets.

Some use the term “neoliberalism,” others “laissez-faire,” and still others just plain “free market ideology.” Following George Soros (1998), we use the label “market fundamentalism” because the term conveys the quasi-religious certainty expressed by contemporary advocates of market self-regulation. Moreover, we want to emphasize the affinity with religious fundamentalisms that rely on revelation or a claim to truth independent of the kind of empirical verification that is expected in the social sciences. (Block 2014, 3) (Soros 1998)

Economists themselves have acknowledged the religious nature of their discipline.

Frank Knight, one of the founders of the influential, market-oriented Chicago school of economics, argued that economics, at a fundamental level, had to be a religion. He held that the basic tenets of this religion must be hidden from all but a few (Knight 1921, 448-

9). More recently, Richard Norgaard characterized this secular religion as Economism, “the 24 reduction of all social relations to market logic”. Although Vladimir Lenin coined the term

Economism circa 1899, Norgaard posits currently that although “economics is cloaked in the rhetoric of science, the modern economy runs on faith” (Norgaard 2015, 1-2). Anthony

Giddens, then Director of the London School of Economics, claimed in 2000, “The new capitalism that is one of the driving forces of globalization to some extent is a mystery.

We don’t fully know how it works” (Hutton 2000, 10). Thus, it is plausible to claim that current “uncritical economic thinking” is faith-based, with markets designated as the revelatory replacement for God. This is an extension of the anthropocentric nature of the

Technozoic worldview through market fundamentalism. Not only are humans considered the apex for which all evolved, the so-called efficient market hypothesis assumes that the sum of all participants’ thinking, based on perfect information (that of course, being

“perfect”, is likely unattainable), is infallible. This is how market fundamentalism recognizes humans as infallible.

The principle focus of mainstream economics remains efficient resource allocation and distribution through implementation and support of markets. At the extreme of the laissez-faire philosophy described, market fundamentalism precludes government intervention in the market mechanism based on the presumption that government is incapable of problem resolution; only “the market” is. This view is foundational to the neoclassical paradigm. A more moderate fundamentalist market view recognizes market failure and the need for intervention, however, intervention using the same market principle of the singular price signal to remedy failure. Market failures are discussed in more detail in chapter two.

Reduction of Economics to Finance

As described above, classical economics took a view inclusive of community considerations, “how people made a living in the context of their community”. In many respects, modern economics yields to the narrower concerns of finance (Fullerton, 2014, pg. xx). Finance (financial activities) is a fund-management science. Finance deals with the interrelation of the concepts of time, risk and money. In contrast, economics is a social science with social welfare considerations. Over the course of the last 60 years, the neoclassical paradigm that emphasized finance has sponsored unfettered capitalism and ushered in an era of global corporatocracy - further expressing Technozoic values.

Extirpation of Moral Consideration in Corporate Finance

The libertarian Chicago School of Economics further narrowed the concerns of modern economics toward simple monetary considerations by promoting the definition of

Corporate responsibility as limited to maximizing shareholder wealth. In the words of

Milton Freedman, “Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of social responsibility other than to make as much money for the shareholders as possible” (Friedman 2002, 133). Antitrust legislation has since explicitly excluded moral and social consideration from legal corporate consideration (Horton 2017). The single measure to drive market efficiency, price, is thereby further codified. Distribution of production outputs (e.g. healthcare, education, eldercare) take a distant back seat to production, efficiency and profit.

Economics is furthered narrowed in scope to “production efficiency” (i.e. profits), leaving distribution, equity and broader community considerations almost totally out of the reckoning. The Western secular cultural value system has thus been reduced to utter

26 materialism. There is no room for virtue in the marketplace; it is a non-sequitur. Free market capitalism is regularly judicially ratified as the dominant mechanism in this quest for ‘economic efficiency’.

The long human relationship with the Earth on which we live has been further reduced to considerations only of extraction and consumption. This is underscored by

Western secular economics modelled with a linear approach to production, an open model concerned only with material input and labor costs, without regard for waste produced during or resulting from the productions process - or the ultimate social consequences of either production or waste. This is exemplified with a deeper dive into NRE in chapter two.

Neoclassical Underpinnings - Physics Envy

By the 1970s and 80s, in order to achieve elevated status as an objective science, neoclassical economists adopted positivism and reductionism. Sometimes referred to as physics envy, economists co-opted methodologies from the hard sciences, especially physics.

The development of physics, then, served as a template for the development of economics as a science. Partially by this means, economists laid claim to scientific status for neoclassical economics. Although dependence on the physical sciences assisted economists initially in founding their discipline, it eventually led to serious problems. (Marcum 2003, 5) According to Mirowski, “the imitation of economics on nineteenth-century physics generated more heat than light”. (Mirowski 1989, 10)

These adopted methodologies are very often frozen in time. As physics, chemistry, biology, and Earth sciences in general continued to develop over the last two centuries, the economics discipline fell out of step and continued to degenerate, inculcated as it was with outdated principles. For instance, logical positivism (logical empiricism) has long since devolved (or been discarded) within the framework of the hard sciences, e.g. physics. 27

However, neoclassical economics continued its development with a progressively epistemological basis for understanding the world, embodying outdated principles, to the detriment of ontological integrity. In this regard, mainstream NRE is severely out of step when compared to the state of the sciences, especially the current and evolving understanding of Earth systems sciences, and with their increasing consideration for and proof of relationships and the interrelatedness of all life and the planet.

Positivism

Positivism (or logical positivism, logical empiricism) is purported to be value-free, in contrast with normative economics, which is value-laden. This is the is/ought dichotomy dating back to David Hume - “Hume's guillotine” introduced in Treatise on Human Nature,

(Hume 1738). Actually, neoclassical economics is prescriptive, and although claims are made to the contrary, it is an ethical system through and through. It has been considered positivistic, suggesting it provides guidance toward a course of action based solely on observations of empirical evidence and analysis. Positivism presumes to operate in this value-free fashion, assuming analysis and results are strictly based on empirical fact.

Positivism was adopted by economists “under the strong influence of the movement called logical positivism” (Putnam 2012, 113). Logical positivism was at its height in the 1930s when it was embraced by economists (Alvey 2005, 1-2).

One reason for its enthusiastic adoption was to undergird neoclassical economics as a ‘real’ science rooted in this philosophy, which supposedly makes a sharp distinction between values and facts, eschewing the former and favoring the later. In this way, neoclassical economics claimed to be rigorously scientific in methodology.

Within mainstream economics, ethical considerations were eliminated from its core by the 1950s. Remarkably, by the 1950s as well, logical positivism was already discredited

(Alvey 2005, 4) for this very fact-value distinction (Putnam 2012, 207) However, economists continued to press ‘value-free’ assertions, demonstrating the nature of an orphaned principle, an assertion underpinned by a premise long since ‘deceased’.

Positivistic economics purports to make empirically objective, evidence-based statements when providing judgement advising public policy and business interests and continues to unequivocally deny any moral ethical considerations are involved.

… economics as a discipline set aside moral questions, settling on a discourse that selectively draws on different theories as needed to supplement and support the dominant market paradigm (Norgaard 2015, 3).

The logical positivist insists on ‘fact-based’ science rather than ‘values-based’ ethical assertions (Spash 2012, 45) (Putnam 2012, 1-10). However, the NRE methods involved, e.g. benefit cost analysis (BCA) include assumptions that rely on value judgement, for example the choice of discount rate. The resulting positivistic judgements epitomize an embedded instrumental value system supposedly devoid of ethical consideration. Normative economics (in contrast with positive economics) provides genuinely prescriptive, value-based statements. These may be supported by factual evidence but are not themselves fact. Normative economics explicitly involves moral and ethical considerations in the analytical process and in the resulting guidance.

In reality, positivistic economics are unavoidably normative insofar as moral judgments are engrained in neoclassical analytics. The illusion of value-free economics attempts to mask the unavoidably moral character of the discipline by excluding explicit

29 moral ethical consideration. The efficacy of positivism was discussed by Friedman and

Samuelson via the American Economic Review in the early 1960’s.

(Caldwell 1980, 70) describes Samuelson’s contribution as “advocacy of the nineteenth- century view of explanation” with regards to positivism, and notes that this “obfuscated all intelligible discussion” in economic methodology for decades. (Spash 2012, 39)

In any case, positivistic neoclassical economics methodologies do include embedded bias toward the narrowly defined anthropocentric instrumental Technozoic value system. These embedded value assertions are unpacked and explored deeply in the following chapters.

Reductionism

Reductionism breaks phenomena down to their simplest elements, on the theory that all complex phenomena can be understood simply as the sum of their parts. The risks of reductionism include oversimplification of complexity, minimizing, distorting, or otherwise obscuring the reality of the phenomena. This analytical flaw results when the relationship of the element parts, and interrelationship with the environment and other agents, are ignored.

Although reductionism is a valuable methodological principle for conducting scientific research, it is of limited value for appropriating economic research and experimentation to complex social issues. (Marcum 2003, 8)

For example, neoclassical economics promotes a belief that there are no real

‘market forces’ operating independently of the individual members of the market.

“Reductionists interpret Adam Smith’s saying in The Wealth of Nations that the “invisible hand” of competition leads private selfishness to a public benefit as being about an economic institution (the capitalist system) that consists only of individual actions and interactions, not about an independent force or structure to reality” (Jones, 2000, xx).

What is not considered, pointed out by Jones, is the reality of the cumulative effect of individual decisions. While individual decisions appear to lead to desirable outcomes considered independently, the cumulative effect of many individual decisions can lead to unsatisfactory outcomes for all the participants. This reality is not considered in the reductionist view, nor in the neoclassical practice. Reductionism in NRE does humanity a disservice by oversimplifying complex systems and the overarching interrelatedness of

Earth systems necessary for flourishing life. This becomes especially obvious within the context of the NRE neoclassical production function, when it excludes the relationships between and among energy systems, the capacity limits of the waste absorption, the reality of input limits, and also ignores the true costs to life beyond monetary consideration. For all these reasons, reductionism supports decision processes inconsistent with a flourishing

Earth, indeed is actually destructive to this goal (Capra 2015, 320). The ultimate example of neoclassical reductionism is the market’s fundamental and singular consideration of the price signal as the sole determinant of economic decision processes. Western secular neoclassical economics, the foundation of capitalism, is narrowly focused on production efficiency in the name of consumption and consumer sovereignty.

Consequences of Technozoic Worldview

The direct results of mankind’s expansion in both population and technological capacity for resource exploitation is evident today in the increasingly rapid degradation of the biosphere including land, water, and the atmosphere – the zone of life on planet Earth.

The following quote summarizes the current state of affairs, taken from the Scientific

Consensus on Maintaining Humanity’s Life Support Systems in the 21st Century – cosigned by 520 scientists from around the world 4/16/2013:

Earth is rapidly approaching a tipping point. Human impacts are causing alarming levels of harm to our planet. As scientists who study the interaction of people with the rest of the biosphere using a wide range of approaches, we agree that the evidence that humans are damaging their ecological life-support systems is overwhelming. We further agree that, based on the best scientific information available, human quality of life will suffer substantial degradation by the year 2050 if we continue on our current path. (The Millennium Alliance for Humanity and the Biosphere 2013)

There is a foundational interrelationship between Western secular neoclassical economics values, the current dominant Technozoic worldview, and the deterioration of the planet. This thesis calls into question their common assertion that the human economy is separate from, above Earth’s systems economies. The alternative to this frightening default pathway would be to move toward an Ecozoic Era. The Ecozoic Worldview starts with the basic presumption easily proven scientifically, that man is only one member of the Earth community, not its head or its purpose for being. (Berry 1988, 199-200) (P. G.

Brown 2009, 6)

An alternative to the Technozoic Epoch - an Ecozoic Epoch

The alternative to the default Technozoic Epoch pathway is to embrace an Ecozoic

Epoch. The Ecozoic Worldview is based on the conception that presumes that man is a

‘mere member’ of the Earth community. (Leopold, A Sand County Almanac: and sketches here and there 1949, 204) (Francis 2015, sec 67). The Ecozoic worldview necessarily incorporates the intrinsic and existential values of nature, the existence values that are an end in themselves, not only a means to an end. This is a value system in disagreement with the anthropocentric instrumental value system.

To be clear, ‘intrinsic’ values can be defined as an expanded notion of instrumental values, unrestricted by the definition limiting ‘instrumental’ as exclusively serving

32 humans. So, these values are instrumental in this broader sense, considering the interrelationships that support life.

Despite its negative connotation in conservation, instrumental value is simply value that depends on valuers. It has a broad range of sources, ... and should not be confused with market value (although market valuation of environmental resources like clean water has motivated some notable conservation successes), nor denigrated as implying entities are only valuable as instruments for human manipulation. …Treating some forms of instrumental value as intrinsic generates misunderstanding by obscuring the crucial role in conservation decision making and ethical importance of instrumental values that are not traded in markets. It also obscures why many individuals become conservation biologists. Their motivation often stems from the beauty, scientific curiosity, emotional connection and feeling of obligation to future generations catalyzed by biodiversity. The values underlying these sentiments are instrumental, not intrinsic. They are no less profound or psychologically potent for being so. (Justus 2009, 187)

The Technozoic and Ecozoic value systems are incommensurable regarding natural systems. The anthropocentric instrumental value system is a belief system based on the assumption that mankind is the apex of creation for which all else exists. Value is a function of anthropocentric usefulness, a means to an end. By comparison, an ‘intrinsic’ (existential) value system is said to exist based on the notion that instrumentality is not limited to human use, but inclusive of the needs of life writ large. There is the need to consider some values as ‘intrinsic’. In other words, some entities / objects are valuable in and of themselves and not as means to anthropocentric ends.

The Ecozoic value system is fundamentally based on the intrinsic value of life.

Ecozoic values have a spiritual dimension, embracing virtue as possessing equal importance as materialism. These value systems are incommensurable as the result of the lack of any “common measure”, or “common language” and might be said to come from different worlds (Kuhn 1996, 149). The Ecozoic worldview has the advantage of being consistent with the current scientific understanding of Earth Systems boundaries, critically

33 necessary for life’s commonwealth to thrive within planetary limits. These limits include sources (the raw materials that support life) and sinks (the capacity to assimilate waste).

The Ecozoic principles will require that economists and planners account for economic throughput in our planet’s closed material system, in contrast with Technozoic assumptions of unlimited resources and waste absorption capacities. In addition, the concepts of entropy and dynamic systems analytics demonstrate the Ecozoic understanding of the dynamic interrelation of the biogeochemical aspects of the natural systems on which life depends.

The Ecozoic worldview explicitly acknowledges that human beings rely on these natural systems for life support; however, this flourishing and inclusive system we now enjoy will continue only with our consideration and respect for the myriad functions natural systems provide to all life.

The Ecozoic worldview appreciates Earth as commons for all life, recognizing and respecting the interrelatedness of all life and life support systems.

Thomas Berry’s Challenge

The choice of which foundational worldview triumphs in the Anthropocene will put to the test whether humanity can organize itself around principles that do not put us and our endless desires as the pinnacle of the natural world which all else has evolved to serve. Although it will be difficult, principles can be developed and implemented that will recognize human beings as members, not masters, of the nature community. The foundational principles necessary for humanity to successfully navigate the Anthropocene include a commitment to ontological integrity and a truthful and realistic assessment of the necessity to operate with respect for the interrelationships of all life. It is incumbent on our societies to align political, social, and financial institutions with the evolving state of the

Earth Sciences, and to do so with urgency and humility. This humility must be rooted in epistemological integrity, respect for the limits of knowledge and the limits of the planet.

Further, it is absolutely necessary that our societies adopt the precautionary principle in the face of uncertainty, especially when technologies or practices threaten irreversible changes to non-linear Earth systems.

Foreshadowing Earth Economics as further evolved Natural Resource Economics

Chapter two will engage in an overarching ‘conversation’ with Environmental &

Natural Resource Economics 10th edition, the standard text by Tom Tietenberg and Lynne

Lewis. The general conversation in chapter two will lead to deeper consideration of specific methods, assumptions, and consequences in chapters three through five. The Earth

Economics alternative principles will be defined and explored in chapter six with an eye toward framing an evolutionary leap from NRE to Earth Economics.

Earth Economics may be conceived as an evolutionary leap from the current NRE, that contributes to the demise of the planet, to a model that offers guidance toward a flourishing future for life. Earth Economics theory, based on Ecozoic principles, are applied to specific examples of current methods detailed in the following chapters three though five. The outcomes resulting from these alternative economic methodologies are contrasted with the current consequences. With this fulcrum, transition to an ontologically relevant and epistemologically consistent the new Earth Economics is promoted.

Chapter 2. Environmental & Natural Resources Economics

This chapter unfolds as follows. First, Environmental & Natural Resource

Economics (NRE) is situated in the context of the neo-classical economics paradigm. This preliminary review provides insight into NRE priority of markets and recognition of their shortcomings, so-called market failures (Tietenberg 2015, 24-36). The second section concerns normative and methodological foundations and public policy dimensions of NRE

(Castle 1999, 289). This introduces valuation of non-market goods and services, benefit cost analysis, discounting, and the normative dispositions engrained in the NRE methodologies. Ecological Economics, a contemporary variant of NRE, is examined as an evolutionary step advancing economics to address ecology and environmental issues. It is said to be concerned with the connections and interdependences between human economies and natural ecosystems. However, it can be shown to be inculcated with the same neoclassical limitations crippling NRE (Sagoff 2012, 1-5) (Spash 2012, 36-38). Ecological

Economics does not provide the foundation required for the evolutionary leap to an Ecozoic worldview. Finally, a survey of the current state of Earth systems; land, water, atmosphere, and energy – features historical results of applied NRE methods.

This overview sets the stage for a deeper dive into specific applied NRE examples in the following chapters. These mainstream applications highlight NRE methodological limitations when dealing with Earth systems’ complex ecological problems. In doing so, further illustrating the need for the paradigm shift to the next evolutionary phase of NRE.

Kuhn posited that “evidence that questions the foundation of the structure”, e.g. recognition of the failure of the NRE framework, foreshadows transition to a new paradigm (Castle

1999, 291) (Kuhn 1996, 12). Also required for transition is a ‘future framework’ of NRE.

Natural Resource Economics – Neoclassical Framework

Economics is mainly concerned with extraction rates and the use of ‘natural resources’, both renewable and non-renewable (Hussen 2013, 2). These are combined under the rubric of NRE in this thesis.

Environmental economics is a distinct branch of economics that acknowledges the value of both the environment and economic activity and makes choices based on those values. The goal is to balance the economic activity and the environmental impacts by taking into account all the costs and benefits. (Wierenga 2003, 1) Natural resource economists are more concerned with sustainable management of natural resources to ensure their availability for current and future generations. ... In a sense, natural resource economics is a sub-field of environmental economics as long as the treatment is neo-classical. (Rao 2017)

NRE is an extension of Western secular economics based on instrumental values which are core to the Technozoic Worldview. Central to NRE is the neoclassical assertion that market mechanisms will efficiently allocate production inputs - including capital, labor, and physical resources - and will subsequently optimize the distribution of outputs.

These embedded value assertions often rely on assumptions that deviate from reality, e.g. homo economicus and the self-interest hypothesis (A. Sen, On Ethics & Economics 1991).

Frequently markets fail to achieve promised efficiency - resulting in so-called market failure. Insofar as the market mechanism depends on the singular input variable, price, market failure often occurs due to inadequacies of the price mechanism, translating into failure to efficiently allocate goods and services.

Reasons for market failure include: positive and negative externalities, environmental concerns, lack of public goods, under-provision of merit goods, overprovision of demerit goods, and abuse of monopoly power. 37

Lack of public goods: public goods are goods where the total cost of production does not increase with the number of consumers. Underproduction of merit goods: a merit good is a private good that society believes is under consumed, often with positive externalities. For example, education, healthcare, and sports centers are considered merit goods. Overprovision of demerit goods: a demerit good is a private good that society believes is over consumed, often with negative externalities. (Lumen Learning 2017)

In the strictest sense, the laissez-faire market mechanism is an economic system in which transactions between private parties are free from government intervention such as regulation, privileges, tariffs, and subsidies. The myth of self-regulating markets, described as arbiter of efficient and appropriate allocation of scarce resources, and an effective wealth distribution mechanism, does not and indeed cannot function without failure. NRE recognizes market failures, and advocates for remedies that involve government intervention in the form of regulations, for example Pigouvian tax is designed to correct the price signal. Generally, the intent of the regulations is to control and correct the price signal. However, we must recall that the market mechanism is dependent on this singular variable, the price signal, to affect efficiency. Recognizing the derivation of the market mechanism helps to understand its limits and consequences. This next section expands on the neoclassical underpinnings introduced in chapter one - physics envy, and; positivism and reductionism.

Normative - Methodological Foundations and Public Policy Dimensions

Methodology, as used here, lies within the progression of the philosophy of science which proceeds from ontology to epistemology to methodology, and then to methods. In this sense, methodology concerns the principles that determine the appropriate methods and analytical tools, and how such tools are deployed and interpreted. It is these principles that must be brought into focus to understand the current foundations of NRE. Recalling

38 that economics is categorized as positive (value-free) and normative (value-laden); setting aside the “positivist straightjacket” (Capra 2015, 46), this methodological discussion is narrowed to orthodox normative economics.

Neoclassical economic theory in its pretensions to scientific status is founded on one of the variants of a now discredited positivism. Neoclassical economic theory claims that there are two distinct areas of economic research: positive economics and normative economics. The former is assumed to deal with the cognitive as scientific content of economics while the later focuses on welfare or equity issues. (Keita 1997, 1)

Normative neoclassical economics, commonly referred to as ‘welfare economics’, employs criteria derived from utilitarian ethical theory. This means that NRE is predominantly founded on utilitarian ethics. In this context, NRE markets represent a mechanism that enshrines the utilitarian background of welfare economics. Based on this theory “markets and market mimicking procedures are appropriate for solving environmental problems” (O'Neill 2017, 226). A central tenet of this methodology is value monism, “the view that there is only one good that is valued for its own sake and is intrinsically valuable in this sense” (ibid, 227). This theory claims all benefits (goods) are commensurable and by extension, interchangeable. Money is the ‘measuring rod’. In contrast, pluralism claims there are irreducible benefits (goods) that are intrinsically valuable. There is no common ground with these positions.

This difference is the basis of the second premise of this thesis, the fact that the value systems ingrained in the Technozoic and Ecozoic worldviews are incommensurable.

The Technozoic worldview, consistent with neoclassical NRE, is aligned with the view that all values, including environmental goods and bads, can be reduced to price. The

Ecozoic worldview argues against monetary commensurability, and the concept of trade- offs between many values is wrong headed. This is especially evident when relationships

39 are considered – minimally, at two levels. First, at the emotional level, e.g. the value of love or friendship, or the value of an ethical commitment. Second, at the functional level, e.g. relationships in nature, recall the value of the aphid to the ant.

Another important philosophical presupposition for neoclassical economics [NRE] is materialism. Just as physicists examine and study a physical world composed of material entities such as atoms and forces, so economists examine and study an economic world composed of material goods and services. (Marcum 2003, 8)

A principle State role is to protect consumer sovereignty (Ver Eecke 2007, 66)

Within the context of this contention, the markets are assumed to summarize the rational choices of the aggregate of individual consumers – and furnish the true value of goods and services. Notwithstanding this basic materialism - “Things ‘R’ Us” (Twitchell 1999, 286), the market pricing mechanism does not translate into the direct monetary value assessment of natural functions (never mind the intricacies of natures’ myriad interrelationships), so a pure market assessment is not plausible. This point reinforces the contention that values such as for example – pork bellies versus access to water - are not interchangeable, they have an incommensurable basis for substitution or trade-offs.

The utilitarian underpinnings of normative NRE are rooted in the rational choice theory developed by John Stuart Mill in the late 19th century, which includes the presumption that all rational choice is driven toward pleasure, and away from pain (Mill

1879, ch. 2). This is not a basis for natural resource valuation because what motivates humans is not what nourishes nature. It will be important to expand the scope of the values assessment processes to include non-monetary community considerations, to include other lifeforms, to include future generations, and to include well-being writ large. This kind of thinking is a necessary catalyst for the paradigm shift to a further evolved NRE.

Ecological Economics - Contemporary Variant of NRE

Ecological Economics as a special field of research, gestated with the emergence of the environmental agenda of the 1960s was formally conceptualized by a group of scholars in Stockholm in 1982, and finally “was institutionalized with the establishment of the International Society for Ecological Economics in 1988” (Ropke 2004, 293).

Ecological Economics is concerned with connection and interdependences between human economies and natural ecosystems. Ecological economists “contended that mainstream economists failed to properly acknowledge the value of the natural world and the services it provides” (Sagoff 2012, 1). However, over the course of the past 30 years Ecological

Economics has not distinguished itself, rather, examination of the research published over the years within the Ecological Economics Journal reveals an increasing convergence with

NRE. “The [study] results suggest that the discourse of ecological economics and environmental economics have grown closer over time” (Plumecocq 2014, 457). This is not surprising given the neoclassical underpinnings also retained by Ecological Economics.

Embedded anthropocentric utilitarianism provides a normative basis for both NRE and ecological economics.

Herman Daly, a founder of the International Society for Ecological Economics, more recently captured the reality of neoclassical influence in ecological economics with his description of “Economic Imperialism”.

Economic imperialism seeks to expand the boundary of the economics subsystem until it encompasses the entire ecosphere. The goal is one system, the macro-economy as the whole. This is accomplished by the complete internalization of all external costs and benefits into prices. Economic imperialism is basically the neoclassical approach. Subjective individual preferences, however whimsical, uninstructed, or ill-considered, are taken as the ultimate source of value. (H. Daly 2014)

Insofar as Ecological Economics embraces this instrumental view of the Earth estate, it does not inform our pursuit of Ecozoic values and principles. Rather, it is a variant of NRE with consistent embedded assumptions, ethics, and value-laden utilitarian prescriptions.

Earth Systems & Applied NRE - Current Technozoic / Anthropocentric Outcomes

The following quote summarizes the current state of Earth systems, taken from the

Scientific Consensus on Maintaining Humanity’s Life Support Systems in the 21st Century

– cosigned by 520 scientists from around the world:

The direct results of mankind’s expansion in both population and technological capacity for resource exploitation is evident in the degradation of the biosphere including land, water, and the atmosphere – the zone of life on planet Earth. In the Technozoic, humanity will continue to understand "progress" in terms of increasing mechanistic control over natural systems for anthropocentric benefit. Through continued scientific innovation and “technological cunning”, artificial environments are developed to "protect" us in isolation, and humanity will continue to become alienated from the rest of life.

Example - Land

Over the course of the last century the extent of anthropogenic land-use and land- cover changes “significantly affect key aspects of Earth System functioning” (Lambin

2001, 261-269). These changes are a primary source of soil degradation, adverse impacts

42 to biodiversity, and materially contribute to climate change (Chase 1999, 93-105) (Sala

2000, 1770-1774) (Tolba 1992).

In general, as with other resources, markets tend to allocate land to its highest-valued use, as reflected by the users’ willingness to pay or willingness to accept payment. (Tietenberg 2015, 235)

The NRE assumption on display above is the presumption that the market mechanism is able to allocate land use and purposefully optimize the outcome. The highest and best use is determined by that use which most readily provides the return on capital.

Price determines this return, price is the single determinant. The NRE presumption of highest-value does not take into consideration the collateral impacts on Earth systems functioning. Immediate returns from the commoditization of land reduced to a single purpose is valued monetarily, generally without consideration for the key roles that these lands play in supporting life; including soil health, climate mitigation, supporting biotic communities and maintaining genetic diversity.

These ‘externalities’ to the market are intrinsic to the integrity of having viable land in the first place. There is no implicit or explicit consideration for the intrinsic values land provided to support flourishing life and the network of interrelationships involved.

Example - Water

The hydrosphere includes all water on Earth. Not only is all life dependent on water, complex hydrologic systems include significant functions in climate regulation, e.g. ocean currents play an important role in natural climate regulation. Warming oceans, melting icecaps, rising ocean levels, reduction in CO2 absorption capacity within warming oceans, loss of phytoplankton, and many other changes in this complex system naturally result over eons from natural perturbations. These phenomena are impacted by human activity and

43 now deteriorating at a disturbingly rapid rate. As recently as August 2017 scientist have documented alarming change in the ocean current. An irreversible change in the global ocean currents, e.g. the Gulf Stream, can have a deleterious impact on climate regulation.

A new study, just out in the journal Nature Climate Change, has joined a growing body of literature suggesting the cold patch is evidence that a major ocean current system - which transports heat and influences climate and weather patterns around the world - may be slowing down. What’s more, the melting of Arctic sea ice could be to blame. “I think the main thing about our paper that we show is that the Arctic sea ice loss can play an active role in climate change and ocean change as well,” said Alexey Fedorov, an ocean and geophysics expert at Yale University and one of the new study’s authors. (Florian Sévellec 2017, 604-610)

Water allocation and distribution

Regarding water, NRE is concerned with the allocation of water (quantity) and the pollution of water (quality). With both, various schemes involving pricing are considered for optimal efficiency. The optimal efficiency of water distribution is complicated by a labyrinth of laws with historical relevance, and by the fact that water is required for life.

The ‘optimal’ distribution entails moral consideration, and some would argue, these issues supersede financial optimization. Maintaining water quality is also approached through regulation to manage water pollution as an externality to the market system. Again, price is the preferred mechanism to mitigate the problem. Water represents a complex problem for NRE as it attempts to address the efficient distribution of water and to affect a measure of water quality standards via regulation, and regulatory markets. The larger problem, regarding overall human impacts on the hydrosphere, begs for the attention necessary to address the source of all water available and necessary for life, as well as large amounts currently at-risk.

We now know that climate change will have a significant impact on the hydrologic cycle, creating changes in freshwater resources, land cover and land-atmosphere feedback. 44

Recent studies have investigated the response of groundwater to climate change but do not account for energy feedbacks across the complete hydrologic cycle (reference, 20xx, 12).

Although land-surface models have begun to include an operational groundwater-type component, they do not include physically based lateral surface and subsurface flow and allow only for vertical transport processes (references, 20xx, 12). Such lateral and subsurface flow studies include variably saturated groundwater flow models with integrated overland flow and land-surface model processes that examine the interplay between water and energy flows in a changing climate for the southern Great Plains, for example, an important agricultural region that is susceptible to drought.

We can minimally conclude: the NRE assumption that markets will address such meta issues is erroneous. Price is irrelevant. NRE economics is not equipped to address these larger Earth systems interrelationship issues directly. Additional NRE assumptions that humanity can ‘outgrow’ the problem, develop substitutes, and that applied NRE involves no moral considerations - are all patently false.

Example – Atmosphere

The industrial revolution has been energized by burning fossil fuels. This release of energy planet-wide has driven technology and quality of life for Western society far beyond what our ancestors could have imagined. The combustion of fossil fuels such as; oil, natural gas, and coal, has also increased the concentration of carbon dioxide (CO2) in the atmosphere. CO2, among several ‘greenhouse gases’ that include water vapor, methane, nitrous oxide, and ozone. Greenhouse gas (GHG) absorbs and emits radiation within the thermal infrared range, and this process is the principle driver of the atmospheric greenhouse effect. Of course, the greenhouse effect is natural and necessary for the stability

45 of Earth’s atmosphere and therefore for all of life. The excessive greenhouse effect resulting from fossil fuel combustion is proving to be highly detrimental, raising global atmospheric temperature, changing weather pattern timing, distribution and intensity, relative to historical norms, culminating in climate change and changes to the oceans and water cycle (Florian Sévellec 2017).

NRE has responded to the atmospheric CO2 negative externality with a market mechanism. Through a cap and trade regulatory scheme, a market for gases with ‘forcing potential’ was established in the 2000’s. The Earth's surface temperature is determined by the balance between incoming solar radiation and outgoing infrared radiation. Radiative

Forcing (RF) is the measurement of the capacity of a gas or other forcing agents to affect that energy balance, thereby contributing to climate change.

This market approach was intended to use the price signal to modify human behaviour and limit the offending gases from being discharged into the atmosphere. The objective was to align the profit motive with the necessity to address human activities that influence climate change. PES, payment for ecosystem services, is an NRE mechanism which logically appears to contribute to the solution of the problem. However, while attempting to resolve climate change several false assumptions are carried over from mainstream economics. The first is that the market can scale to the level required for impact. The reality is that the market will scale to the level of potential capital returns, not necessarily to the scale of the problem. The argument is made that this is at least a partial solution. The assumption of moral neutrality carries over when in fact at the heart of the issue is the ethical question “do we have the right to knowingly extinguish life support systems on Earth?”. The Precautionary Principle is called upon in this argument. Finally,

46 while technological solutions are likely an important substitute for releasing yet more CO2 into the atmosphere, currently the price signal does not support this transition. NRE market solutions do not support a fulsome solution to the problem, they provide remedies on the margin that are insufficient to scale up to the challenge.

Example - Energy

The mass providing energy stores, e.g. plant sugars or fossil fuel, reaches a higher state of entropy when it releases heat. Entropy of course, is a measure of disorder or increased randomness in systems. In natural systems, there is finite amount of low-entropy matter but one process that creates low-entropy matter results in fossil fuels. Fossil fuels were created by plants capturing solar radiation combining CO2 and H2O and converting that mix of energy and atmosphere to carbohydrates via photosynthesis. Subsequently the plant materials fossilized over eons. Since this process takes so long fossil fuels are considered non-renewable. The result is a closed system with a limit of ‘low entropy matter’. Humans convert this matter, fossil fuels, to high entropy matter at a rate far beyond the system’s capacity to reorder, that is to reproduce or renew the source. This means the process is terminal.

NRE assumptions that include self-regulating markets, price signals to optimize efficient production and distribution, and especially accept the premise that growth is the ultimate solution for economic health, all fail when the challenges of planetary limits are considered. The NRE’s main solution is the addition of regulatory schemes to manage markets, including the programs discussed above that address market failures and attempt to price negative externalities as well as programs that attempt to create regulatory markets to curb greenhouse gas emissions, such as cap and trade. However, these attempts to align

47 capital interests with environmental interests would require sufficient trajectory and scale to forestall the massive rate of environmental change underway. This alignment will require broader consideration than the current NRE primacy given to efficiency, and broader consideration for life in general. This is scrutinized deeply as the thesis progresses.

NRE with its neo-classical underpinnings is not equipped to address these pressing problems; on the contrary, its dependence on mainstream Western secular neoclassical economics vastly contributes to the dilemma. Additional considerations are required to augment the price signal and give broader consideration to the alternatives available to power the planet and enable it to absorb its wastes, within the hard and fast planetary boundary conditions.

“Chasing economic growth while ecosystems collapse is a sign of stupidity, not wisdom.” (Shiva 2015, 43)

Chapter 3. Natural Resource Economics – Raison D'être

This chapter takes a deep dive into a mainstream Natural Resource Economics textbook’s prescriptive “economic approach”, which claims to be able to achieve the self- described desirable “Human - Environment Relationship” (Tietenberg 2015, 16). The blueprint for this chapter establishes a pattern of inquiry with Tom Tietenberg and Lynn

Lewis’s text: Environmental & Natural Resource Economics, 10th ed. At the beginning of the chapter, the overarching Natural Resource Economics foundational proposition is critiqued. Specifically, this critique challenges the claims that NRE is the mode by which the desirability of environmental outcomes can be ascertained, and the nature and severity of problems can be understood and addressed. The NRE Anthropocentric value assumptions are contrasted with the debut of more comprehensive Ecocentric alternative.

Issues including complexity are introduced and the stage is set for scrutiny of the inevitable failure of oversimplified NRE solutions to narrowly construed environmental problems. Market failure is defined and the roles of the State, Science, and NRE are characterized and juxtaposed in preparation for specific examples of NRE methodology in the next chapter. Following a summary of salient overarching Natural Resource Economics

(NRE) principles, a four-step pattern is undertaken in chapter four. First, an assertion is drawn from the NRE text, including the associated NRE methodologies. Second, examples of the NRE prescriptions in application are presented, and the embedded assumptions are teased out these examples. Third, consequences of the NRE application are identified and examined. Finally, in chapter six the examples are reframed with Ecozoic principles derived in chapter five. The anticipated results and alternative consequences are deliberated, and our moral obligation to all life is posited.

Natural Resource Economics - foundational proposition critique

Mainstream Natural Resources Economics textbooks instruct in accordance with

Western secular neoclassical economics values and principles, applied to the natural estate of the Earth, which consists of land, forests, soils, mineral deposits, water, and atmosphere.

In [NR] economics the system of measurement is anthropocentric, which simply means human centered. All benefits and costs are valued in terms of their effects (broadly defined) on humanity. (Tietenberg 2015, 18) …environmental economics is based solidly on the standard paradigm of neoclassical economics. (Tietenberg 2015, 7)

This foundational proposition is further established and amplified with this leading precept of the Tietenberg Environmental & Natural Resources Economics text.

We begin by examining the relationship between human actions, as manifested through the economic system, and the environmental consequences of those actions. We can then establish criteria for judging the desirability of the outcomes of this relationship. These criteria provide a basis for identifying the nature and severity of environmental problems, and a foundation for designing effective policies to deal with them. (emphasis added) (Tietenberg 2015, 15)

Principles and embedded assumptions whereby this NRE “economic approach” is undertaken are unpacked for examination here, beginning with a critique of the overarching proposition regarding the NRE basis and limitations for determining “desirability of outcomes”. The appropriateness of the NRE role regarding for actually “identifying the nature and severity of environmental problems” is also addressed. The domains of Earth

Sciences and Ethics are introduced to begin to challenge this presumed reach of NRE.

Desirability of Outcomes

Desirability of outcomes involves values judgement. NRE reduces this judgement to monetary value. Desirability of outcomes can be properly associated with quality of life, however, as Steve Cohn illustrates in his assessment of implicit neoclassical assertions,

NRE is bounded by the dogma that “the major purpose of economic theory is to promote economic efficiency and economic growth, as both provide a basis for human happiness”

(Cohn 2003, 4). This is too narrow a gauge for assessment and makes assumptions that are not shared or proven universally. Tietenberg’s NRE intention, stated above, to achieve desirable “Human-Environment Relationship”, can be more accurately characterized as the intention to achieve “Right Relationship”, which is a Quaker concept that recognizes “that the entire world is interconnected and is a manifestation of God”. Truly adhering to the idea of Right Relationship, as authors Peter Brown and Geoff Garver state in their books of the same name, requires a more comprehensive basis in order to “advance a larger moral context for economic analysis and for reconceptualizing the economy within vision of ecological stewardship and the well-being of the entire commonwealth of life” (P. G.

Brown 2009, iii).

The NRE assessment of the “desirability of outcomes” with respect to the disposition of “Earth’s estate”, that is planetary natural resources, shows that NRE’s role is problematic insofar as its consideration is limited to human interests and, excludes all non-human life. Moreover, the values employed are limited to monetary measurements using the self-referential NRE approach. As Thomas Berry puts it, “The difficulty is that with the rise of the modern sciences we began to think of the universe as a collection of objects rather than as a communion of subjects” (Berry 1999, 16). This notion is the harbinger of systems thinking as a broader basis for NRE analysis.

Objects to Relationships - Communion of Subjects

“A thing is right when it tends to preserve the integrity, resilience, and beauty of the commonwealth of life. It is wrong when it tends otherwise”. (Brown and Garver, 2009, 5) (Leopold 1949, 262) 51

Holism is the theory that whole entities have an existence greater than the mere sum of their parts (Wordnik 2107). Holism is a highly suitable means of describing the essence of life, and is true of individual organisms as well as communities. Over the course of the twentieth century, transformation from a mechanistic to ecological (holistic) paradigm has progressed in many scientific fields. This revolution as Fritjof Capra has described it, spearheaded a “constellation of concepts, values, perceptions, and practices shared by community, which forms the particular vision of reality that is the basis of the way the community organizes itself” (Capra 2015, 6). With this dynamic is mind, the human community is far more able to define what is required to establish the “desirability of outcomes” for itself and for the planet.

For example, the Congress passed the 1972 Clean Water Act (CWA) with the expressed desire that waters of the US be unimpaired chemically and biologically by 1983, a case examined in detail in the next chapter. This legislated objective contrasts with the assertion that NRE can identify desirable environmental outcomes applying positivist market logic. Moreover, interrelations within the larger the natural community (relevant ecological inputs) must be taken into consideration in the evaluation of likely outcomes.

This thesis posits the appropriate role of NRE is to undertake and establish mechanisms for desirable outcomes by applying science to policy options.

The basic tension is one between the parts and the whole. The emphasis on the parts has been called mechanistic, reductionist, or atomistic; emphasis on the whole, holistic, organismic, or ecological. (Capra 2015, 4)

It is the natural community, the whole, that must be considered in the evaluation of desirable outcomes. It is the relationships - the communion of subjects that is paramount.

Community – Reverence for Life

Whereas the physical world is not encumbered with moral issues since it is given, the social world is charged with them since we can choose which social world to live in based on personal or social values. (Boulding 1969, 1-12)

NRE is a social science, not a mechanistic framework based on demonstrable physical reality. It is, rather, an interpretation of social processes that purports to understand underlying forces and structures. “The 1992 Nobel laureate in economics, Gary

Becker, has attempted to “pry economics away from the narrow assumptions about self- interest. Behavior is driven by a much richer set of values and preferences” (Becker 1993,

385) (Marcum 2003, 8). Ecozoic NRE, as a subset of economics writ-large, needs to be largely a community enterprise with considerations for both the vested interest of the human community, and the rest of life; in care for common pool resources. This responsibility entails a “Reverence for Life”, a moral obligation. “Reverence for life does not offer specific instructions with regard to our behavior in the world, but it provides us with such a principle and encourages a healthier and more reverential attitude toward all living things” (Cicovacki 2009, 19). Relationships are the foundation of these communities, human natural and communities – and extend to entire living systems. These living systems are composed of life – autopoietic (self-making) organisms (Capra 2015,

134). Autopoietic means the property of anything from cells to systems like forests, that allow it to maintain and renew itself by regulating its own composition and conserving its boundaries. (https://www.merriam-webster.com/dictionary/autopoiesis - accessed 3-25-

2018) This essence of life, Schweitzer’s “will to live” expressed autopoietically, aspires for a next generation NRE with an “economic approach” (to use Tietenberg’s terminology) that is “life enhancing, not life destroying” (Capra 2015, 320). Integrating Ecozoic

53 principles reframing NRE toward a paradigm shift that reincorporates the moral foundations which can support processes that enhance life’s well-being, instead of concentrating on amoral market structures, is the ultimate opportunity for progress in the field.

Identifying the Nature and Severity of Environmental Problems

Identification of the nature and severity of environmental problems rightly belongs in the realm of Earth Sciences. NRE, especially as extension of neoclassical economics, is distinctly unqualified for this responsibility. The underpinning economic assumptions are out of step with the far more evolved state of the hard sciences; they are also influenced by political agendas and inculcated with utilitarianism (Perman 2003, 59). NRE as it presently exists is ill-equipped to factually identify the nature and severity of environmental problems or to design effective policies for addressing them.

Significant environmental problems are often the result of ongoing NRE prescriptions or they are concealed by the distraction of a false remedy. For instance, degradation of the Chesapeake Bay by agricultural water pollution is not resolved with the usage of the NRE benefit cost analysis (BCA) applied within the contributing landscape.

NRE methodology subordinates’ environmental effectiveness to market efficiency. This contradicts the claim that the environmental consequences of human actions, as the result of economic system, provides the basis for identifying the nature and severity of environmental problems. NRE is able to rank environmental problems in monetary terms; however ultimately, diagnosis what to do about them necessarily must involve biophysical factors that are outside the domain of that NRE core concept of “willingness to pay”. At the heart of the issue, the facts of environmental problems are not based on opinions,

54 markets, or tastes - rather, the facts are based on scientific inquiry and the resulting evidence. NRE, with its anthropocentric emphasis on market efficiency, treats scientific fact as elective, subordinate to optimal net present value (NPV).

Dealing with Complexity - Systems Thinking

For every complex problem there is an answer that is clear, simple, and wrong. H. L. Mencken NRE has not kept pace with the advances in the hard sciences, nor with our emerging understanding of the complexity of Earth Systems. Over the course of the last two centuries the physical sciences have progressed radically. Classical physics has evolved from Newton’s mechanical understanding of matter, motion, energy, and force - to Modern Physics founded on the theory of relativity and advancing to quantum mechanics. Determinism has yielded to the understanding that there exists a complex set of interrelationships. It has become clear that key to understanding the planet, nature, and

Earth Systems, it is critical to understand the relationships among and between the various components. Humanity has only begun to scratch the surface of this complexity.

Understanding the interrelationships of Earth Systems on which all life relies, obligates us to contemplate complexity, dynamic interrelationships, and adopt systems thinking. There is the concept of a continuum ranging from simple, to complicated, to complex. Simple problems use basic techniques, like a recipe or protocol, to provide a successful outcome. Complicated problems have increased requirements of coordination and application of expertise to provide a positive solution. These solutions can be arrived at with a relatively high level of certainty. But complex systems are beyond both these processes.

In contrast, complex systems are based on relationships, and their properties of self- organization, interconnections, and evolution. Research into complex systems demonstrates that they cannot be understood solely by simple or complicated approaches to evidence, policy, planning, and management. …. Uncertainty of outcome remains. The most useful solutions usually emerge from discussions with the wider [community] and involve values (Allen 2016, blog).

“We can determine complicated outcomes. We can only enable complex outcomes.

We can specify complicated systems. We can only intervene in complex systems” (Ng

2011, blog). So one major problem is that NRE applies simple and/or complicated solutions to complex systems. This Technozoic approach further extends the notion of separateness of systems’ components. The Ecozoic worldview embraces the notion of complexity inherent with living systems.

A major outcome of taking insights from living systems is the notion of optimizing systems rather than components. (Wahl 2016 ) (Ellen MacArthur Foundation eds. 2014)

Insights into the complexity of Earth systems, provided by increasingly advanced scientific understanding will allow us to transition from the dominant worldview with its inherent notion of separateness, to the reality of fundamental interconnectedness and respect for right relationship.

Paradigm Shift – Object to Subject

Ecozoic principles can, and must, contribute to the NRE paradigm shift centered on life and relationships – to a ‘communion of subjects rather than collection of objects ‘.

Only now do we begin to consider that there is an economics of the human as a species as well as an economics of the earth as a functional community. The primary objective of economic science, of the engineering profession, of technological invention, of industrial processing, of financial investment, and of corporate management must be the integration of human well-being within the context of well-being of the natural world. Only within the ever-renewing process of nature is there any future for human community. Not to recognize this is to make economics a deadly affair. (Berry, The Dream of the Earth 1988, 74-75)

Thomas Berry’s comprehensive view of the potential for NRE recognizes the need for the transition from materialism (individualism) to the larger context of the comprehensive community. An evolved NRE is contemplated, grounded with undergirding values that are aligned with a comprehensive construct that supports all life. The NRE paradigm shift will incorporate systems thinking that can provide this understanding to guide mankind, and provide us with options, so we can continue the human enterprise within the constraints that the Earth Sciences dictate.

Earth Stewardship - Natural Resource Economics, Science, and the State

This thesis posits, ideally, that there are distinct and complimentary roles played by the political community (the State), the scientific community, and natural resource economists. The political functionaries, who are the de facto trustees of the commons, must establish and implement selected solutions that will enable them to govern on behalf of humanity and life’s commonwealth. The scientific community, continuously advancing knowledge of Earth’s thresholds and systems, provides the factual scope (breadth and depth) concerning environmental problems. Ideally, the scientific community will comprehend the breadth, depth, and scope of the Human – Earth relationship, and establish the parameters that will enable us to address environmental problems successfully. These parameters can be used to establish the NRE criteria we must operate within to address environmental constraints; i.e. limits and thresholds of renewable resource recovery trajectories, waste absorption capacities, non-renewable resource depletion rates - entropy, and the dynamic interrelationships of life systems. With more societal understanding and political support and funding they could do much more. The resource economist’s role must be to provide solution sets that frame the required adaptations of the human economy

57 and identify the mechanisms necessary to meet the fixed limits of production functions input and output resource uses; in short, to fit the human economy within the limits of nature’s economy.

Salient Overarching Natural Resource Economics Principles

In order to examine the principles and assumptions of the unevolved NRE approach, it is necessary to take an overview of the structural features of the market mechanisms employed These features include basic concepts of producer supply, consumer demand, price mechanisms, efficient market allocation, consumer and producer surplus, and scarcity rent. These constructs combine to place an overarching emphasis on efficiency. Markets are considered the principle arbiter for efficient allocation of goods and services. Markets are conditionally predicated on consumer willingness to pay, establishing demand. At a certain price level this demand matches with producer supply at an acceptable cost, which is termed the clearing price. Thus, via the price mechanism, the “chief normative economic criterion” of efficient allocation is thought to be achieved (Tietenberg

2015, 19).

In actuality, the concept of ‘the market’ is any structure where buyers and sellers exchange goods, services, or information. Pure market allocation is governed by the clearing price (matched willingness to pay and willingness to supply prices), regardless of other considerations. When the production process includes natural resources, for instance as raw material inputs or services for byproduct disposal – the actual cost of supply can be understated when the replacement cost of the inputs and services are excluded from the cost of production, and in fact because these costs are so high, they are purposefully

‘externalized’. As a result, the clearing price in the market is artificially low. This error in

58 pricing does not achieve the overarching market goal of efficient allocation of natural resources, and this is how the market mechanism fails to achieve efficient allocation.

Market Failure

Markets are prone to failure. Failure can occur due to externalities, the problem of public goods, ineffective provision of merit goods, asymmetry of information, and market forces of capitalism resulting in concentration of power. Non-produced goods and services provided via natural functions are the special case of ‘natural resources’ highlighted above.

Natural resources include two categories, renewable and non-renewable. Resources may be considered renewable if their rate of replenishment exceeds the rate of consumption, e.g., fish stocks reproduce faster than population decline (harvest, mortality). Non- renewable resources are not replenished for long periods of time, centuries or longer.

Understanding these characteristics sets the stage to consider the NRE approach to addressing market failures which include externalities, and the provision of public goods. Recalling that the economic approach is presumed to efficiently allocate production inputs as well as wastes (byproducts), direct failure results in inefficient allocation, e.g. as based on the wrong price signal characterized above. Indirect failure is defined herein as the inability of the market mechanism to comprehensively value non-produced resources

(natural resources) beyond the direct cost of extraction and waste remediation, excluding replacement cost. Negative market results, namely: toxic waste, water pollution, air contamination, climate and land degradation are considered ‘negative externalities’ to the market. Collectively these externalities are assumed correctable, given a modified price signal. The price signal is manipulated by regulation intended to incorporate the price of the externality into the market price. In effect, the goal of regulatory policy is to establish

59 a market price for these externalities – a shadow price representing the market value of the resource. This results in a patchwork of pecuniary adjustments to compensate for the efficient market shortfalls.

The remedy for public goods market failures involves developing a non-market price. These analytics fall under the rubric of contingent valuation. There are a variety of methods used to establish prices for goods and services across the spectrum of public goods. These include ‘willingness to pay’ (WTP), ‘willingness to accept’ (WTA), benefits transfer, and revealed preference methods, among others. Willingness to pay is just as it sounds, what would an individual (theoretically) be willing to pay for a particular benefit. willingness to accept follows suit, what an individual will accept as payment for the imposition of an externality. Fortunately for respondents they rarely have to balance the books following their response (Ackerman 2004, 158-9). Benefit transfer uses a similar circumstance (or studies) with known values as a proxy for the non-market benefit.

The Earth Estate – Natural Resources in the Context of Markets

The concept of ‘the market’ is a catch all term that includes a spectrum of pure public goods, common pool resources, congestible resources (club goods), and pure private goods. The intent here is to narrow the focus to of the discussion to market failures as relates to the disposition of Earth’s estate, our so-called natural resources. Pure public goods are non-excludable and non-rival; in other words, there is no exclusion from use and no reduction in value due to use, the classic example used being a lighthouse. Common pool resources (open access resources) are defined as non-excludable, but rival. Examples of common pool resources include ocean fisheries, or grazing use of the village commons.

Congestible resources are excludable but non-rival, e.g. Yellowstone Park. Admission is

60 required (excludable) and to an extent the park is non-rival, however there is capacity over which park use becomes rival – a limit beyond which additional guests detract from the value of one another’s experience. Finally, private goods are both excludable and rival.

Understanding this spectrum helps to understand the primacy given to private property, rights of exclusion that support the market objective of efficiency; obviously the boundaries between pure public goods, common pool resources, and congestible goods are less clear. Regarding NRE, on the spectrum of non-private goods, not all goods are natural resources. However, all natural resources are on the goods spectrum and therefore subject to market failure. In the case of natural resources, market failure includes both externalities and public goods. NRE recognizes these market failures and advocates for remedies that involve government intervention, regulations. The desired effect of market failure regulations is not to properly manage the resource, but simply to correct the price signal.

Role of the State -Earth Estate Stewardship

A political analysis of the role of the State as trustee of the citizenry is beyond the scope of this thesis, however the interaction between economics, policy, and their supposed resolution of the fact-value dichotomy is important to understand. Although “values were the domain of the legislative body, or elected officials more generally, and administrators were involved with carrying out instructions, not with setting a value-based agenda” (P. G.

Brown 1994, 9), legislated policy continues to be sufficiently ambiguous that it relies on its implementation to determine and institute engrained values.

There are at least two reasons for doubting that this way of stating the fact / value distinction holds up. One is that the administrative roles have a great deal of discretion built into them. Authorizing legislation typically carries a rather vague mandate. There is no way to decide what to do without making value judgements. Second, the distinction overlooks the role that administrative agencies play in the value-shaping process.

Reports and testimony from administrative agencies help set the agenda of elected officials. (P. G. Brown 1994, 144)

The political administration (the state) relies largely on economists to direct policy implementation. Natural Resource Economists are committed to the market framework,

“itself founded on a set of incomplete and tacitly assumed values” (ibid, xx). The market maxim is directed, or implied in legislation, that was formerly underwritten by mainstream economics (including NRE). The NRE (false) value-free assertion, cloaks the embedded value-laden NRE assumptions with the pretense of a legislative directive - a directive originally sponsored by the NRE market maxim. This interwoven construct serves to protect unquestioned embedded assumptions from scrutiny. In this way, the political administration sidesteps assertion, or lack of assertion of values - rather it imitates Pontius

Pilate deferring responsibility to the Natural Resource Economists for policy direction.

We must recall that the market mechanism is exclusively dependent on the price signal to affect efficiency. Negative outcomes, such as - toxic waste, air and water pollution, loss of biodiversity, or land degradation are considered ‘negative externalities’ and therefore simply not considered. Collectively these are assumed to be correctable

(made efficient), provided with modified price signals or market substitutes. The price signals are modified by regulation and intended to incorporate the prices of externalities in the production functions. Likewise, the spectrum of public goods market failures are addressed with regulation; for example, blocked exchanges, regulations the exclude goods or services from the market, e.g. drilling for hydrocarbons on public lands, extracting timber on national forests, and “specific resource allocation across generations”

(Georgescu-Roegen 1971) (H. E. Daly 1996). This patchwork approach is necessary in

62 pursuit of the NRE objective of efficient allocation while adhering to the market mechanism.

Role of Science – Earth Estate Stewardship

The Technozoic worldview embraces this patchwork approach, this fragmented thinking. Paradoxically, even though the physical and biological sciences are the basis of technological prowess, the Technozoic worldview extends antiquated notions of separateness in natural systems’ ‘elements’. “The physical and biological sciences have an enviable rigor. They explain a great deal, and their predications are remarkably accurate”

(P. G. Brown 1994, 10). However, in the context of current administrative-legislative and economic-advisory functions, the sciences are treated as discretionary inputs. Once again, the objective of market efficiency takes precedence over consideration of market effectiveness and for the scientific realities of purposely ‘unanticipated outcomes’.

Summary of Salient Overarching NRE Principles and Assumptions

Progressing to conversation with Tietenberg’s NRE text, summary of the principles and assumptions discussed above - sets the stage.

• NRE’s primary objective is to maximize efficient allocation of natural resources; land, forests, soils, mineral deposits, water, and atmosphere. • The market is considered the best mechanism to effectuate this objective. • The NRE market approach includes tacitly embedded values and assumptions, not infrequently inconsistent with the guiding legislation’s intended value proposition. • Markets are subject to failure, inefficient allocation of public goods, or externalities. Addtionality, NRE methods are subject to failure based on simplifying assumptions. • Natural resources frequently exist on the public goods spectrum and are broadly affected by market failure. • The NRE prescription to remedy market failure is regulation. • Regulations can be intended to correct the price signal, e.g. in the case of externalities. • Regulations can be intended to remedy market failure directly, allocate or block public goods exchanges in the market. 63

Chapter 4 – Natural Resource Economics Methodology in Action

This chapter will employ a four-step pattern. First, an assertion will be drawn from the NRE text that includes its associated NRE methodologies. Second, examples of applied

NRE prescriptions will be presented with their embedded assumptions teased out of the examples. Third, the consequences of the NRE applications will be identified and examined.

To undertake the four-step NRE evaluation approach described, the first assertion to be discussed is an overarching contention founded on the ‘scarcity premise’ of mainstream economics. This assertion establishes the foundational claim that market systems are democratic (which certainly is arguable) and are a sufficient means of providing solutions to the enormous environmental challenges humanity faces. This analysis is followed by four specific examples of NRE methodology in action. These examples include dealing with an externality (point source pollution), dealing with protecting public goods (non-point source pollution), dealing with the conversion of renewable resources to non-renewable resources (soils management), and methods dealing with perpetual growth.

Tietenberg’s overarching NRE assertion

One of the keys to understanding how society will cope with increasing resource scarcity and environmental damage lies in understanding how social systems will react. Are market systems, with their emphasis on decentralized decision making, and democratic political systems, with their commitment to public participation and majority rule, equal to the challenge? Our examination of the record seems to suggest that while our economic and political systems are far from infallible and have exhibited rather glaring deficiencies, no fatal flaws have become evident. (emphasis added) (Tietenberg 2015, 533)

In contrast with the authors’ assertion that “no fatal flaws have become evident”, this thesis takes the position that the Western secular political economic project, with its 64 strictly instrumental value system, is on a collision course with reality. The current measurable degradation of the planet is an undeniable demonstration of a fatal flaw, proving that the current systems are not only insufficient to address the assortment of environmental problems we face; they actively contribute to them.

NRE Response to Market Failures – Externalities & Public Goods

We will use two specific examples to scrutinize NRE response to market failure due to externalities along with failure in the spectrum of public goods. The first example of market failure due to externality draws on a specific example of water pollution from

Tietenberg’s NRE text. This simple example is sufficient to identify and call into question embedded NRE assumptions regarding agency and complexity. This example also makes it possible to identify the base assumptions being employed to scope the problem and its associated consequences. This form of analysis continues with an actual case of market failure involving public goods, and traces a specific example of NRE applications attempting to address water pollution in Virginia. This example includes the political interplay and the methods prescribed and employed, as well as the actual results. This example is then recast using Ecozoic principles and describing the expected results of their application.

First Example: NRE – Externalities, Assumptions, and Solutions

The simplified externality case explored here demonstrates application of the usual

NRE definitions of such a problem, along with the methodology applied to address this particular case of water pollution. The model presented in the text was simplified for pedagogical purposes and this simplification suits the critique here. The example involves

65 a steel mill that discharges waste into a waterway that has a negative impact on a downstream resort hotel.

Suppose two firms are located by a river. The first produces steel, while the second, somewhat downstream, operates a resort hotel. Both use the river, although in different ways. The steel firm uses it as a receptacle for its waste, while the hotel uses it to attract customers seeking water recreation. If these two facilities have different owners, an efficient use of the water is not likely to result. Because the steel plant does not bear the cost of reduced business at the resort resulting from waste being dumped into the river, it is not likely to be very sensitive to that cost in its decision making. As a result, it could be expected to dump too much waste into the river, and an efficient allocation of the river would not be attained. This situation is called an externality. (emphasis added) (Tietenberg 2015, 24)

This example highlights two embedded assumptions – anthropomorphism (in this case limited agency) and linearity (as opposed to complexity). The simplification used for this example highlights the conflict in interest “whenever the welfare of some agent, whether a firm or household, depends not only on his or her activities, but also on the activities under the control of some external agent” (Tietenberg 2015, 24). The embedded assumptions include the consideration of a narrow set of human ‘agents’, whose only measure of value is monetary. This oversimplification reduces the problem of steel waste in a river system to a linear cause /effect relationship between these very few (two) agents.

The second embedded assumption narrows concern to a linear problem between these two parties, without consideration for collateral damage to other parties. In contrast to this view, current science conceives rivers as complex systems.

Hydromorphology is a relatively new field that deals with the structure of hydrological systems and changes in their form over time. Many such changes are influenced by human-induced pressures. Realistic attempts to conceptualize hydromorphological forms and processes reflect the fact that rivers are complex multidimensional systems with longitudinal, lateral, vertical and temporal components, as well as being hierarchically organized, with fine-scale elements embedded within reaches, segments and river networks. (Tanago 2016, 35)

The flaws in NRE thinking exemplified here include anthropocentric presumptions that the river belongs to humans exclusive of other life. This is evidenced with the NRE definition of agency, both human businesses run for profit. The second concern is the

‘external’ nature of the economic problem, a problem defined without consideration for nature’s economy with no direct consideration for impacts of steel waste on the natural system. Rather myopically, the concern is efficient allocation of the river for human use alone – shrinking the myriad effects of river pollution into the simplistic dichotomy of waste disposal versus recreation. Tietenberg and Lewis then suggest that regulatory limits on waste discharge could be imposed to address the market inefficiency. Implicitly, NRE thinking considers the economic question of efficient allocation of the river as separate from larger consideration of the river in the context of planet, also external to NRE.

The application of simplistic solutions (NRE methodologies) to address this distorted view of exactly what impacts there are on complex systems is a clear example of a fundamental flaw of the NRE approach. It illustrates the regressive mechanistic approach taken to complex systems, and highlights the disconnect between current biogeochemical science and NRE. There are myriad of interrelationships (Ahmed 2014) hosted by river systems which are beyond the scope of NRE consideration, and even within its own definitions and requirements, arguably these are additional externalities that have not directly been addressed and therefore reveal another flaw in this approach.

NRE Solution to Externality

In order to resolve externalities, many interventions would be required of the NRE applications in order to address each of the many interrelated externalities, and we note again that this example is emblematic of the entire NRE paradigm. The compounding

67 problem of multiple regulatory patches needed to deal with a host of individual externalities can become untenable. This issue is consistent with Kuhn’s argument that a paradigm holds until there is enough evidence to cause a shift in thinking, when a new paradigm is born

(Kuhn 1996, 19). This thesis continues with the contention that a new paradigm is overdue, a fundamental change in approach to markets’ use to allocate natural resources and underlying NRE assumptions.

“Truth emerges more readily from errors than from confusion” – Francis Bacon

Thus far in this simple example, three embedded assumptions are exposed. These include: 1) the strictly anthropocentric worldview - exclusive human agency; 2) the instrumental value system that reduces all value consideration to money (price); and 3) the human economy as separate and dis-embedded from nature’s economy. The failure of the market mechanism to meet the prime objective of efficiency is addressed using NRE’s method, government regulation, to incorporate the ‘externality’ with a price (regulatory compliance cost), and thereby achieve efficiency. NREs method includes defining the externality and effectuating the price signal required to achieve efficient allocation of the resource in question - in this case “efficient allocation of the water” (Tietenberg, 2015, 24).

Second Example: NRE – Protecting Public Benefits, Methods and Assumptions

As with NRE approach to market failure resulting from externalities, their approach attempting to remedy inefficient allocation of public goods is to amend prices for those goods with government intervention. This curative introduces the NRE benefit-cost analysis (BCA) method into the discussion, together with its ingrained discount rate. Other

NRE methods are also available to augment BCA, including Cost Effectiveness Analysis

(CEA) and Impact Analysis (IA). Review of the BCA is sufficient to identify embedded assumptions and bring to light the foundational value system discrepancies.

NRE Methods - Benefit Cost Analysis (BCA)

As the name implies, the BCA analysis is used to evaluate the relative cost of benefits associated with some proposed action. In its simplest form, if the benefits (B) exceed the cost (C) of the proposed action - then the action is supported - if not then the action is not supported. The next level of complexity involves considering benefits and cost over time. For instance, costs incurred now for some benefit in the future implies an investment with a cost of capital included in the cost analysis, an interest rate for capital.

Likewise, the monetary value of the benefit to be realized in the future is evaluated with a discount rate. In this way, the cost and benefits are standardized to a present value (PV) which allows direct comparison, a net present value (NPV) of the costs and benefits. If the

NPV is positive the action is supported, if negative, the action is not supported. The analysis can be further refined when multiple individual actions or combinations of actions are considered with an eye toward the solution that provides the optimal NPV.

There are two forms of error in setting up this analysis. First all the line items are often not included (all the costs, all the benefits). Second the values assigned are often incorrect (or unverifiable). Every process step involves elements of uncertainty and risk.

Risk, as first articulated by the economist Frank H. Knight in 1921, is something that you can put a price on. ... Uncertainty, on the other hand, is risk that is hard to measure. Knight said that objective probability is the basis for risk, while subjective probability underlies uncertainty. (Knight 1921)

A range of risk can be quantified for BCA line items, given some probability assumptions.

Alternately, the line items subject to uncertainty assessment entail a subjective valuation

69 that is likely based on opinion (and bias). Uncertainty requires careful consideration, best addressed with the precautionary principle.

BCA Structure – Direct Costs and Contingent Valuation Assumptions

The three elements of the BCA to be highlighted here include the development of the cost estimate, the benefit estimate, and the applied interest and discount rate. Of these the most straight forward may be the cost of the proposed action. Generally, the cost involves an expenditure and the confidence interval for the estimate can be specified. The benefits can be more elusive insofar as they include tangible and intangible (qualitative) outcomes. Tangible benefits may be directly priced; intangible benefits require some mechanism for quantification in the NRE BCA.

There are a variety of methods currently being used to quantify qualitative benefits.

Contingent valuation or benefits transfer, the results of analogous research are often used.

The contingent valuation method is a stated preference approach to the valuation of non-market goods in which survey respondents are asked hypothetical questions directly about their total economic values. The advantages of the method include flexibility, ability to estimate nonuse values and an ability to incorporate ex-ante uncertainty. (Whitehead J.C. 2015)

There are a variety of methods currently being used to quantify qualitative benefits.

Contingent valuation or benefits transfer based on the results of analogous research are often used. The challenge of these methods is entrenched in a mechanistic approach for evaluating economic value, parsing value into three components, 1) use value, 2) option value, and 3) non-use, or passive value. The third, passive value can also be considered

‘existence value’, or ‘value for future use’ (or even ‘future option’ value). The approach attempts to simplify the problem and solution sets and reduces all attributes to financial measures. Benefit transfer uses the result of similar studies on the resource being

70 considered to assign values. Contingent valuation methods, such as willingness to pay

(WTP) or willingness to accept (WTA), are also often used as a proxy for market price in the BCA. This anthropocentric approach is based on consumer preference and ignores facts of ecology involved, nor does it attempt to capture the interrelated nature of environmental components. The approach does measure individual preference, generally corresponding with consumer preference. Although somewhat arbitrary, consumer preference resolves to a measure of utility, a workable NRE variable consistent with the NRE embedded utilitarian ethic.

Recalling the discussion in chapter two regarding commensurability, the second type of error in BCA is defined simply as using the wrong value. The estimate of cost may be significantly mistaken, either over- or under-estimating value. The estimate can also quite easily be a misrepresentation, due to the effort to reduce all the benefits to money.

…most economists remain extremely reluctant to acknowledge even the possibility of monetary incommensurability, perhaps because of a fear that it entails abandoning the entire consequentialist framework of welfare economics. (Aldred 2006, 157)

The fundamental NRE premise that markets are the ultimate arbiter of allocative efficiency, the paramount NRE goal, requires monetary commensurability in order to retain its reliance on the price signal.

As identified above, considering simple versus complex systems, BCA valuation can be an example of simplification attempting to address complexity. The system’s view of resource allocation in question, for any given BCA, will require the evaluation of costs and benefits with consideration for the interrelatedness of the resources and all the various lifeforms that will be affected. This interrelatedness and the fact of entwined relationships within natural systems will always entail additional benefits and costs not currently even

71 contemplated in anthropomorphic BCA considerations, a situation dealt with in more detail in chapter six.

Who Pays - Who Benefits

Another consideration in the application of the BCA involves the questions of who bears the cost and who receives the benefits. This examination includes return on capital and environmental degradation. Profit maximization or capital rent seeking can come at the expense of less privileged members of society, future generations, and the environment, including its many voiceless plants and animals that sustain natural systems. BCA outcomes that recommend less environmental protection lead to higher profits that accrue to the capital investor class, and higher negative environmental impacts for the broader population; this is a form of wealth redistribution. The capitalists, in this case the shareholders in, for example, industrial oil interests, will increase their wealth via extraction of oil; while the cost (reduction in wealth) accrues to the local population, natural systems, and future generations. This is a social justice issue; however, it is worth noting

NRE BCA can, by its very nature, thereby be biased (manipulated) toward capital – the wealthy members of society. Insofar as capital (the wealthy) dominates the political system, and this system strongly influences NRE analytics, the BCA results can be and unfortunately sometimes are, directed to favor capital rent-seeking--for example the current efforts to open the Artic Wildlife Refuge (ANWR) to oil production.

ANWR represents both an oil rich and wildlife rich environment. Due to ANWR’s unique nature, it is difficult to find an effective balance between maintaining these two resources. Under the hypothetical model of oil development in ANWR, there would be dramatic habitat destruction and migration disruption, similar to the construction of Prudhoe Bay. However, with stricter regulations for ANWR development, the potential negative environmental implications would be reduced. Additionally, the benefit-cost analysis of

Hahn and Passell revealed the benefits of opening ANWR to oil drilling outweighed the costs. (emphasis added) (Ikeda 2011, 12)

The ANWR BCA includes no costs for habitat destruction, migration disruption, or associated intergenerational costs. These issues are quite real, however, and must be considered across generations, insofar as extraction benefits (revenue) accrue to some members of the present generation and the degradation of the environment becomes cost born by human and non-human life, and future generations. This is an example of the first type of BCA error described above, line item exclusion. Although recognized and documented impacts are expected, “dramatic habitat destruction and migration disruption”, the cost (to the oil company) is excluded from the BCA altogether – eternalized.

Discount Rate

The time preference for extraction/consumption is reflected in the discount rate.

Recall that the discount rate is the percentage by which a future value (FV) is reduced to a present value (PV). A lower discount rate yields a higher PV and vice versa. For example,

$100 ten years hence is worth $39 today with a 10% discount rate. $100 ten years hence is worth $61 today at a 5% discount rate. The choice of discount rate has a material impact on the outcome of the PV of future benefits. The discount rate is embedded in the BCA

n equation; PV= [Bn] = Bn / (1+r) . The present value (PV) of the future benefits (B) in year

(n) is discounted by rate (r), which can swing the outcome significantly.

Economists do not have a theoretical basis for recommending a discount rate for intergenerational equity problems. This is a normative issue where the preferences of some parties cannot be known (Lind and Shuler, 1998, 59). Economists need not be paralyzed by such problems, but it will help if they are honest. For example, they may be able to say that all efficient solutions are not sustainable, but

they should be cautious about specifying a particular efficient solution as intergenerationally optimal. (Castle, 1999, 300)

Recalling that discounting is related to interest rates applied to the investment in the activity, there is a broader discussion to consider regarding the choice of interest and thus discount rates. Suffice to say that the discount rate is a material assumption, a value judgement, embedded in the BCA calculation.

Discount Rate Selection

A brief review of the discount rate selection here will be followed by a specific example use within a BCA application for a water quality investment decision in Virginia.

Discount rates (DR) are considered in two categories, private and public (social) discount rates. The private rate established by investors is generally the best of their risk adjusted alternatives, the best alternative rate of return. This rate consists of the risk-free cost of capital, the return the investor could receive bearing no risk (for instance treasury bills) plus the risk premium. The social risk premium frequently diverges from the private risk premium, although the NRE text identifies this as source of market inefficiency. There can also be differences in time preference. Discount rates and their market relationship are defined by Tietenberg and Lewis here.

…the social discount rate is equal to the social opportunity cost of capital. The cost of capital can be separated into two components: risk free cost of capital and the risk premium. The risk-free cost of capital is the rate of return earned when there is absolutely no risk of earning more or less than the expected return. The risk premium is the additional cost of capital required to compensate the owners of this capital when the expected and actual return may differ. Therefore, because of the risk premium, the cost of capital is higher in risky industries than in no-risk industries. Though private and social discount rates do not always diverge, they may. When those circumstances arise, market decisions are not efficient. (Tietenberg 2015, 64)

For this thesis, the social discount rate is used for the examples. In contrast with the

NRE textbook contention that private risk may converge with the social cost of capital, this 74 is actually unlikely. Private risk is the fully exposed market rate of risk/loss. Public risk is inherently subsidized by taxing authority; hence less risk is experienced by the investor, who is therefore expected to require less risk premium. The discount rate is prescribed for public investment, for instance The Office of Management and Budget (OMB) prescribes a range of rates associated with the time under consideration. Published rates for 2017 range from 1.4% for three-year investment to 2.8% for thirty-year investments. (OMB

2016)

In the Virginia BCA example evaluated below, three discount rates are prescribed and examined. To set the stage for this Virginia example, which shows public benefits market failure, the historical legislative background is presented first.

Second Example: Background - Role of the State, 1972 Clean Water Act (CWA)

In 1972 the Congress passed the CWA - purportedly a moral imperative to protect the Waters of the United States. The water quality goals stated by the Congress were -

“to make all U.S. waters fishable and swimmable by 1983”, “to have zero water pollution discharge by 1985”, “to prohibit discharge of toxic amounts of toxic pollutants”.

The Clean Water Act significantly expanded the 1948 Federal Water Pollution Control Act.

The stated overarching goal was “to restore and maintain the chemical, physical, and biological integrity of the Nation’s waters” (33 U.S. Code § 1251 - Congressional declaration of goals and policy). President Nixon vetoed the bill due to cost, however an unusually unified Congress overrode the veto (The American Presidency Project 1972).

Generally, the bill directed the Environmental Protection Agency (EPA) to stipulate limits for so-called “point source” discharges, and enforce these regulations using permits, via the National Pollution Discharge Elimination System (NPDES). NPDES permits were 75 geared to address the Total Maximum Daily Load (TMDL) that each water body could absorb and still maintain integrity. These limits were applied to point sources of pollution

(end of pipe). Municipalities were required to implement secondary treatment standards by

1977. Industries were required to meet a stricter standard using Best Available Technology

(BAT) by 1983.

Importantly, two distinct discharge sources come into focus. The first, point source,

‘end of pipe’ discharge sources are subject to the NPDES permit system described above.

The second are non-point source discharges, e.g. stormwater and agricultural field runoff.

The intent of the legislation was for States, in partnership with the EPA, to establish total maximum daily load (TMDL) limits and regulatory controls for the non-point sources.

The 1972 Congress may also have been influenced by the view that control of non-point source pollution is a form of land use control and that land use control rests traditionally with state and local governments, not with the federal government. Science, Politics, Law, and the Arc of the Clean Water Act: The Role of Assumptions in the Adoption of a Pollution Control Landmark. (Glicksman 2010, 116)

Administration - Instrumental Values preempt Virtue

The 1972 CWA can be considered “symbolic legislation” (Dwyer, 1990, 233). The moral imperative to eliminate water pollution was severely undercut by the approach to establishing controls for non-point pollution, stormwater runoff, and agricultural runoff.

This law has been characterized as symbolic insofar as “the legislature has failed to address the administrative and political constraints that will block implementation of the statute”.

…while the statute, literally read, promises a risk-free environment, the hard issues involved in defining acceptable risk are passed on to the regulatory agency or to the courts. The actual regulatory program takes shape only after additional legislative, administrative, or judicial developments that transform symbolic guarantees into enforceable standards. (Dwyer, 1990 p 233)

Point source controls have had some success over the course of the last forty years, but this has not held true for non-point sources, and overall water quality remains poor.

The EPA funded point source municipal remediation until 1987. Subsequently the funding mechanism shifted to loan assistance program administered by the EPA and state agencies, the so-called Clean Water State Revolving Fund (CWSRF).

Since the 1972 U.S. Clean Water Act, government and industry have invested over $1 trillion to abate water pollution, or $100 per person-year. Over half of U.S. stream and river miles, however, still violate pollution standards. (Keiser and Shapiro, 2017, 1)

The point is that the legislature provided guidance with a virtue-laden objective, pro health and the environment, and against trading lives for dollars. As described in the

Role of the State (chapter 3), the values expressed in the final outcome are the result of the administrative mechanisms employed for implementation. While legislators seek credit for virtuous intent, the role of science and economics determines outcome (setting aside corruption and other implementation issues).

Science provides the parameters defining water quality, and ultimately NRE methods actualizes the value system asserted in its own presumptions. In so doing, NRE applications demonstrate the effect of embedded values, although they are presented as factual analysis.

The fact-value distinction (page 28) unravels as the ‘value free’ NRE analysis pre-empts the supposed virtuous legislative intent - an instrumental value ‘end run’ around virtue.

Legislating BCA - NRE Instrumental Values

The CWA was amended in 1986; however, President Reagan pocket vetoed the amended act, once again claiming the price was too high. Reagan further affected the efficacy of environmental regulations by imposing the use of BCA on all proposed actions,

As a result of the Reagan Administration's Executive Order 12291, benefit-cost analysis is playing an increasingly important role in the EPA regulatory process. Benefit-cost analysis has assisted in organizing information and improving cost estimates. It has influenced the choice of regulatory criteria and aided in the developing degrees of stringency for environmental regulations. [Fortunately] The usage of benefit-cost analysis is limited by interpretations of portions of the Clean Air Act and Clean Water Act that restrict consideration of costs or establish technology standards. (Luken 1985, 373)

This CBA requirement is consistent with the Reagan administration’s basic drive toward market fundamentalism. The CBA uses dollars (willingness to pay) to limit science and also the intent of the CWA. The EPA charter under the CWA dealing with point source pollution is a relatively straight forward proposition from the perspective of controlling end-of-pipe discharges. System complexity regarding pollution carrying capacity ultimately remained the challenge. For example, human health standards were used as a way to assess the total maximum daily load (TMDL) a receiving water body can handle from all sources, point and non-point. Given the TMDL, which is a “pollution diet” for a receiving water body, point source discharge limits are allocated with NPDES permits.

With the well-defined point source parties responsible for discharges, the assumption was made that best available technology would provide the solution to pollution discharge, and also provide the ability to achieve competent compliance confirmation. the stage was set for success. Correspondingly, point source pollution has been significantly reduced under the CWA. In contrast, non-point controls have not been successful.

1972 CWA - Net Effect

The overall result is less positive, even forty-three years following the passing of the CWA. “Instead nearly two thirds of all waters assessed by the states are impaired, including 68 percent of the area of assessed lakes, ponds, and reservoirs and 78 percent of assessed bays and estuaries” (Radcliffe, NEIWPCC, 2012, 1). The NRE approach, market

78 fundamentalism, focuses on price and requires a simplified problem to achieve efficiency, to achieve a successful outcome. Point source pollution largely fit this model. Non-point discharges represent a more complex problem both in terms of establishing TMDLs and in terms of discharge controls. It is the primarily non-point contributions to the waters of the

U.S. that have continued the degradation of the hydrosphere.

The variety of solutions used to address non-point pollution is more directly tied to environmental management practices and somewhat less dependent on technology. These solutions require biophysical systems thinking. The NRE methodologies applied to non- point pollution have not, in themselves, provided adequate systems thinking to address the goals of water integrity (fishable and swimmable) as the 1972 Clean Water Act mandated.

Recalling that the point source solution was federally mandated to achieve the limits imposed by the TMDL via the best available technology – the emphasis was on the effectiveness of the outcome. With the nonpoint pollution objective implemented with an emphasis instead on market efficiency, at the expense of overall effectiveness, NRE prioritized cost. The NRE methods have been used to countermand the moral imperative intended by the Congress. This very important distinction will be highlighted further in the thesis. NRE methods were used to countermand the original legislative intent. This tactic, executed to the detriment of society and for the benefit of the few is not uncommon.

Second Example: NRE BCA – Chesapeake Bay Application

Focusing on a specific example of BCA applied to a water pollution problem in

Virginia drawing from the background above provides insight into the imposition of NRE instrumental market values. The Chesapeake Bay was a keen focus of the 1972 CWA. The

Bay suffered from both point and non-point pollution, resulting is dead zones--areas within the waterbody that have insufficient dissolved oxygen to support life. The Bay’s 64,000 square mile watershed, source of its water, includes the District of Columbia and portions of New York, Pennsylvania, Maryland, Delaware, West Virginia, and Virginia (figure 1).

Figure 1 - Chesapeake Bay Watershed 80

Overall water quality was still impaired 30 years after CWA enactment (figure 2).

There are still multiple pollution sources affecting the Bay, including: septic systems (3%); stormwater runoff (15%); wastewater treatment; factories; point source (16%); air pollution (25%); and agricultural runoff (41%), especially from Virginia industrial hog farms. (www.cbf.org: accessed 2/11/2018)

Figure 2 - Chesapeake Bay Water Quality – 2005 Source: Chesapeake Bay Foundation – 2/11/2018

Non-point pollution sources contribute over 55% of the “pollution diet” of the Bay.

Point source pollution contribution has been significantly reduced due to the 1972 CWA. 81

CWA Two Step Approach – Important Variance in Results

“A core element of the CWA is a two-step approach to improving water quality, which delegates certain responsibilities to EPA and others to the states in furtherance of the Act’s stated purpose of promoting cooperation between federal and state governments.” (Chesapeake Bay TMDL District Court Decision Sept. 13, 2013-EPA; accessed 2/11/2018)

The responsibility to control non-point pollution sources was delegated to the states which were intended to work together with the Environmental Protection Agency

(EPA). This aspect of the 1972 CWA introduces a geographic complexity, shared responsibility among the six contributing states. It is important to recognize that political boundaries (states, counties, and municipalities) do not coincide with biogeochemical boundaries (watersheds, ecological communities, land use land cover types). It is the later category that governs pollution load contributions to the Bay, while it is the former that is responsible for administration of the CWA. This arrangement creates complex circumstances. Political administration of the CWA does not correspond with biophysical impacts or consequences which overlap political boundaries - authority and responsibility become convoluted. For instance, a municipality may have a TMDL discharge limit

(responsibility) defined by a boundary that does not encompass the stormwater and agricultural runoff perimeter. The downstream load measure for which the municipality is responsible does not reflect the upstream load received, a load over which the municipality has no authority to control.

The CWA established the intent that TMDL’s be established on a watershed basis and established a mechanism to share the cost of development of watershed plans - §319.

Where watershed plan has not been developed, the TMDL required for impaired waters can be established with the best available information. TMDLs are the scientific contribution to the administration of the states required CWA obligations, controlling non- 82 point sources. The NRE contribution includes the required BCA, based on the TMDL requirements.

The CB Watershed is Comprised of Many Sub-Watersheds

A watershed is a drainage area, a catchment. The USGS has an accounting system that catalogs watersheds using a “hydrologic unit code” (HUC) ranging from large to small catchment footprints (USGS 2018). The HUC defines the watershed on a geographic

(topographic) basis. The hierarchy ranges from region (large) to sub-watershed (small).

The Chesapeake Bay falls in the Mid-Atlantic Region (02, of 20). The region is further divided into nested watersheds – ranging form sub-region hydrologic unit codes with (4- digits), to the smaller basin (6-digits), to the yet smaller sub-basin (8-digits), to the watershed (10-digits), to sub-watershed (12-digits). The Chesapeake Bay drainage is composed of four sub-regions which include: the Susquehanna River Basin (catalog number 2050); the Upper Chesapeake (2060); the Potomac River Basin (2070); and the

Lower Chesapeake (2080). It is these watersheds boundaries that are used to determine the

TMDLs, the scientific contribution to CWA administration (National Hydrography Dataset

(NHD) 2018).

The HUCs, or hydrologic units, “are arranged or nested within each other, from the largest geographic area (regions) to the smallest geographic area (cataloging units). Each hydrologic unit is identified by a unique hydrologic unit code (HUC) consisting of two to eight digits based on the four levels of classification in the hydrologic unit system.” (USGS 2018)

The common base accounting unit is the subbasin 8-digit HUC. This base unit often used for evaluating regulatory requirements, including TMDL requirements. It is clear that the Chesapeake Bay drainage area is comprised of many subbasins, 58 total 8-digit HUCs.

Recall that political boundaries do not coincide with subbasin boundaries, leading to even

83 more administrative bodies involved in the coordinated ‘two-step’ implementation of the

CWA between the EPA and the local political administration. Understanding the legal, procedural, historical, and scientific complexities of the CWA (the comprehensive water quality statute designed “to restore and maintain the chemical, physical and biological integrity of the Nations waters”), it is no surprize that 45 years hence, the implementation is ongoing with unsatisfactory water quality results. As described above, NRE has been legislated for use, and employed to provide cause to avoid implementation of the CWA based on cost in excess of benefits. Follows are the details of an actual case in Virginia.

Second Example – Virginia Applied BCA

The Chesapeake Bay is the second-largest estuary in the world, with contributing drainage of 64,000 square miles including land from six states and the District of Columbia.

The contributing watersheds, totaling 58 USGS 8-digit HUC subbasin areas, streams, and

Bay tributaries, cross multiple state and local jurisdictional boundaries. These local jurisdictions are responsible for implementation of non-point pollution controls under the rubric of “cooperative federalism” (Jones 2014, 277).

The CWA’s cooperative federalism is revealed by its approach to improving water quality, which delegates certain responsibilities to the EPA and others to the states. The Act does so in two steps: first, in its approach to point sources – “any discernable, confined, and discrete conveyance” such as a pipe – and second, in its approach to improving ambient water quality under Section 303’s TMDL strategy. (Jones 2014, 290)

Local administration involves implementation of a state’s scientifically developed

TMDL, and execution of the so-called TMDL IP (implementation plan). A Benefit Cost

Analysis (BCA) has been executed in advance of the implementation plan for an impaired watershed in Virginia. The example of the BCA for a Virginia watershed provides insight into the efficacy of the BCA for this general application, and the results of the decision

84 process guided by the process. The example BCA is for the Opequon Creek Watershed located in Virginia and West Virginia and draining north to the Potomac River and to the

Chesapeake (figure 3).

The total area of Opequon Creek watershed is about 890 km2, with the Virginia portion covering about 44% of the area. Current land use in Virginia portion of the watershed is 50% forest, 30% agriculture, and 20% is urban. The watershed is urbanizing rapidly with annual population growth rates in Clarke and Frederick Counties (2.5% and 3.6%, respectively) above the U.S. average (US Census Bureau 2006). (Borisova 2008, 1010)

Opequon Creek and its main tributary Abram Creek were classified as impaired in 2003.

Figure 3 - Opequon Creek Watershed used for Benefit Cost Analysis TMDL plans for Upper and Lower Opequon Creek and for Abrams Creek were developed and approved by the Virginia State Water Control Board in 2005 (Borisova 2008, 1011). 85

Opequon Creek Watershed – TMDL BCA

This [BCA] analysis examines a TMDL written to address bacteria and aquatic-life-use impairments on Abrams and Opequon Creeks in Virginia. Benefits were estimated using a contingent valuation survey of local residents. Costs were based on the number and type of best management practices (BMPs) necessary to achieve TMDL pollution reduction goals. Based on our projections, the costs to achieve TMDL induced pollution reduction goals outweigh the estimated benefits. Benefit-cost ratios ranged between 0.1 and 0.3. (Borisova 2008, 1009)

This watershed is classified as impaired; however, BCA results would recommend no action be taken to remedy the Opequon and Abrams Streams impairment (Tietenberg

2015, 47). This guidance is not the final decision, this recommendation does set the stage for non-compliance with the CWA §303 (Tietenberg 2015, 70). Unpacking the BCA estimation of TMDL-IP costs and benefits sheds light on the effectiveness of this method.

Potential consequences of outcomes and issues with this BCA application are highlighted.

Assumptions – Costs and Benefits

The TMDL-IP cost estimate was comprehensive for direct cost, including costs for recommended best management practices (BMP) installation, maintenance, and personnel requirements. Three scenarios were developed for a ten-year period including high, medium, and low cost, and each scenario was discounted at 2.74% (OMB 2006). The BCA did not include indirect costs for negative externalities associated with practices that contributed excess N, P, and sediment to the streams, and ultimately to the Chesapeake

Bay.

“The benefits of TMDL were defined as water quality improvements to a level required to support aquatic life and designated recreational uses” (Borisova 2008, 1014).

Supporting aquatic life was considered in the immediate waters, and just downstream in

West Virginia. No consideration was given to benefits that accrue in the Potomac River or the Chesapeake Bay insofar as they were considered insignificant, they did not alter the benefit cost results. Likewise, recreational benefits were considered for a narrow range of activities – wading and swimming safety, and improved fishing. The assessment of monetary value of benefits was limited to local residents based on willingness to pay

(WTP) surveys.

NRE – Evaluation Limitations

There were several limitations placed on the benefits assessment in this example.

This application is representative of the process generally, so review of these limitations is instructive. These limitations for review include (and are not limited to); 1) the geographic challenge described above in which authority and responsibility are mismatched, 2) the question of cost and benefit matching (who pays, who receives), the limited range of benefits considered, 3) the contingent valuation process, 4) the choice of discount rates, and 5) apparent optionality to comply or not with the CWA requirements, in other words to opt out of compliance. A legitimate defensive argument can be made that the CWA §319 calls for a watershed plan, and in the absence of the plan (often due to expense) rough approximations are made for the monetary analysis – this bolsters the critique of the use of this application to achieve NRE efficiency. This will be taken up in the summary argument.

Accounting Stance – Geographic Discrepancy

BCA under consideration is in the Shenandoah Watershed Hydrologic Unit Code (HUC)

02070007. Taken on an individual basis, as this Opequon Watershed evaluation has been, no one individually is likely to make remarkable contributions to the Bay’s sediment- nutrient load. Taken together the load is sufficient to cause the hypoxia observed in the

Bay (figure 2).

The authority required to achieve obligations enacted by the CWA is fragmented across six states and the District of Columbia, as well as numerous municipalities. The

BCA evaluates the cost to the local residents and limits assessment of the benefits to the local residents. It is not surprising that the benefits due to reducing sediment-nutrient loading in the Bay do not appear as benefits in the local BCA, nor to the local residents.

Who Pays – Who Benefits

Not only are benefits accruing to the health of the Bay excluded from the local BCA decision process, there is an embedded wealth redistribution component. Insofar as the

BCA seeks to achieve NRE efficiency in the allocation of resources, externalization of costs is institutionalized in the process. For example, the costs associated with agricultural

BMPs, practices that would reduce the sediment and nutrient loading headed downstream, are foregone at the expense of removing the loads downstream or suffering hypoxia and the death of the Bay. Since the EPA point source pollution program, the National Pollution

Discharge Elimination System (NPDES) permit system has been successful, the expense of removing sediment and nutrient loads is falling to downstream municipalities, specifically to the NPDES-permitted wastewater treatment facilities. This remediation process is orders of magnitude more expensive than control at the source. The option for the municipalities to develop a mechanism to pay for the upstream actors to reduce their

88 loading is under development. However, this is partial solution to the problem of voluntary compliance toward the objectives stipulated by the CWA.

Benefits - What’s In, What’s Out

The specific benefits identified in the Opequon BCA are limited even beyond the geographic limits identified above. The only values considered were the improvement of water quality measured in terms of safe swimming and fishing. This is a very narrow interpretation of benefits. Embedded in these issues are human health concerns associated with bacterial TMDL limits, however the reduced health costs due to impaired waters does not enter the BCA as a benefit. Benefits to agriculture for the use of BMPs are appropriately included in the analysis. Overall, the benefits of non-impaired waters include a variety of non-market attributes as well, e.g., aesthetics, submerged aquatic vegetation, health of forests, birds and other shore life.

Benefits – Contingent Valuation

“BCA is most often justified on conventional economic grounds as a method of reducing inefficiency” (Clowney 2006, 113). In order to develop the benefit-cost ratio, all costs and benefits must be expressed in dollars and cents. For those non-market benefits

(benefits without a market price) a contingent valuation method is used to develop values.

The method used in this study was the willingness to pay (WTP) survey. In general terms, a survey was sent to the residents of the watershed. The survey was designed to gauge the willingness to pay for benefits offered (wading and swimming safety, and good fishing).

The process was executed thoughtfully for this study. There are typical WTP concerns of fairness (ability to pay factors, for instance - rich versus poor WTP) and amount of benefit accruing to specific individuals. These two factors were well accounted for in the study.

Nonetheless, the ability to determine the actual value of unimpaired local waters, and the downstream effects, based on the simple characterization of benefits is biased downward.

Because important categories of benefits are priceless, cost-benefit analysis in practice frequently turns out to be “complete cost- incomplete benefit analysis”. Cost estimates are typically relatively complete, while benefits estimates are substantially incomplete and thus guaranteed to understate true benefits. (Ackerman 2004, 207)

The cost of the analysis itself can be prohibitive, at least inhibiting the inclusion of all the factors required to achieve an accurate assessment of the true BCA ratio.

Discount Rate Selection

Discount rate selection is can be arbitrary. Discrepancy between the discount rate used to adjust cost to present values and the discount rates used to evaluation the present value of benefits is difficult to justify. The estimated costs were discounted at the OMB published rate of 2.74% - which sounds perfectly rational and acceptable. The benefits were discounted at different rates ranging from 4.25% to 29%, apparently based on a literature review (Borisova 2008, 1015) (Benson 2006). Presumably, the range in discount rates was intended to accommodate some level of embedded risk. This is best articulated explicitly rather than treated as “insurance” to provide downward bias. The effect of a large discount on benefits reduces their value significantly, further understating the potential value of the benefits – in this case the benefits of unimpaired waters.

Compliance – Effective versus Efficient

Benefit-cost analysis has broad latitude in application having substantial impact on the results, on whether the resulting ratio recommends action or not. The ANWR example above (page 70) illustrates that the approach can be used to arrive at, or justify, a foregone conclusion. Even when the methodology is fairly applied “a growing body of literature rejects cost-benefit analysis as a valid decision-making tool” (Clowney 2006, 118) 90

The particular variant of cost-benefit approach that is most commonly used now is, in fact, extraordinarily limited, because of its insistence of on doing the valuation entirely through an analogy with the market mechanism. This admits only a narrow class of values, demands that individuals be unconcerned about many substantial variations, ignored in the procedure of market valuation. (A. K. Sen 2000, 931)

Persuasive adverse arguments can be made regarding the accuracy, fairness, and honesty of the methodology underpinning benefit-cost (cost-benefit) analysis. These concerns generally fall into four categories described above; accounting stance, fairness, values comparability, and discounting. The overarching NRE intent is to achieve efficiency via market mechanisms.

The fifth and final issue raised above questioned the apparent optionality to comply or not with the CWA requirements, in other words to opt out of compliance. The CWA codified two approaches to implementation concerning the two types of pollution, the federal EPA dictum regarding best available technology and point source pollution control, and the joint EPA agreement with the states affected by non-point pollution. The point source control mechanism, the NPDES permit process, has been largely successful. There the emphasis was on effective execution toward the objective – unimpaired waters. The non-point control mechanism employed the BCA was impacted by the logic of President

Reagan’s 1981 Executive Order 12291. This executive order (The American Presidency

Project 1981) requires that BCA be used to rationalize regulations that have discrete characteristics, for instance health and safety regulations with over 100M in cost. The trend to employ BCA established by the Reagan administration become firmly rooted in the policy processes (Ackerman 2004, 167-169). The effect regarding the approach to control non-point sediment-nutrient loads was effectively optional, based on benefit-cost analytics.

The overarching effect is that overall water quality was still impaired 30 years after CWA

91 enactment (figure 2). The most egregious pollution sources affecting the Bay remain non- point, that is: (15%), air pollution (25%), and agricultural runoff (41%) – total equals 81%

(Chesapeake Bay Foundation 2018). The use of the market mechanism that prioritized efficiency over effectiveness has been a political maneuver that uses NRE for political ends. There are NRE alternatives that focus on effectiveness – Cost Effective Analysis, and

Impact Analysis (Tietenberg 2015, 68-69).

What can be done to guide policy when the requisite valuation for benefit-cost analysis is either unavailable or not sufficiently reliable? Without a good measure of benefits, making an efficient choice is no longer possible. (Tietenberg 2015, 67)

In the current context of NRE, evidenced with the preceding Chesapeake Bay TMDL example, this reliability criterion endorses the Cost-Effective Analysis. This is not meant to disregard BCA. The intent is to redefine the prioritization of NRE analyses to include and be led by the goal of effectiveness in terms of policy achievement first, only then to be followed by cost consideration. This sequence of NRE applications begins with the Impact

Analysis to establish (legislative) priorities, informed by a Cost-Effectiveness Analysis recommending the optimal approach required to achieve the specified policy target. For example, the specified target stipulated by the CWA was to eliminate impaired waters of the US by a specific date. Impaired waters refers to a scientifically defined biogeochemical condition, with defined thresholds. This policy target was the result of Impact-Analysis

(specifically, the result of public response to water pollution culminating in the Cayuga

River catching fire – not formal analysis, but politically effective). The results of the point source permit program that focused on best available technology (effectiveness) was success; while the results of the non-point market mechanism focused on efficiency did not achieve success.

BCA and Impact Analysis and Cost Effectiveness Analysis

Impact Analysis is the technique that attempts to quantify the consequences of an action, or lack of action, with no attempt to reduce consideration to a one-dimensional measure such as monetary cost. “Impact analysis places a large amount of relatively undigested information at the disposal of the policy maker. It is up to the policy maker to assess the importance of the various consequences and act accordingly” (Tietenberg 2015,

69). This NRE contribution continues with the recommendation for the least cost means of achieving the policy target – the so-called Cost-Effectiveness Equimarginal Principle.

The NRE tools available including BCA, provide the analytics to establish many of the central facts pertinent to the policy recommendations and implementation. It can be argued that the overarching emphasis on market efficiency can derail legislative intent. In fact, we can see from the Reagan experience that the emphasis on efficiency can be used to derail legislative intent. This thesis posits that the relative order used for NRE. Leading with near term market efficiency using the BCA can be misleading, and ultimately less efficient and costlier in the long run. The deficiencies of the BCA have been detailed, the net effect is that the BCA routinely excludes Earth estate values insofar as there is no price established for them. The contingent valuation process, while well intentioned, is most likely to understate true value, or replacement value (Ackerman 2004). In addition to understated values, numerous Earth estate benefits are not included at all. The cost side of the equation is more likely to be close, although it has been shown to reflect bias as well

(Haveman 1972). Based on the assumption that eventually the degradation of the Earth estate will require a remedy, postponing the investment increases the eventual cost. The contention is that NRE, in its current form, can make a better contribution by accepting the

93 shortcomings of the BCA and leading the decision process with the Impact Analysis, and complimenting the policy prioritization with the Cost Effectiveness Analysis. The result can be expected to be results for a fraction of the cost.

Third Example – Land Commodification

It is the individual farmer who must weave the greater part of the rug on which America stands. Shall he weave into it only the sober yarns which warm the feet, or also some of the colors which warm the heart and eye? Granted that there may be a question which returns him the most profit as an individual, can there be any question which is best for his community? This raises the question: is the individual farmer capable of dedicating private land to uses which profit the community, even though they may not so clearly profit him? We may be over-hasty in assuming that he is not. (Aldo Leopold, "The Farmer as a Conservationist," 1939)

Green Revolution – Brief History

In the 1940s, the Rockefeller Foundation sparked the so-called “Green Revolution” with a research project launched in Mexico to improve agricultural yields. Grant recipient

Norman Borlaug’s development of disease resistant high-yield dwarf wheat was very successful. By the 1960s there appeared to be a potential famine looming in Southeast Asia, a situation exacerbated by severe droughts, and only averted by substantial imports of food grains from the US (Parayil 1992). The agricultural success in Mexico was exported.

An outgrowth of the original Green Revolution was a joint effort by developed nations to help millions of people in India and other countries by developing hybrid seeds, fertilizers, and pesticides. In addition to high-yield wheat, other major food crop varieties, including semi-dwarf rice plants, sorghum, millet, maize, cassava, and beans, were developed to be pest resistant and grow quickly year-round so farmers could use land more intensively. (The Environmental Literacy Council 2017)

This technological response to the food shortages transformed farming practices in many regions of the tropics and subtropics. A limiting factor for grain production in hot climates occurs when the plants are fertilized; they become fragile, growing to an unnatural height which causes stalks to collapse. “It was found that if a short-stemmed grain were thickly sown at the right depth and adequately irrigated, it could take massive doses of fertilizer 94 without becoming lanky and give spectacularly high yields” (Tannahill 1988, 336). Wik, in his book Global Agriculture Performance: Past Trends and Future Prospects, among many others, gave credit to the new hybrids for what appeared to be an extraordinary jump in food production in the next few decades, with cereal crop harvests tripling despite only a 30% increase in land area cultivated (Wik 2008).

GR Objectives – Claims

The overarching promise of the Green Revolution was the elimination of hunger with the development and dissemination of these new High Yield Varieties (HYV) of food crops. The new varieties were developed to mature quickly and grow at any time of the year. Adoption of the HYV crops grew quickly between 1970 and 1990, crop areas in developing countries for wheat (20%) and rice (30%) increased to 90% in this period

(IFPRI 2000). The strategy for food crop productivity growth assumed technology

“spillover” would occur across political and climatic boundaries (Pingali 2012, 12302).

With the advent of such “miracle seeds”, the promise of economic efficiency and growth was on the horizon. Addressing the food shortage problem appeared to promise reduced poverty and provide economic development to support new demand for production inputs, and consumer goods. However, as often occurs with new technologies and Western economics, gains got more attention than costs. And the capital costs associated with the implementation of the HYV agriculture regime, including mechanization, fuel, irrigation pumps, water, fertilizer, herbicides, pesticides and the fact that all these inputs required large fields precluded many of the small holder farmers from participating. Indeed, instead of having more food and prosperity, many small holders were forced to leave the land and add to swelling urban displacements. Moreover, the rapid increase in crop productivity

95 included other unintended consequences. One was the loss of traditional practices that had sustained the population for centuries.

As early as 1889, Dr. John Augustus Voelcker was sent to India to advise the imperial British government on the application of chemical agriculture to India’s farms. On studying Indian farming systems, Voelcker stated, “there is little or nothing that can be improved.... Certain it is that I, at least, have never seen a more perfect picture of careful cultivation. I may be bold to say that it is a much easier task to propose improvements in English agriculture than to make valuable suggestions for that of India.” (Shiva 2016, 1-2) (Voelcker 1893, 11)

Since the 1960s, at which time petrochemical companies introduced new methods of intense chemical farming in tandem with HYV development, technology has dominated the agricultural sector. This reality is consistent with the mainstream Technozoic worldview, and neoclassical Natural Resources Economics.

Economic growth

With the introduction of industrial agriculture, which is now considered

‘conventional agriculture’, farming began to transition from being capable of being renewable towards a much more extractive enterprise. The reason to do this was in order to follow economic Market precepts: improve market efficiency, reduce the price of production and externalize the actual multiple costs to society and the ecosystem.

Crop farming is an “extractive” process, meaning that as plants grow, they take nutrients from the soil and turn it into plant matter. When the plants are harvested, the nutrients leave the soil’s system. (Sullivan 2004)

Optimal efficiency involves ensuring supplies of raw material, flow of commodities, accumulation of capital, and returns on investment. The increase in production with HYV and other genetically modified organisms (GMOs), intensive petro-chemical fertilizers and irrigation, provides the opportunity for substantial capital returns, but only in the short run.

The expenses “externalized” include the loss of organic matter in the soil, the

96 accompanying severe negative impact on soil biology (the organisms living in the soil that are the basis of soil health and long term productivity).

They [soil borne organisms] affect soil structure and therefore soil erosion and water availability. They can protect crops from pests and diseases. They are central to decomposition and nutrient cycling and therefore affect plant growth and amounts of pollutants in the environment. Finally, the soil is home to a large proportion of the world's genetic diversity. (Tugel 2000)

Plowing, especially with heavy machinery, exposes the soils to the atmosphere resulting in significant contributions of greenhouse gases to the atmosphere; in fact, upwards of 24% of all CO2 emissions (FAO 2014) happen this way. Repeated plowing destroys soil structure which depends entirely on its organic material and carbon content.

Along with structural loss, the soil’s capacity to absorb and retain water is thereby severely diminished. The continuous use of irrigation to replace the capacity of the soil to hold water is not only water-use and labor-intensive; it ultimately increases the salinity of the soil, eventually decreasing productive capacity and ultimately ruining the soil altogether

(Bresler 1981, 66-67). Moreover, the continuous tillage of soils exposes them to wind and water erosion – worldwide up to 75 billion tons of topsoil are eroded every year equating to: 9 million hectares of productive land lost, 80% of worlds agricultural soils are affected by erosion (Thompson 1995).

The extractive process of industrial agriculture extends to the removal of all plant material, the residual nutrients that provide all the nourishment for soil biota. Basically, this process transitions agricultural soils from a regenerative resource to a non-renewable resource. Continued production requires continuous application of fertilizers, biocides, and irrigation. In addition, the soils’ micronutrients are not replaced with the chemical

97 fertilizers; they are extracted and eventually no longer available, leading to nutrient- deficient crops and useless, hard-packed soils that cannot absorb water, termed ‘deadpan’.

Throughout this period the international consortium of agricultural scientists was naturally concentrated on increasing the yield, with little attention being devoted to the issue of nutritional quality (micronutrient density) of produced crops. Exhausted from the years of cultivation, soils slowly become more deficient in most essential nutrients, including micronutrients. (Knez 2013, 517)

The processes of agricultural industrialization, also termed ‘intensive agriculture’ reduce soils from living ecosystems to a medium for micronutrient-deficient crop production that requires ever more macronutrient inputs of Nitrogen, Phosphorous, Potassium (NPK) which are derived from fossil fuels. In 2005, American farmers used more than 22 million tons of chemical fertilizers (USDA 2006). Much of this fertilizer runs off farmlands becoming a major contribution to the TMDL, ultimately impairing waters of the US addressed by the Clean Water Act.

Sustainable practices replenish these nutrients, using compost, manure, or “green manures,” which are plants that naturally deposit nutrients in the soil. Instead of replenishing the soil, intensive practices use chemical fertilizers to supply only what is necessary to grow the next round of crops. Chemical fertilizers are not as effective as natural sources of fertility and are known to cause long-term depletion of organic matter, soil compaction, and degradation of overall soil quality. (Sullivan 2004)

The Green Revolution ushered in all these practices industrial agriculture which seemed to have the immediate effect of a spectacular improvement in agricultural production. The new era of chemical farming, however, was dependent on a massive (and costly) use of fertilizer and biocides, ultimately with deleterious effects. “It is well known today that the Green Revolution has helped neither farmers, nor the land, nor the consumers” (Capra 2015, 432). Unfortunately, the promise of economic efficiency and growth arrived with exciting short-term gains leading to corporate profitability and masking their serious long-term consequences. The new conventional agriculture did not

98 give full consideration to the existing efficacy and interconnectedness of natural systems – especially the complex nature of soil biology, which is only now coming into complete focus (Tugel 2000, 1-5).

GR Pro’s and Con’s (generally)

Summarizing the pros and cons of the Green Revolution sets the stage to evaluate the neoclassical NRE methods employed to prioritize policy and investment in this kind of agricultural land use practices. Here we can assess how the normal Benefit Cost Analysis

(BCA) is used to evaluate the sustainability of agricultural systems. A BCA is intended to compare the advantages and disadvantages of ‘conventional industrial agriculture practices’ with traditional smallholder practices (commonly referred to as agroecology, traditional agriculture, organic agriculture, or sustainable agriculture). The Technozoic conventional practice pros and cons include:

P) Benefits – short-term high yield and large scale

P) over cropping – no rest for the land, continuous production with no fallow time

C) Inputs – fertilizer, pesticides, herbicides, water use, GMO seed (often patented)

C) additional capital inputs – equipment, tractors, water pumps, etc.

C) significant contribution to GHG emissions, plowing and petrochemical inputs

C) monoculture (impacting genetic diversity)

C) socio-economic impacts – corporatization, disadvantaging small holders

NRE – Evaluation Limitations

The NRE benefit-cost analysis (BCA) results in a policy or project recommendation based on the benefit-to-cost ratio, more benefit than cost (ratio >1) supports the project, a

(ratio <1) does not. As with the prior BCA TMDL example, the challenges with such an

99 analysis involves questions of scale, distribution of costs and benefits, what costs and benefits to include, and how to establish current market prices for these. This farming example mimics the contraposition of the prior TMDL example for the Chesapeake Bay.

The prior example focused on reduction of agricultural externalities to meet TMDL requirements for non-point contribution of N, P, and sediment. These non-point source discharges represented potential costs that were externalized using the conventional agricultural practices under consideration in this new example.

Accounting stance – scale

“The accounting stance refers to the geographic scale at which the benefits are measured. Scale matters because in a benefit-cost analysis only the benefits or costs affecting the specific geographic area are counted” (Tietenberg 2015, 58). The geographic scale used for a conventional agriculture BCA is the extent of the farm field(s) under examination. The results of these analyses are assumed to be subject to extrapolation or aggregation, in order to presume impacts on a broader scale – whether regional or national.

Who pays – who benefits

This question can become complicated quickly, especially without consideration for underlying assumptions. For example, with an implicit assumption that conventional agriculture is necessary to support a growing population in order to avoid starvation, clearly human society benefits. On the flip side, corporatization and externalizing production costs results in wealth redistribution to the capitalist companies that for example manufacture the inputs at the expense of the environment and is therefore deleterious to both current and future populations of people; ergo, society does not benefit. This “society benefits” argument extends to the assertion that conventional agriculture with HYV crops and

100 associated inputs reduces the acreage under cultivation, thereby reducing environmental impacts. These are all valid points; however, with temporal consideration, the fact that conventional agriculture transforms the soils from a renewable resource to a non-renewable resource supplants the overarching contention that humanity benefits. What’s more, this

Technozoic version of the NRE analysis is anthropocentric by default, so other lifeforms are excluded from consideration.

In general, society gains in the short run with apparent higher productivity. With the advent of chemical farming, however, there was a fundamental transfer of dominion from small landholders to corporate interests, who were the suppliers of the newly necessary chemical inputs that replaced historical biological soils amendments providing fertility (when well managed—like crop rotation, fallowing, addition of biomass, etc.).

This transfer has had broad social consequences – and supports the claim that those who have actually benefited from the extraction of natural resources and the redistribution of the wealth inherent in soils and in food production was not society as a whole, but rather the investor class of capitalists.

Insofar as conventional agricultural practices transition soils from renewable to non-renewable resource status, NRE considerations should then become those applied to non-renewable resources. These include Hotelling’s rule, which purports to define the optimal depletion rate for the natural capital via the use of the discount rate. That approach ties the optimal depletion rate to the market mechanism using price optimization. Thus,

NRE considers conversion of natural capital (regenerative soils) to economic capital

(money) as a completely functional substitution. The second NRE consideration is called

Hartwick’s rule, which contends that the economic capital resulting from the conversion

101 of natural capital is resource rent. The rule claims that if resource rent is invested such that total capital stock (natural plus economic capital) does not diminish, that provides for intergenerational parity. This involves two rather large inherent assumptions: that there exists substitutability between natural and economic capital, and that the economic value

(resource rent) accruing to the private account will be available to future generations.

“Conventional [NR] economics does not consider soil as natural capital able to produce a flow of goods and it assume that natural resources constitute a capital that should not be amortized” (Flores 2004, 88). This treatment of the value of natural capital further skews the relative value of economic capital by understating the real values of natural capital.

In the aggregate, even if the math works, the redistribution of natural capital from the inventory of public goods accruing to the private investor capital accounts is untenable.

These public goods include the air and waters involved, and a usufruct argument can be made that society is required to provide responsible care of soils, that it is unacceptable to kill the regenerative capacity of soils for short-term gain for a small minority. Current and future generations that are dependent on this conventional version of industrial agriculture are paying the price for these extractive practices. As Franklin D. Roosevelt put it “A nation that destroys its soils destroys itself”.

What’s in – what’s out

The direct benefits of Green Revolution industrial agriculture have been described in some detail. They include dramatic growth in productivity and operating scale. The surplus food production has re-established some countries’ status, from net importer of food grains to net exporters, a positive development by conventional measures of economic

102 development: Gross Domestic Product (GDP) and trade surplus. The NRE BCA includes these values very well.

The social costs associated with the transfer of natural capital to money are not considered. In addition to the social costs, there are significant externalized costs that accrue to the conventional agriculture accounts. These include the direct loss of soil to erosion, resulting in sediment in the waterways. Along with the sediment, nitrogen and phosphorus are transported, contributing to the pollution diet of the receiving waters. The impairment of waters was discussed in detail in the prior TMDL example, specifically the hypoxic conditions resulting from the nutrification of the receiving waters. The residual biocides are associated with both acute poisoning and long-term chronic illness in humans and other lifeforms (Union of Concerned Scientists 2017).

Negative impacts associated with eliminating the soil biology, that is to say the regenerative ability of the natural ecology, can be expected to have long term effects on genetic biodiversity. There is also a significant contribution to GHG emissions. Directly, repeatedly exposing the soils to the atmosphere via tilling emits carbon. These emissions must also include the tractor and irrigation fuel consumption. Upwards of 13% of overall anthropocentric emissions come from industrial agriculture, second only to power generation (Russell 2014). Indirect GHG contributions include the production emissions of petrochemical inputs which include fertilizers, pesticides, and herbicides, all of which are petrochemical products and therefore also non-renewable. As a point of interest, one of the main reason this form of agriculture even exists is that following WWII, the explosives industry had excess capacity (and no further market) which it was excited to discover could be redirected to fertilizer and biocide production. This purely economic benefit to existing

103 capitalist corporations provided a very significant “push” for the development of chemical farming (Ganzel 1990).

Benefits & Externalized Costs – Contingent Valuation

Insofar as this example is in direct contraposition to the prior TMDL example, the benefit values associated with unimpaired water, as were considered for the TMDL discussion, are indicative some of the externalized conventional agriculture costs. In other words, in the Opequon BCA, the Best Management Practices (BMPs) costs required to meet the CWA TMDL requirements, are the externalized costs offered in this example. In the TMDL example, the BCA result was to not proceed because costs exceeded benefits; the recommendation was to continue to externalize the costs. It is worth recalling that the benefits did not include the broader geography, including the whole of Chesapeake Bay and also paid no attention to the aggregate impact on the overall watershed. This agricultural Technozoic NRE application suffers from the same lack of fair accounting. In fact, the accounting stance limits consideration only to the agricultural fields under consideration in the Opequon study. As with the Flores study, the NRE benefit-cost

“analysis does not incorporate ecological. social, or cultural variables, it has important limitations to compare the sustainability of these agricultural systems” (Flores, Limitations of Neoclassical Economics for Evaluating Sustainability of Agricultural Systems:

Comparing Organic and Conventional Systems 2004, 77). The result of BCA without considering the true costs of conventional industrial agriculture recommends use of the conventional practices.

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Discount Rate

The discount rate used to evaluate agricultural policy and specific projects, can be arbitrary. From the agricultural perspective the discount rate represents the cost of capital, a rate that can be set by the investors’ alternative rate of return. However, in the case of agriculture, the rate is likely derived with price index expectations and risk assessment.

Given the assumption that the land is a fixed cost in place and its productive capacity is known, the need for working capital drives the process. The discount rate can be used to capture these variables (especially risk); however, funds are calculated with less fluidity

(moving from one investment to another) insofar as the land requires continuing investment for production. Typical published rates range from 3%, to 7% and 10% to test sensitivity

(USDA 2017).

There are important environmental considerations that must be taken into account when choosing a discount rate, considerations that will be embedded in the analysis. For example, a farmer knows the productive capacity of his soils and also that by using conventional methods, extractive practices there will be a decline in productivity over time.

This calculation can be accompanied by adding declines from erosion and offset with the implementation of best management practices (BMPs). This cost of the BMPs, year after year, reduces the overall value of production. Putting simple numbers to this example, the farmer earns $100k per year and the productivity of the soils decline 1% per year with erosion. Installing the BMPs to forestall erosion cost $15k. The decline in revenue over 10 years @ 1% per year amounts to a loss of $10k @ 10% discount rate.

PV = (-$1,000) (1/0.10) = -$10,000

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At this discount rate the farmer would chose to not invest in the Best Management Practices

(as we saw in the TMDL example – the costs of the BMPs exceeded the benefits evaluated).

However, if the farmer chose a lower discount rate of 5%, the result would reverse. The value of losses would be -$20,000, thus making the $15,000 investment positive.

The difference between a farmer’s alternative rate of return (ARR) and the discount rate that is required to sustain the soils, if positive, is their investment in the soil health. For example, if the farmer’s ARR was 8% and her sustaining DR is 5%, then she has invested

3% in soil health. If the soil health could be induced to provide a higher net revenue (lower cost of inputs) the difference could shrink or become negative – the agroecological option being more lucrative. It is this difference between the ARR and the DR that is the price of the ecological benefits, and potentially the social and cultural benefits as well. Thus, the

DR is directly connected to the value of the overall proposition, inclusive of all the benefits.

Effective vs Efficient (Extractive)

Following on the argument in the TMDL example, the NRE BCA arrives at a costly recommendation, when the overall costs and benefits are included in the analysis. Insofar as this analysis does not incorporate ecological and social considerations, it is misguided.

It is especially egregious that the practices that are recommended will transition soils to non-regenerative status.

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Chapter 5 – Moral Foundation of Natural Resource Economics for the Ecozoic

With this chapter, the four fundamental assertions of the thesis are revisited in the context of Natural Resource Economics’ unfavorable environmental results highlighted in chapter two, and the specific examples presented in chapter four. The assertions contend:

1) that humanity is at a crossroads - the dawn of the Anthropocene; 2) the current

Technozoic worldview is rooted in a value system that is detrimental to flourishing life, and at odds with Ecozoic values; 3) Natural Resource Economics is unavoidably moral, an ethical system through and through; and 4), human society has an ethical obligation to all future life, to make a conscious decision regarding the choice of the world view which will underpin and share natural resource economics assumptions consistent with an evolutionary worldview. The utilitarian baseline presentation will be expanded to include additional moral factors and foundations, and will be organized within the same framework of the current utilitarian ethical system.

Metaphorically, this approach mimics the iris of the eye, regulating the amount of light entering the pupil and bringing into view the broader range of moral factors for consideration and expanding the sphere of NRE ethical dimensions. Consideration is given to the notion that these moral factors and their ethical foundations are a remedy when applied to attributes of public and private goods that are used to characterize the shortcomings of the market mechanisms.

Crossroads

We have arrived at a transition between geological periods from the Cenozoic Era to the next. The physical reality of finite planetary resources coupled with an unbridled appetite for more consumption per capita by an increasing population has humanity on a

107 collision course with a new reality. That reality is our planet’s increasingly demonstrated inability to meet the necessities for survival of human life, which holds extreme negative consequences for all life.

Rival Value Systems – Incommensurable Core Principles

Technozoic and Ecozoic worldviews have three contradictory underpinning core principles. These include: 1) Technozoic anthropocentrism versus Ecozoic ecocentrism; 2)

Technozoic NRE core principles include that Cartesian reductionism versus Ecozoic

Holism; 3) Technozoic neoclassical economics asserts a positivist, supposed value-free perspective, while Ecozoic principles embrace the overarching normative ethical nature necessary for the NRE paradigm shift

Contradictory Principle 1) - Anthropocentrism versus Ecocentrism

The anthropocentric principle embodies the notion that all value is instrumental, measured in terms of usefulness to human beings, and can be reduced to monetary terms.

Humans enjoy intrinsic value exclusively; nothing else on the planet does. Ecocentrism

“places value on all living organisms and their natural environment, regardless of their perceived usefulness or importance to human beings” (Dictionary.com 2017). Ecocentrists believe intrinsic values are not limited to humans, but also include such things as plants, animals, and ecosystems. “…ethical questions related to the environment involve determining what is in the best interests of these life forms, or what furthers or contributes to (or is a satisfactory fit with) some ecosystem” (MacKinnon 2015, 240).

In [natural resource] economics the system of measurement is anthropocentric, which simply means human centered. All benefits and costs are valued in term of their effects (broadly defined) on humanity. (Tietenberg 2015, 46-47)

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Instrumental and Intrinsic Values

Anthropomorphic and Ecocentric bedrock principles are incommensurable. The

Technozoic instrumental value system is an anthropomorphic belief system based on the assumption that mankind is the apex of creation for which all else exists. Value is a function of anthropocentric usefulness, a means to an end. In this context, humans have intrinsic value and moral agency exclusively. Conversely, an ecocentric intrinsic value system is argued to exist based on the notion that at least some non-human values must be intrinsic.

In other words, some objects are valuable in and of themselves and not as means to other ends. These value systems are incommensurable as the result of the lack of any “common measure”, or “common language” (Kuhn 1996, 174).

In the Technozoic, when value is based on the usefulness of a thing, that object becomes the means to an anthropocentric end. The system is otherwise indifferent to the object or to its source (nature), and the relationship between man and the object is impersonal. In the Ecozoic, all things considered to have intrinsic value and have exist for their own sake. As intrinsically valuable, they are not exchangeable for something else.

The philosophical distinction between instrumental and intrinsic value has been described by many; in book one of the Republic Socrates claims that justice is both good in itself, intrinsically valuable, and good for its consequences, instrumentally valuable. Aristotle makes the distinction with the famous maxim: war for peace, peace for leisure, leisure for contemplation of the Good (Nicomachean Ethics, 1177b4-26). Assuming war for peace and peace for leisure are pursued for their instrumental value, that end-point, leisure, is sought for contemplation of the Good “desiring no end beyond itself…”, thus demonstrating an intrinsic value.

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In his seminal essay – The Historical Roots of Our Ecological Crisis – Lynn White

Jr. posited that in the history of Western thought, nature has been primarily appreciated as instrumentally, rather than intrinsically valuable (Whilte 1967). He points out that in

Genesis 1:28 - God gives mankind “dominion over the Earth”, claiming the Western Judeo-

Christian attitude toward nature is historically “exploitive”, nature is regarded exclusively for its instrumental utility. This worldview was codified by Cartesian dualism with respect to mind and nature, specifically in his popularization of positivism, which is content with observed facts, and which holds that nature can be “described in physical and chemical formulae, and that in the process of nature there is nothing else” (Whitehead 1938). From the point of view of Modern Philosophy, intrinsic value cannot be the property or characteristic of nature, because the radical Cartesian distinction between subject and object is fundamental to Modernism (Witemeyer 1997, 13). This is the backdrop for neoclassical NRE. From the Cartesian perspective, value is conferred on an object by the intentional act of a subject. In this world view, ‘value’ is a verb first and a noun only derivatively. Subjects may think, perceive, desire, and value. The intentions, the objects of the subjects valuing are valuable (just as the intentions of the subjects desiring are desirable). The Cartesian line of reasoning holds that if there are no valuing subjects, nothing would be valuable. Ipso facto, without humans and instrumental value, there is no value in, or of nature.

Moral Standing – Moral Patients

In direct contrast, Ecocentrists believe intrinsic values are not limited to humans, but also include such things as plants, animals, and ecosystems.

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Early evolutionary accounts also sometimes depicted humans as the pinnacle of evolution or the highest or last link in some great chain of being. We can ask ourselves whether we place too high a value on human beings and their powers of reason and intelligence. Ecocentrists criticize the view that we ought to seek to understand nature so that we can have power over it because it implies that our primary relation to nature is one of domination. (MacKinnon 2015, 240)

This Ecocentric worldview confers moral standing to all life, their communities and ecosystems. Moral agency is defined as an attribute of individuals who can act with reference to right and wrong. This view of moral standing can be considered in degrees.

For instance, a child may not be capable of taking responsibility, nor of discerning right from wrong. However, the child still retains a degree of moral standing (Jaworska 2018).

Another characterization is consideration of non-humans as ‘moral patients’. Moral patients do not have moral agency and thus have no moral obligations; rather they are things to which moral agents have responsibility. Moral agents are also moral patients, but moral patients need not be moral agents. It is in this sense, as moral patients, that this thesis posits normative ethical obligations toward the environment at the scale of the entire Earth system, one system with integrity, stability, and beauty (Schonfeld 1992). This morality

(obligation to moral patient) is a matter of preserving Earth systems and doing only what benefits them and does not detract from their well-being.

Contradictory Principle 2) - Reductionism versus Holism

Anthropocentrism is a reductionist perspective. All of nature, according to this view, is reduced to the level of “thing-hood.” The seventeenth-century French philosopher René Descartes is sometimes cited as a source of this reductionist point of view because of his belief that the essential element of humanity is the ability to think (“I think therefore I am,” etc.) and his belief that animals are mere biological machines. (MacKinnon 2015, 240)

Reductionists measure the sum of value of the parts without consideration for the interrelations that make up the whole. For example, in chapter three, consideration of the 111 steel mill discharges and the effect on the downstream hotel was reduced to the conflict between two human-run business enterprises. The goal of efficient use of the river did not consider the myriad relationships dependent on the river, just the impact of the market failure of externality on two human ‘agents’. Invariably, this thinking carries over into

BCA theory, which measures only the costs on humans and a fraction of the benefits especially for future humans as well as few for other life).

The concept of holism emphasizes the whole rather than its constituent parts and today is able to scientifically demonstrate that in fact, 'the whole is greater than the sum of its parts'. Whitehead argues that understanding the relationship of life with nature is imperative to conceiving and enjoying the values of the whole (Whitehead 1957, 53). In general, the production function of nature is to maximize gross output (the whole), while the production function of mankind is to maximize net output (sum of the parts, particularly in relation to short-term human interests). This is exemplified by market valuation and capitalism. Market value is defined as the non-normative assessment of what an agent is willing to sacrifice to obtain a given good. Thus, market commodification can establish instrumental values. Although instrumental value is defined in terms of its propensity to procure other goods, the means to an end, we determine just how instrumentally valuable things are in terms of their market value. In other words, we put a price on everything; how instrumentally valuable land is, how instrumentally valuable labor is, the instrumental value of any commodity. To maximize net value to humans, nature is partitioned, and value is found only in the instrumental parts. The crux of the issue is that market valuation is incapable of calculating intrinsic values. Nature has intrinsic value as a whole but is

112 instrumentally valued as partitioned. The market metrics cannot commodify nature, put a value on nature, because it is the nature of creation to be an integral whole.

The valuation of nature cannot be accomplished using market prices where no market exists, for instance the existence value with no discernable use value. Ecological economics attempts to value natural systems as a whole; however, it still falls short insofar as it relies on indirect use value, the support system to produce direct economic value. This does not address the moral dimension of economics. The essential problem remains the use of a single measuring rod where a scale is needed as well. Some values are irreducible.

Contradictory Principle 3) - Positive versus Normative

Technozoic neoclassical economics asserts a positivist, “value-free” perspective. The

NRE text assumes this positivism in part, with recognition of normative judgements as a separate contribution to the ‘economic approach’.

Normative economics (as opposed to positive economics) is a part of economics that expresses value or normative judgments about economic fairness or what the outcome of the economy or goals of public policy ought to be. (Wikipedia 2017)

The Tietenberg text examples of positive NRE analysis boil down to financial analysis; for instance, ‘what is the cost of best available technology (BAT) for foundry air pollution control?’ (Tietenberg, 2016, 18). Ultimately, the NRE economic methods that are used to prescribe policy include embedded normative ethical judgements. For example, evaluating economic efficiency of the BAT via BCA would use the cost results from the financial analysis described above, and then add consideration of the monetary benefits – including a value for human life-years, clearly a normative judgement--included in the overall analysis and policy recommendation.

Positive economics attempts to describe what is, what was, or what will be. Normative economics, by contrast, deals with what ought to be. Disagreements within 113

positive economics can usually be resolved by an appeal to the facts. Normative disagreements, however, involve value judgments. Both branches are useful. (Tietenberg 2015, 18)

This distinction between positive and normative economics characterizes elements of analytical methods as “branches”. This description, while precisely accurate, explains elements of the analytical methods used. It does not candidly represent the fact that there are normative aspects of the overall economic methodology employed. The distinction is that elements of the method simply describes features of the tool used (fact reference versus value reference); methodology is the rationale for using the methods. In this case the rationale for using methods in combination for economic policy prescriptions invariably involves elements of normative value judgement. The BCA example above includes the cost method (positive) and benefit method (normative). Inclusion of any normative element makes the overall analysis normative. NRE is a normative ethical system through and through.

Natural Resource Economics - Ethical System

At this point, the discussion of NRE as an ethical system takes a deeper dive in order to analyze the current foundational ethical system’s underlying factors and associated principles. The Natural Resource Economics Benefit Cost Analysis (NRE BCA), discounting, and market failure examples in chapters three through five characterize the

Technozoic value system they represent. Consequentialism and welfarism, culminating in embedded utilitarianism in neoclassical NRE (and thereby in the Technozoic worldview), will now be contrasted with an Ecozoic Theory of Values. The primary moral factors undergirding this Ecozoic value system will be identified in affiliation with their ethical foundations, and subsequently associated with principles - values consistent with Ecozoic

114 moral authority. The overarching Ecozoic ethical foundations incorporate virtue and deontological ethics, together with NRE utilitarian ethics, explicitly asseverated to promote the NRE paradigm shift leading to an Earth Economics. This Ecozoic Theory of Values, in contrast to exclusively Technozoic anthropocentric principles, is amplified to emphasize the current obligation we have to humanity and to all of life to make an explicit decision regarding the value system that will shape the future Human/Earth relationship.

NRE Utilitarianism.

Ideas, like men, can become dictators. We Americans have so far escaped regimentation by our rulers, but have we escaped regimentation by our own ideas? I doubt if there exists today a more complete regimentation of the human mind than that accomplished by our self-imposed doctrine of ruthless utilitarianism. (Leopold 1939, 8)

“The most famous consequentialist theory is utilitarianism, which is the result of combining consequentialism with welfarism” (Kagan 1998, 61). Consequentialism holds that an act is right if it leads to the best consequences. Welfarism holds that the goodness of the result is the measure of individual well-being that results. Therefore, the goal of utilitarianism is to achieve the greatest total amount of human well-being. Of concern are non-utility effects since they are not considered in welfarism. This thesis posits that the reach of consequentialist reasoning (Pettit 1993, xiii) is limited by arbitrary welfarism restrictions.

Indeed, since these additional [welfarism] constraints also reduce the opportunity of taking adequate note of consequential evaluation… that by confining attention to utility information only, welfarism goes against the spirit of taking responsibility for all the consequences of one's choice. (A. Sen 2000, 479-482)

The thesis posits that a broader view of consequentialism will be necessary for the moral foundation of NRE for the Ecozoic. “The very specific demands of specific consequentialist systems, such as welfarism, (on which utilitarian ethical theory relies) are

115 not required by the theory of consequentialism itself” (A. Sen 2000, 482). Moreover, the argument is made that we can naturally combine additional demands with consequential evaluation – and derive a satisfactory consequential theory. It is in this spirit that deontological considerations are further developed in this chapter – promoting a fulsome ethical theory as a foundation for NRE in the Ecozoic.

NRE operationalizes utilitarianism

NRE methodology is geared to accomplish this objective, and the utilitarian construct is engrained in NRE methods. In the NRE context this result is believed to be accomplished by way of market efficiency. For example, BCA involves the use of a discount rate which ideally makes comparable monetary values adjusted for costs and benefits over time. The singular goal is to achieve the highest net present value (NPV).

Presumably, maximum NPV equates to maximum individual human well-being. Recall that this market hypothesis is driven by price, and the ultimate goal is maximum monetary value - apparently to purchase all the well-being money can buy.

By examining the chapter three example, the Chesapeake Bay BCA, it is clear that costs and benefits include qualitative and quantitative inputs and outcomes. Two immediate concerns arise with the BCA method. First, have all the costs and benefits (line items) been identified? Secondly, are realistic values available and applied? The NRE method requires that all values of course be reduced to monetary measures, although some values may be irreducible, i.e. the value of an extinction (cost), or the value of a beautiful scene (benefit). This goes to the heart of the incommensurability dilemma - applying market prices to non-market ‘goods’ or attributes.

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This issue dates back to antiquity, when Aristotle identified and addressed the topic in

Book V of the Nicomachean Ethics and Book I of Politics.

In his idea of commensurability Aristotle was the first to identify a serious and authentic problem of economics. Perhaps he was searching for a way of setting justifiable ratios for fair exchange so that product could be treated as "commensurable enough" to permit the exchange. The good must be an object of need that is expressible as money and the ratios must be quantitative and "precise enough." (reference, xxxx, xx; accessed 2/21/2018)

In current NRE applications this often results in the “complete cost – incomplete benefit analysis” mentioned in Chapter four.

Factors, Foundations, Principals, and Values

Parsing the utilitarian ethical system and using Kagan’s approach to normative ethics provides an example of moral factors and the associated ethical foundation. The normative moral factors can be indicative of the ethical foundation and vice versa, although moral factors and foundations can be theorized independently. Each normative ethical foundation can be associated with related operative principles and the values involved

(Kagan 1998, 17-22).

Ethical Factors Foundation Principles Values Promoting Good Consequences Utilitarian Anthropocentric Instrumental Welfare Positivist Reductionist

Table 1 - Utilitarian Ethical Foundation, Factors, Principles, Values

In the case of the utilitarian ethical foundation, underpinning moral factors include: promoting good; consequences of an action are also a primary moral concern (best possible outcome); and maximum welfare (well-being). The associated principles include

117 anthropocentrism, positivism, and reductionism. The values system is instrumental. The relationships among moral factors, their utilitarian ethical foundation, principles, and values, have been discussed in detail in the context of neoclassical NRE within this thesis.

The objective here is to use this example of moral factors and ethical foundation to construct a basis (template) for identifying additional ethical foundations via moral factors and associate them with their principles, and values. This exercise will allow consideration of these ethical foundations to be used to evaluate alternative scenarios for the examples in chapters three, four, and five. Moral foundations of Ecozoic NRE involves moral patients for all life. The claim is made that the NRE ethical system must expand to achieve this.

Ethical Economic Foundation Principles Values Objective Mechanisms

Utilitarian Anthropocentric Instrumental Efficiency Markets - Price Positivist Empiricism Externalize Costs Reductionist Disintegrate Extraction

Table 2 - Ethical foundation, principles, values, objectives, Economic mechanism Table two extends the logic used for table one and includes additional functional considerations which are the objectives and mechanisms that operationalize the principles.

This table highlights the economic mechanism employed to institute its economic approach and clearly illustrates the utilitarian ethical foundation, with its anthropocentric principles and instrumental values, in pursuit of the NRE primary objective - efficiency. The NRE mechanism to operationalize this objective is markets along with the integral price signal.

In summary, Table one elucidates the moral factors undergirding utilitarianism at the foundational level: positive good, consequences, and welfare (Kagan 1998, 217-18). The associated principles, anthropomorphism, positivism, and reductionism, are identified and 118 included with the instrumental value system. Table two expands to include the NRE utilitarian objectives and the economic market mechanism. All of these neoclassical attributes of NRE have been discussed in detail.

This template will now be used for three purposes. First, to establish a representation of the deontological and virtue ethical foundations. Second, to characterize the relation of the ethical foundations to the notion of goods, both public and private.

Finally, the template will be used to recast the examples presented in chapter three, four, and five, and to deliberate the (new) alternative outcomes.

Deontological and Virtue Ethics – factors, foundations, principles, values

Additional normative ethical foundations deliberated in this thesis include virtue and deontological ethics. These are evaluated as working simultaneously with the utilitarian ethics (consequentialism - welfarism) currently employed by NRE (Kagan,

1998, 61). These philosophical theories are discussed in order to provide the groundwork to understand limits of the current NRE ethical foundation and establish a theory of multiple normative ethical systems engaged to achieve the moral foundation of NRE for the Ecozoic.

Moral Factors and the Deontological Ethical Foundation

Following the organizational example of the utilitarian ethical foundation above, moral factors underpinning the deontological ethical foundation are considered. In addition to promoting good and well-being (albeit with a broader constituency), total view, equality, fairness, no harm, constraints, obligations, and rights are included. Total view extends consideration for well-being beyond the individual to the larger community. This involves

119 interrelations, adding a level of complexity to the ethical foundation principles. All of the moral factors considered take on a new level of complexity with moral patients concerns.

Ethical Factors Foundation Principles Values Promoting Good Well-being Deontological Ecocentric Intrinsic Total View Complexity Community Equality - Agency Moral Patients Reverence for Life Fairness Patience No Harm Precaution Constraints Humility Obligations Honesty Rights Commensurability Table 3 - Deontological Ethical Foundation, Factors, Principles, Values

Deontological principles and values are more comprehensive than their utilitarian counterparts. NRE utilitarianism has the prime objective of efficiency, efficient allocation of scarce resources to meet unbridled desires. The measure of ethical success is maximum welfare (consequence) measured in monetary terms (highest net present value). The deontological ethical foundation, however, is rooted in obligation. This ethical foundation does not hold that “the good” is the dominant normative moral factor (as utilitarianism), rather the “deontological do not similarly give notions of the good such exclusive priority”

(Kagan 1998, 192). Constraint as a moral factor is grounding for the other moral factors.

This factor will play an important role for Ecozoic NRE expressed in its guiding principles.

These principles are bedrock ecocentric and include recognition of complexity (systems view of life), moral patients for all life, humility (as in compassionate retreat), and the precautionary principle. The primary deontological values include the notion of intrinsic values (not exclusive to human beings), the values of community (interrelationships and 120

networks), and reverence for life. These prescribe constraints, deontological obligations,

required to develop and maintain a mutually enhancing Human/Earth relationship.

Ethical Economic Foundation Principles Values Objective Mechanisms Regulatory Deontological Ecocentric Intrinsic Effectiveness Enforcement Complexity Community Resilience Regenerative Moral Patients Reverence for Life Biodiversity Honor Obligation Patience Precaution Thresholds Block Exchange Humility Honesty Usufruct Limit Extraction Set Limits Commensurability Table 4 - Deontological ethical foundation, principles, values, objectives - mechanism

A deontological ethical foundation contrasts with the utilitarian ethical foundation

insofar as the NRE utilitarian foundation is narrower in moral considerations (factors).

Chief among the differences includes the moral patient consideration for non-human life

and communities, integral to this is the extension of recognition for intrinsic values beyond

human-beings. The primary NRE objective of efficiency is superseded, not supplanted, by

the objective of effectiveness. Insofar as the deontological ethic does not hold a single

moral factor above all others, and constraint can be engrained in associated moral factors,

it can be envisioned as the “first filter” by which actionable priorities are established. For

instance, the current consideration provided by a BCA is to determine whether to undertake

a project based on the ratio of benefit to cost. If the projected benefit is less than the

projected cost, the recommendation is to not proceed with the project or policy. There are

the analytical limitations identified already: do we have all the benefits and all the costs

identified? In other words, have we included all the line items? The next level of 121 questioning involves the associated prices assigned to the costs and benefits. What is our confidence in costs that are fabricated (e.g. contingent valuation) in lieu of market values that do not exist? Beyond the confidence with the BCA result, this thesis posits that we are asking the wrong question in the first place. The question the BCA begs is, “can we afford to save the Chesapeake Bay from dying?”. This question implies that allowing the Bay to die, or killing it outright is actually a viable alternative. This is not a question of market efficiency (NRE utilitarian), rather it is a question of obligation (deontological, virtue).

Recharacterized, the question becomes, “what is the most cost-effective way to save the

Bay?”. Through this lens science comes into play to define the requirements, the pollution diet the Bay can handle (TMDL). Economics role is to achieve the most effective result.

Effective first – Efficient follows

The obligatory nature of the deontological ethical foundation and the fact that it does not treat “the good” (limited to humans) as the single operative moral factor provides the basis for an argument that NRE efficiency is not the overarching ethical objective. In fact, the constraints implied by the moral factors militate for effective NRE prescriptions, subordinating efficiency to effectiveness. Extending the example, the BCA result will not be the recommendation to invest or not in a targeted benefit (e.g. bring the Chesapeake Bay back to life and /or stop killing it). Rather, the BCA would treat the benefit as an obligation, and determine the cost-effective approach – in other words, the most efficient approach to meet the obligation. Tietenberg’s NRE text describes this “cost-effectiveness analysis”.

Cost-effectiveness analysis frequently involves an optimization procedure. An optimization procedure, in this context, is merely the lowest cost means of accomplishing the objective. The procedure does not, in general, produce an efficient allocation because the predetermined objective may not be efficient. (Tietenberg, 2015, 68)

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It is in this context that the thesis promotes the prioritization of NRE objectives, with an option of holding a benefit as a fixed outcome - and determining the cost-effective pathway to accomplish the objective. This implies a mechanism to establish the NRE objective and thus the efficient versus effective primary objective in different cases. The deontological moral factors are the key to the objective prioritization process.

Rules can be established to guide the use of the moral factors and deontological principles to provide the normative basis for the objective prioritization approach. The basic guidelines provide the basis for obligation. For instance, renewable resources cannot be over used and rendered non-renewable. When enforcing TMDL, for example, non-renewable resource extraction must be limited by waste absorption capacity (see rule one). Or, for CO2 extraction and release into the atmosphere, this model would favor regeneration over extraction applying methods such as biocentric soil management that recognizes the autopoietic capacity of the soil ecosystems. These rules can be informed by the nature of goods defined earlier as public or private. This normative ethical objective prioritization can be applied using the rules (guidelines) and aligning the appropriate objective with the characterization of the goods in question, whether they exist in public or private variants.

Where do we go from here?

Normative foundational ethics must be explored within the development of the virtue ethics template. A more extensive discussion of deontological “first filter” evaluation of public and private goods with reference to the established templates follows, that includes pure private, club goods, common pool, and pure public goods. The role of the State, NRE, and

Science will be revisited in the context of the broader normative ethical construct. Finally, the

NRE application examples from earlier chapters will be evaluated using the moral foundations template and filters conceived here.

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Moral Factors and the Virtue Ethical Foundation

The five moral factors as examples underpinning the virtue foundational ethic are drawn from Aristotle’s overarching list of 24 virtues (Creative by Nature 2017). These virtues are compared to similar moral factors in the deontological foundation and further considered relative to the role of NRE and the roles of Science and the State, originally introduced in chapter three (pages 61-63).

Ethical Factors Foundation Principles Values Temperance Liberality Virtue Ethics Arete Excellence Honor Phronesis Wisdom Truthfulness Eudemonia Well-being Justice Table 5 - Virtue Ethics Foundation, Factors, Principles, Values

Although the virtues are conceived as individual character traits, they are extended to represent the character of all societies in search of excellence; the State stands for society. All three institutions, NRE, Science, and the State, are important in the conception and delivery of NRE mechanisms defined in the context of the normative ethical foundations. Idealized, the State represents society’s aspiration to excellence, exercised through its political institutions and process. NRE provides the mechanism alternatives to deliver legislated policy intentions in respect to human obligations and the subordinate societal preferences established and enforced by the State. Science is respected for its contribution to understanding the human obligations empirically and providing this factual input to inform the NRE delivery mechanism. The limits of scientific knowledge are

124 respected and dictate observing the deontological precautionary principle with humility and patience (deontological moral factors).

Aligning Virtue and Deontological Ethical Systems

Correlating deontological moral factors with five example moral factors (virtues) underpinning the normative ethical foundation provides insight into the alignment of the

State and NRE roles. These include: 1) the virtue of temperance (self-control and restraint) aligning with the deontological moral factors of constraint, precaution, and patience. 2)

Liberality (big heartedness, charity and generosity), aligned with ecocentrism and agency.

3) Honor (respect, reverence, admiration), aligned with ecocentrism, agency, complexity, and humility. 4) Truthfulness (straight forwardness, frankness, and candor) aligned with honesty. 5) Justice (impartiality, evenhandedness, fairness) aligned with fairness, honesty, and ecocentrism. Combing interpretations of legislative intent (virtue) with NRE mechanism for delivery can be envisioned as an alignment of normative ethical systems.

Ethical Economic Foundation Principles Values Objective Mechanisms Implementation Effectiveness Virtue Ethics Arete Excellence Character Honor Obligation Phronesis Wisdom Ends & Means Regulation Eudemonia Well-being Happiness Enforcement

Table 6 - Virtue ethics foundation, principles, values, objectives, Economic mechanisms

The NRE mechanism is consistent and coordinated between the virtue and deontological ethical foundations. For example, the virtuous intent of the 1972 CWA, that the waters of the US become fishable and swimmable by 1983, can be imagined as being empowered to be fully successful with the right NRE mechanism. The 1972 Clean Water

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Act was legislated with a two-step approach to implementation (page 82) and federal authority extended to the point sources of pollution. The NRE delivery mechanism was the implementation of best available technology, which dictated the outcome (benefit) and superseded the most efficient, price driven approach. The non-point contribution to the pollution load was relegated to the states and became subject to BCA. The intended result of this has been that benefits have been subordinated to cost, and the result for the Bay is failure. The interpretation intended by retelling this sad story is recognition of the deontological NRE mechanism that instead would honor obligations and enforce constraint as a viable alternative to a myopic market methodology.

This does not preclude a market mechanism; however, it would relegate the market mechanism to the scenarios and situations in which it can be the most successful mechanism. That leads to analysis of the variants of public and private goods and best NRE mechanisms to apply, following presentation of table seven, which combining the preceding tables one through six. This table will be used in reference to the discussion of institutional roles: State, NRE, and Science. Table seven will also be used to present the proposed NRE mechanisms to be applied to the examples from chapter three, four, and five. These examples are re-examined in the context of new normative NRE that uses the combination of foundational virtue ethics, deontological ethics, and utilitarian ethics in concert. The table includes expected results.

Virtue and Deontological Foundation Guidelines - Rules

Environmental Economics and Natural Resource Economics are combined under the rubric of NRE for this thesis. For a moment, however, it will be useful to focus on each individually.

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Environmental Economics is primarily concerned with human induced environmental damages - Resource Economics is mainly concerned with extraction rate and use of ‘natural resources’, renewable and non-renewable (Hussen, 2012, 2).

Considering human-induced environmental damages, one specific category is the overuse of renewable resources which reduces them to non-renewable status. In the context of the NRE utilitarian ethic, these are often the result of market externalities. The examples used in this thesis include sediment and nutrient loading beyond the total maximum daily load into a water body – thereby reducing or eliminating dissolved oxygen and creating dead zones. The second example involves heavy-handed soil management, leading to soil erosion and degradation, effectively killing the soils’ biological regime - its ecology. A third example is the atmospheric effect of climate change, clearly understood to be caused by atmospheric CO2 loading resulting from burning fossil fuels. The moral factors that militate against this overuse include taking a total view of damage, including consideration of complexity, attempting to cause no further harm, employing constraints, and being ever mindful of obligations. The virtues involved, a word not used much anymore but certainly due for revival, include temperance, liberality, honor, truthfulness, and justice.

NRE promotes the notion of an “optimal depletion rate” known as “Hotelling’s Rule.”

The mechanism of the rule links the current interest rate. “The rule states that in equilibrium the resource net price (defined as the price minus extraction costs) must rise at a rate equal to the rate of interest” (Harris 2013, 101). This logic is used to establish the discount rate and thus the optimal rate of extraction--and even the optimal rate of extinction (in this context of amorality). The higher the discount rate, the faster the rate of extraction, and vice versa. This rule begs the question, “What about the ethical imperative to leave something for future generations?” (Harris 2013, 102). The rationalization is as follows:

127 the proceeds from extraction will be invested (not squandered on frivolous consumption), and the economic value of this investment will accrue to future generations. Specifically, this rationalization is expressed with the “Hartwick Rule”.

The Hartwick rule (Hartwick 1977; Solow 1986) offers a rule-of-thumb for sustainability in exhaustible-resource economies—a constant level of consumption can be sustained if the value of investment equals the value of rents on extracted resources at each point in time. (World Bank 2006)

This rule states that we should invest this revenue (resource rents). The investment is said to be the proceeds of the sale of the resources, less the cost of extraction. The theory holds that the diminished natural resources are replaced with an equal value of produced capital, although of course the odds of that happening are slim.

When Environmental Economics (degradation concerns) and Natural Resource

Economics (extraction concerns) are considered together (NRE), they interact in a positive way. For instance, if we consider the absorptive capacity of the waterways as limited to the science-based total maximum daily load (TMDL), we would curtail the sediment and nutrient loading, and adjust regulatory incentives to address non-point pollution and heavy- handed soils management. Likewise, we would observe the moral imperatives to constrain

CO2 discharges, thereby curtailing extraction and burning fossil fuels. We can characterize this downward adjustment to the extraction rate recommended by Hotelling’s Rule as

“Hotelling’s Knothole”, a limiting ethical constraint which states that “in no circumstances can a renewable resource be converted to a non-renewable one through overuse”. It is this sense that Ecozoic NRE can be used to develop the most effective mechanism to the economic model that is required.

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Ethical Economic Factors Foundation Principles Values Objective Mechanisms Results Promoting Good Regulatory Virtue Ethics Well-being Deontological Ecocentric Intrinsic Effectiveness Enforcement Systems View Total View Complexity Community Resilience Regenerative Renewable Equality Moral Patients Reverence for Life Biodiversity Honor Obligation Autopoietic Fairness Patience No Harm Precaution Thresholds Block Exchange Constraints Humility Obligations Honesty Usufruct Limit Extraction Set Limits Rights Commensurability Renewable into Non-Renewable ***Hotelling’s Knothole Promoting Good Consequences Utilitarian Anthropocentric Instrumental Efficiency Markets - Price Allocation Welfare Positivist Empiricism Externalize Costs Commodification Reductionist Disintegrate Extraction Highest NPV Market Failures Temperance Deontological Liberality Virtue Ethics Arete Excellence Character Regulatory Effectiveness Honor Phronesis Wisdom Ends & Means Enforcement Truthfulness Eudemonia Well-being Happiness Honor Obligation Justice Table 7 - Normative Factors, and related Ethical Foundations, Principles, and Values

***Hotelling’s Knothole defined – the extraction rate is limited by the absorptive capacity of the discharge receiver (air or water) The underlying rule is that in no circumstance can a renewable resource be converted to a non-renewable resource via overuse. 129

Ethical Foundations - Natural Resource Economics, Science, and the State

As this thesis posits on page 57, ideally there are distinct and complimentary roles played by the political community (the state), scientific community, and natural resource economists. The political functionaries, trustees of the commons, must establish and implement selected solutions - to govern on behalf of humanity and life’s commonwealth. The scientific community provides the factual scope (breadth and depth) of environmental problems. Scientists define the parameters and establish the criteria we must operate within to address these environmental problems; i.e. limits and thresholds of renewable resource recovery trajectories, waste absorption capacities, non-renewable resource depletion rates, entropy, and the dynamic interrelationships of life systems. The resource economist’s role must be to provide solution sets that frame required adaptations of the human economy and identify necessary mechanisms to meet the fixed limits of the production functions input and output resource uses - to fit the human economy within the limits of nature’s economy.

The relative roles of NRE, Science, and the State, as described above, can also be aligned with the normative foundational ethical systems listed in the charts. The role of the

State can be aligned with Foundational Virtue Ethics, that is, the pursuit of the values of excellence, wisdom, and well-being. This is consistent with the conception that “values were the domain of the legislative body, or elected officials more generally, and administrators were involved with carrying out instructions, not with setting a value-based agenda” (P. G. Brown 1994, 9). The administrative role, regulation implementation and enforcement can follow from the NRE science-based policy recommendation, directed by the legislative intent. This is where the vision of a NRE paradigm shift comes into play.

Current NRE is committed to the market utilitarian construct with NRE policy recommendation delivered in the guise of value-free analysis. The role of Ecozoic NRE

130 aligns the deontological moral foundation with legislative intent (virtues) expressed by the

State. Earth systems science, the empirical contribution to the NRE analytics leading to policy recommendation provides the factual foundation necessary to put legislative intent into action, benefiting all life.

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Public and Private Goods

Rival Non-Rival

Excludable Pure Private Club 1 (Farmland) 2 (Yellowstone) Non-Excludable Common Pool Pure Public

3 (Fisheries) 4 (Atmosphere) Table 8 - Variants of Public and Private Goods

The characteristics of public and private goods include exclusivity and rivalry. Table seven represents four categories of goods: 1) private; 2) club; 3) common pool; 4) public. With this exercise we will take each category of goods in turn, describe the characterization of the category, and use the deontological first filter approach described on page 103 to associate the category of goods with moral factors. This approach focuses desirable NRE mechanisms for each category of goods and provides a starting point to determine policy.

Pure Private Goods

Pure private goods are said to be ‘rival’ and ‘excludable’. Specifically, the use of the goods can exclude others, and the rivalrous nature of the goods reduces their value with use. For example, an ice cream cone has a unique owner (excludable), and consumption reduces its value (rival). The example in table seven involves farmland. The owner may be a farmer (excludable) and the farmer can control the land and the results of its production to his or her unique benefit (rival). The farmland is a pure private good; however, in the context of society and humanity the farmland carries with it certain obligations. There is an implied responsibility on the part of society too.

When a farmer owns a rarity, he should feel some obligation as its custodian, and a community should feel some obligation to help him carry the economic cost of 132

custodianship. Yet our present land-use conscience is silent on such questions. ("The Ecological Conscience," Leopold, 1947) The utilitarian ethical system, with its singular moral factor of well-being for the individual (the farmer), recommends actions that maximize profit for him alone, without finding any need for other considerations. However, applying the deontological “first filter” will lead to other results.

Ethical Factors Foundation Principles Values Promoting Good Well-being Deontological Ecocentric Intrinsic Total View Complexity Community Equality Agency Moral Patients Reverence for Life Fairness Patience No Harm Precaution Constraints Humility Obligations Honesty Usufruct Rights Commensurability Table 9 - Deontological Ethical Foundation, Factors, Principles, Values

Selecting just a few of the moral factors can be informative. First, total view extends consideration for well-being beyond the individual to the larger community. Moral agency thereby extends to the creatures that share (or are excluded) as the result of farmland stewardship. This includes a biocentric view that includes soil ecology, which ultimately benefits the farmer, the biota and future farmers and landowners. No harm includes consideration of the externalities associated with stewardship practices such as erosion, nutrient (fertilizer) export, micro-nutrient mining, runoff control, insecticide contamination, etc. These considerations indicate the need for constraints. Finally, for this limited example, there are obligations associated with each of these moral factors.

However, as the Leopold quote conveys, there are also reciprocal duties for society to 133

consider and fulfill. This is a part of the State’s role introduced earlier and will be covered

in detail later.

The values promoted and protected by the deontological first filter approach include

intrinsic value, community, reverence for life, and usufruct concerns for future generations.

This sampling of moral factors provides more complex considerations than the narrower

utilitarian prescription would indicate – maximize net present value. The deontological

moral factors focus on this fact and inform the mechanisms necessary to provide this moral

foundation for Ecozoic NRE. These mechanisms will require coordination with the State.

Ethical Economic Foundation Principles Values Objective Mechanisms Regulatory Deontological Ecocentric Intrinsic Effectiveness Enforcement Complexity Community Resilience Regenerative Moral Patients Reverence for Life Biodiversity HonorObligation Patience Precaution Thresholds Block Exchange Humility Honesty Usufruct Limit Extraction Set Limits Commensurability Tax Options Table 10 - Deontological ethical foundation, principles, values, objectives - mechanism

The NRE mechanisms involve using applied science to establish the most effective

approach to achieving the objectives (in the farmland stewardship case) of proper soil

management. The Total Maximum Daily Load (TMDL) contribution from farmland can

be determined. Increased costs to the farmer can be calculated and may be shared by society

via tax mechanisms. For instance, established best management practices (BMP) can be

subsidized, allowing society to share the stewardship cost associated with the benefit of

healthy waters. 134

The NRE mechanism, fairly, has the famer’s success as a primary goal. The farm’s baseline value can be assessed under the old utilitarian regime (markets and price) used to determine maximum net present value. Costs can be offset, leading to a bargain for society and for the farmer. For instance, using the tax code, farmland BMP commitments can be based on contracts (easements of fixed duration). These easements have a “face value” which can be sold to other tax payers who can apply this value to their taxes as a deduction.

If this face value is bought for example for $0.85 on the dollar, the purchaser has received a 15% tax deduction, and society has the benefit of cleaner water.

NRE modelling can be established that defines and calibrates the most cost-efficient way to execute the most effective mechanism to achieve this kind of mutual (individual and society) benefit. For instance, the cost data for removing nutrients introduced by heavy- handed farm practices can be collected from downstream water treatment plants. Assume, for instance, that the cost to remove phosphorous is $25 / pound, and the cost to keep it out of the system in the first place is only $2.50 / pound. With this data, tax limits for fungible easements can be quickly and usefully assessed.

Other NRE mechanisms include interpreting science and modelling mechanisms that enhance regenerative capacity. For example, soil management BMPs can be developed that maximize soil organic matter, thereby providing a sink for atmospheric carbon. NRE can be used to develop financing mechanisms to compensate landowners for this societal and ecosystem benefit. This approach works hand in hand with institutional science, insofar as the models used for policy recommendation are based on solid empirical science.

Coordination with the State is required for policy implementation, regulation and compliance. Regarding limits, some situations may require blocked exchange (transactions

135 that are not allowed by regulation). The objectives are all geared to honor obligations to private landowners, and treat the ecosystems involved as ‘moral patients’.

Ultimately, the moral factors and their associated foundational ethical systems could be complimentary with the current NRE utilitarian ethical system. Moral standing and moral patients were previously defined and must now considered for expanded inclusion of factors that extend morality. The deontological ethical factors used to filter the optimal economic mechanism respect the notions of private property, can be used to provide landowner compensation for obligations that preclude the market failures (externalities).

Public Goods - Club Goods

Club goods are public goods characterized by being excludable and non-rival. The example of Yellowstone Park demonstrates that visitor use can be excludable, as it requires admission fees. The Park can be considered non-rival insofar as the visitors do not reduce the value of the park with use. However, there is a limit to this characteristic, due to congestion. At some level of visitor numbers, the park experience is reduced (rivalrous).

This problem can be controlled by admission limits. As a public good, park maintenance is the responsibility of the State. These two considerations, capacity and maintenance, bring into play the NRE mechanisms of assessing and recommending the limits and tax policy options. These are established and backstopped by the State with regulation and enforcement. The NRE role includes developing a science-based model that protects the ecosystem and park inhabitants from damage, establishing visitor limits and pricing required to maintain the Park experience and ecosystem health.

The deontological moral factors in play for promoting good via the NRE mechanisms include: total view; equality; fairness; no harm; constraints; and obligations. From the

136 utilitarian perspective, well-being is expanded by moral patients to include consideration for park ecosystems and inhabitants, via constraints on market optimization.

Public Goods – Common Pool Resources

What is common to the greatest number gets the least amount of care. Men pay most attention to what is their own; they care less for what is common; or at any rate they care for it only to the extent to which each is individually concerned. Even when there is no other cause for inattention, men are more prone to neglect their duty when they think that another is attending to it. (Aristotle 1946: 1261b; Wall, 2017, 25)

Common pool resources are public goods that rivalrous and non-excludable. The classic example of a fishery clearly illustrates the point; the fishery is open to all. Fish taken from the school reduces the value of the school of fish. To the extent the reduction in fish is offset by reproduction, the resource is renewable. However, overfishing and reducing the school lower than its reproductive potential is an example of excess extraction making the renewable resource non-renewable. This is contrary to the proposed limit imposed by

“Hotelling’s Knothole” (page 109), a rule that sets the limits (in this case to fishing) above the replacement rate.

There has been much discussion, from antiquity to post modernity, about what is known as ‘the commons’, that is, pooled resources. The details of this controversial topic range from extreme population control, promoted to address the so-called “tragedy of the commons” (Hardin, 1967, xx), to cooperative management of common pool resources

(CPR) (Ostrom, 2015, chapter 2). These topics are beyond the scope of this thesis; the limited objective here regarding common pool resources is to characterize the moral factors that bear on NRE mechanisms for common pool resource policy. Following the format established thus far in this section, the moral factors associated NRE mechanisms are explored.

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The utilitarian model based on individual pursuit of well-being would indicate that a competitive consumption is a recommended course of action. A cooperative (total view), approach would expand the notion that restraint would provide greater benefit to all.

Mancur Olson’s research indicates that cooperation would fail (Wahl 2016 ) 83. Applying the deontological moral factors leads to yet another example where the NRE contribution of policy guidance, underpinned by science, would provide the State with proper direction.

The moral factors that directly relate are total view, equality, no harm, constraints, and obligations. As with the other categories of Public Goods (Club and Pure), the concept of

‘moral patients’ extends these considerations to the broader community of life. A NRE model can be developed that directs the regulatory framework as well as the tax policy necessary to retain renewable status.

Pure Public Goods

Pure public goods are non-rival and non-excludable. The example used here is the atmosphere, from which no one can be excluded, and their use does not limit the value to others (breathing). Of course, the atmosphere can become polluted and less valuable. As a pure public good, no individual is inclined to take responsibility to pay to keep it clean.

Pure public goods share all the same challenges of both Club Goods and Common Pool

Resources. In addition, Merit Goods share similar characteristics. Merit goods, and demerit goods are categories that can be considered as under- or over-consumed. It is thought that consumption of merit goods creates positive externalities, and in the total view sense the social benefits exceed the private benefits. The reverse is true for demerit goods, which are over-consumed in terms of negative benefit. For example, education is considered a merit good, smoking a demerit good. Regarding NRE, public parks can be considered a merit

138 good, and dirty air a demerit good. With merit goods, subsidies are required to allow full participation for those who cannot pay to use, for instance public schools. With demerit goods, regulations and/or tax policy can modify behavior, for instance pollution regulations and “sin” taxes.

This approach uses the same deontological “first filter” that has been promoted for each of the categories of public goods. NRE mechanisms working in coordination with the State and incorporating science into their policy recommendations which are based on deontological moral factors and include (moral patients) consideration for all life. This overlay of moral factors, working together with the utilitarian objectives in the broader sense, provides a critical role for future NRE economics, and could create an NRE with a moral foundation for the Ecozoic. The basic tools of analytical economic tools may be redirected by employing these explicit normative underpinnings.

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Chapter 6 – Ecozoic NRE Moral Foundations Applied to Examples

With this chapter, the NRE application examples from chapter four are reexamined through the lens of expanded moral factors and ethical systems described in chapter five.

These examples include the CWA Chesapeake Bay TMDL Opequon Benefit-Cost analysis

(pure public goods and externality market failure), the soils nutrient degradation example

(private goods externality market failure), and the growth impacts issues (summary of all public goods categories and market failure). Chapter five defined, and then applied the envisioned and inclusive NRE ethical system to the categories of private and public goods.

This chapter takes the evaluation to the next step with these inclusive NRE ethical systems adapted to the specific examples defined above. The fundamental differences between the current, narrowly scoped NRE utilitarian ethical system and the more broadly conceived

Ecozoic alternative include the contradictory principles described in chapter five (pages

114-120). These include anthropocentrism vs ecocentrism, reductionism vs holism, and positivism vs normative ethics.

The term ‘moral patients’ was defined and posited to extend moral standing to non- human lifeforms and ecosystems. The suggestion in this thesis is that the addition of the deontological and virtue ethical systems may be envisaged as hosting the primary moral factors. This is to say, the thesis is attempting to tailor consequentialist and welfarist moral factors with deontological moral factors such as the already examined total view, no harm, constraint, and obligation. The NRE examples described above are reframed and reconsidered when they are compared to new results that employ this expanded normative ethical system, together with broader definitions of moral agency (moral patients). The

140 objective is to characterize, through these examples, the moral foundations of NRE in the

Ecozoic.

First Example – CWA Chesapeake Bay TMDL (Public Goods Market Failure)

Based on implementation of 1972 Clean Water Act (CWA) in the Chesapeake Bay and its 64,000 square mile watershed (considered in chapter four) the CWA objectives and results were compared. The CWA objective was to eliminate impaired waters of the US, but results have been mixed (Jones 2014, 279) There were two mechanisms used for implementation. As stated in chapter four, the National Pollution Discharge Elimination

System (NPDES) permit system requiring use of “best available technology” (BAT), administered directly by the US Environmental Protection Agency (EPA). Secondly, so- called ‘cooperative federalism”, a joint effort between the federal EPA and the states using

NRE market mechanisms, was also employed. Where the first mechanism was used for point source control the program has been largely successful, where the second mechanism was used for non-point control the program has been largely ineffective (Glicksman 2010,

137). There are significant differences in terms of the complexity of point source versus non-point source controls. Point source controls are clearly identifiable, regulated, and monitored; non-point sources are spread across the landscape and are challenging to define, regulate, and monitor (EPA 2017). However, the vexing issue remains regarding the administrative implementation, referring to required (point source) vs voluntary nature

(non-point) of the two program approaches. The point source implementation approach focused on effectiveness as the priority, and cost-effectiveness was secondary. With this relative success, in the Obama administration an executive order prioritized the implementation of non-point source TMDL (Chesapeake Bay Foundation 2009).

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Despite extensive restoration efforts and significant pollution reductions during the past 25 years, the TMDL was prompted by insufficient progress and continued poor water quality in the Chesapeake Bay and its tidal tributaries. The TMDL is required under the federal Clean Water Act and responds to consent decrees in Virginia and the District of Columbia from the late 1990s. It is also a keystone commitment of a federal strategy to meet President Barack Obama’s Executive Order to restore and protect the Bay. (Chesapeake Bay Foundation 2010)

To be clear, this approach has fierce detractors, primarily from market fundamentalists in whose view clean water is a “luxury good”. Although older, the article quoted below provides insight into their point of view. They make the case that the costs of point source control are high, and that non-point controls following the same implementation approach can be expected to have the same reception – the position that regulation distorts the neoclassical NRE utilitarian free market ideal.

Real total costs [for water pollution control] were $15 billion in 1972 and had grown to $91 billion by 2001. The average annual rate of growth in total costs was 6.2%. In comparison, real GDP grew by an average annual rate of 2.9% over the same period. As indicated above, the real costs of water pollution control grew at an average rate almost twice that of the growth in real GDP. This implies that water pollution control is a luxury good, with demand rising more than proportionately with income. The level of water pollution control is largely determined by government regulation, which distorts market-based incentives. Nevertheless, it is unlikely that the trend in government environmental regulation will reverse in the near future, especially in light of the influence that environmental interests have on regulatory outcomes. (Johnson 2004, 42)

For this thesis discussion, the 1972 CWA is still a work in process and its mixed results are well documented. There remains, however, in all such situations, a dynamic tension between at least two protagonists. One group, neoclassical market fundamentalists, promote the market mechanism as the arbiter of all priorities, and the efficient execution of this determination. The second group consists of those whose focus is on effective results geared to the defined objectives. Their first priority was effective results followed by cost consideration. Further, this characterizes NRE failures as the result of using the market

142 means to establish efficiency as paramount, assuming that the Human-Earth relationship is discretionary, and cost based.

CWA Chesapeake Bay TMDL: Opequon Watershed Benefit-Cost Analysis

Revisiting the Opequon Watershed BCA discussed in chapter four, five specific questions regarding estimation of benefits were addressed. These questions included: the geographic discrepancy (accounting stance) as to who pays versus who benefits; the scope of benefits considered; contingent valuation (willingness to pay); and discount rate selection. Finally, one overall question was addressed: is compliance with implementation of CWA non-point load contribution to TMDL optional? Each of these issues will be reconsidered with the addition of moral factors beyond the foundational NRE consequentialism and welfarism.

Ethical Factors Foundation Principles Values Promoting Good Well-being Deontological Ecocentric Intrinsic Total View Complexity Community Equality Agency Moral Patients Reverence for Life Fairness Patience No Harm Precaution Constraints Humility Obligations Honesty Usufruct Rights Commensurability Table 11 - Moral Factors used to examine Opequon BCA results

Accounting Stance – Geographic Discrepancy

“The accounting stance refers to the geographic scale at which the benefits are measured. Scale matters because in a benefit-cost analysis only the benefits or costs affecting the specific geographic area are counted” (Tietenberg 2015, 58). As established, 143 when the BCA results in a score greater than 1.0, it recommends the action (benefits exceed costs). The study score of 0.1 – 0.3 recommends no action to implement the Opequon

TMDL. The Opequon BCA limited consideration of benefits to the local residents. The potential positive effects on the Bay were not included in the BCA as they were considered insignificant (Borisova 2008, 1016).

The moral factor Total View extends consideration for well-being beyond the individual to the larger community. In this case, there are 58 8-digit HUC subbasins that make up the Chesapeake watershed (USGS 2017). One can make the analogy that the Bay is the community and the Opequon Watershed represents one individual within it. Just as

Herman Daly’s conception of full world requires consideration of aggregated impacts (H.

E. Daly 1996, 7), the condition of the Chesapeake Bay demonstrates the aggregate result of individual decisions (Chesapeake Bay Foundation 2018). The Total View moral factor argues for inclusion of the larger geography, the potential equity imbalance is discussed below.

Who Pays, Who Benefits

Including the larger geography essentially requires the local residents to pay for a public good, that is, unimpaired Chesapeake Bay waters that are non-rival and non- excludable. With the inclusion of moral patients, non-contributing (free riders) includes non-human lifeforms and the ecosystem. These are therefore costs rightly borne by society.

Besides cost allocation, benefits will accrue to those individuals and entities that cannot share the costs, and as such, they are recipients of a merit good. A merit good is typically undersupplied with the NRE market mechanism due to the absence of any price signal and no apparent demand. Thus, societal (State) intervention is required to assure provision for

144 those that cannot pay. Nonetheless, it is to society’s4 benefit that the good is provided, due to the positive externalities that result.

NRE economic mechanisms, including tax policy, non-traditional offset markets, and regulatory controls can be combined to meet financial requirements and cost allocation.

The moral factors that have come into play include Agency and Fairness.

What’s In – What’s Out?

NRE Cost-Efficiency Analysis can be used with positive results, even in the societal context. When costs are considered in the context of a “with & without” analysis (costs with TMDL, or costs without TMDL implementation), the cost effectiveness of the TMDL becomes clearer. In fact, it can be argued that the opportunity costs of no TMDL implementation could be included in the BCA analysis as negative benefits. For example, benefits not considered in the Opequon BCA include the reduction of pathogens in the Bay, reduction of the risk of West Nile Virus, harmful algal blooms, and other significant reductions in health care costs that are difficult to value in precise monetary amounts.

(Waigner 2015, iii). These benefits added to the BCA are clearly Public Goods and invalidate the assessment that load contributions from the Bay watershed sub-basins are insignificant when considered in aggregate. Further, the addition of the human health values alone (while still anthropocentric) will change the BCA outcome, likely resulting in the recommendation of the TMDL implementation. Overall, society benefits, and therefore, rightly carries most of the costs recommended by the NRE Cost-Effective approach. The NRE Impact-Analysis is capable of revealing this investment is a bargain.

The moral factor that has been brought to bear in this section included No Harm with the implementation of the Precautionary Principle focused on human health.

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Contingent Valuation – WTP (willingness to pay)

This method, attempting to assign market prices to non-market goods, compounds the valuation flaw associated with an incomplete assessment of benefits, “complete cost – incomplete benefit analysis” (Ackerman 2004, 9, 207). Opequon watershed residents may be able to provide some rational opinions regarding their WTP for wading and fishing.

However, it is very unlikely that the residents have any means of assessing the value even of the Public Goods under consideration, never mind the many Public Goods that are not included for consideration. The classic WTP process will lead to an understatement of monetary value even for many anthropocentric interests, which include human health concerns, together with the recreational benefits that are included. Beyond this consideration, the ecocentric principle further expands the notion of benefits to include the ecosystem (as described above). The WTP approach does not comprehend this Public

Good.

In addition to the moral factors previously considered, supplementary moral factors dictate constraints not considered in the WTP method, and obligations not explicitly considered by residents putting a price on fishing and swimming.

Discount Rate Selection

n The discount rate is embedded in the BCA equation, PV= [Bn] = Bn / (1+r) .

The present value (PV) of the future benefits (B) in year (n) is discounted by rate (r), which can swing the outcome significantly. Higher discount rates yield a lower the present value.

As described in the Opequon BCA in chapter four, the discount rate used for the costs

(2.74%) was different than the discount rate used for the benefits. The range of discount rates used for the benefits was higher (4.25 to 29%). This embedded assumption account

146 for strong downward bias of the WTP results when considered over ten years. The Ecozoic moral factors (other than fairness) do not bear on the embedded assumption value choice, however a strong rationale in the choice of discount rate is necessary. The usufruct nature of current use is geared by the discount rate.

The deontological moral factors in play for review of the Opequon BCA include; total view, equality, fairness, no harm, constraints, and obligations. From the NRE utilitarian perspective, well-being is expanded to include consideration the Bay ecosystem.

Compliance – Effective vs Efficient

The NRE approach leads first with the market mechanism which is focused on efficiency. The Opequon example reviewed reveals shortcomings specific to this BCA example, as well as shortcomings that accrue with broader application of the BCA procedure (A. K. Sen 2000, 950-951).

A growing body of literature rejects cost-benefit analysis as a valid decision-making tool. Environmental law scholars in particular have argued persuasively against the accuracy, honesty, and fairness of the methodology underlying cost-benefit analysis. (Clowney 2006, 118)

In contrast to leading with efficiency as the primary policy objective, this thesis posits that the primary objective is more closely linked to the NRE Impact Analysis and guided by the NRE Cost Effectiveness Analysis (Tietenberg 2015, 67-69). An argument is made that the BCA, while providing a seemingly rational basis for the assessment of an action under consideration, is deficient. The BCA methodology is at risk to underestimate benefits, both by exclusion of benefits and valuation techniques. Likewise, costs can be understated.

Indeed, in pursuing this approach, formal cost-benefit analysis often hurts more than it helps: it muddies rather than clarifies fundamental clashes about valuation. By proceeding as if its assumptions are scientific and speaking language all its own, economic analysis too easily conceals the basic questions that lie at its heart

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and excludes the voices of people untrained in the field. Again and again, economic theory gives us opaque and technical reasons to do the obviously wrong thing. …cost-benefit analysis promotes a deregulatory agenda under the cover of scientific objectivity. (Ackerman 2004, 9)

Alternately, the BCA can be skewed in favor of projects. A study evaluating the use of

BCA to justify environmentally impactful projects demonstrates how much it can be manipulated. The US Corps of Engineers BCA process used for favored projects had cost estimates that have been shown to demonstrate bias (Haveman 1972). There is no methodical safeguard to protect from either intentional or unintentional cost errors. The

BCA approach, while having the potential to provide insight and inform project evaluation, must be considered in the context of its weakness.

In the empirical studies presented, ex post estimates often showed little relationship to their ex ante counterparts. On the basis of the few cases presented here and the a priori analysis presented here, one could conclude that there is serious bias incorporated into agency ex ante procedures resulting in overstatement of expected benefits. Similarly in the analysis of project construction cost, enormous variance was found among projects in the relationship between estimated and realized costs. (Haveman 1972, xx)

In conclusion, the NRE BCA approach has the potential to provide some insight into the discussion leading to recommended policy action. However, the problematic nature of this methodology essentially precludes the use of its result to guide policy reliably. In addition, there are considerations for overall outcome with larger scale actions. For example, a ‘rule’ was stipulated that renewable resources cannot be overused to the point of becoming non-renewable resources. This overarching concern does not enter the policy consideration on a fragmented basis. The CWA Opequon example demonstrates this lack of consideration for all factors involve, which can be brought into focus by using the Total

View moral factor. The policy deliberation under consideration logically follows an NRE

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Impact-Analysis. This prioritization of effective action supersedes the optionality imposed by the quest for efficiency.

The posited goal for future NRE is to develop policy options driven by Cost-

Effectiveness Analytics, based on Impact-Analysis results and direction. It is not the NRE role to determine that we cannot afford ethical environmental behavior. This newly envisioned, postmodern NRE will apply existing and newly developed methodologies to address distributional and allocation issues. For example, with regard to implementation of the CWA TMDL stipulated by the legislative goal of unimpaired waters for the US, a new

NRE could provide the analyses required to guide policy recommendations for finance by considering both public and private interests) as well as including the broader consideration of public interest economics, to achieve the objective of unimpaired waters in the most cost-effective way.

NRE Consequences – with and without moral factors

A summary of considerations and outcomes that compares the Opequon BCA example from chapter four and chapter six can provide insight into the consequences of each version of NRE. That is, we compare the current utilitarian methodology versus one that includes additional moral factors. These expanded considerations include:

Ecocentrism versus strict anthropomorphism – consideration for: 1. other lifeforms – hypoxia impacts 2. temporal effects – loss of life support functions over time Reductionism vs holism – consideration for: 3. aggregate effects – accounting stance 4. not allowing renewable to be converted to non-renewable Positivism vs normative ethics – consideration for: moral factors – deontological 5. total view 149

6. equality – moral patients 7. fairness 8. no harm 9. constraints 10. obligations

In addition to the expanded considerations above, utilitarian moral factors include:

1. well-being 2. consequences (including overarching biocentric constituency) 3. welfare (including overarching biocentric constituency)

Extrapolating from the results of the point source regulatory approach, this thesis posits that the same regulatory approach applied to non-point controls – requiring implementation - would yield similar success. The moral factors brought to bear in the reframing of the Opequon example would also be satisfied with this approach. Indeed, since damage avoidance would cost less than remediation after the fact, cost effectiveness could be improved as well.

Second Example – Soils (Pure Private Goods Externality Market Failure)

The last half century has been a short-lived experiment with non-sustainable, chemical- intensive, water-intensive, and capital-intensive agriculture. This new farming, often incorrectly touted as “conventional,” has destroyed the ecological foundations of agriculture, devastated natural environments, and resulted in food insecurity across the world. (Shiva 2016, 2)

If we revisit industrial agriculture as discussed in chapter four, we recall that five specific questions regarding estimation of costs and benefits were addressed. These questions included the geographic discrepancy (accounting stance); who pays vs who benefits; scope of benefits considered; contingent valuation (willingness to pay); and discount rate selection. One overall question was addressed: Does human society have obligations for usufruct consideration with regard to land management practices? Each of

150 these issues will now be reconsidered with the addition of moral factors beyond the foundational NRE consequentialism and welfarism.

Ethical Factors Foundation Principles Values Promoting Good Well-being Deontological Ecocentric Intrinsic Total View Complexity Community Equality Agency Moral Patients Reverence for Life Fairness Patience No Harm Precaution Constraints Humility Obligations Honesty Usufruct Rights Commensurability Table 12 - Moral Factors used to examine Industrial Agriculture NRE BCA results

BCA – Assumptions

It is easier to evaluate the limitations of neoclassical NRE Benefit Cost Analysis for evaluating agricultural systems if we use a study that compares conventional methods with organic agricultural systems. The 2004 study, Limitations of Neoclassical Economics for Evaluating Sustainability of Agricultural Systems: Comparing Organic and

Conventional Systems, Claudia Flores and Santiago Sarandon indirectly incorporates some

Ecocentric values which are consistent with deontological moral factors including: total view; fairness; no harm; constraints; and agency (Flores 2004). The study purports to support a holistic vision, although it is limited by its choice of considering only benefits and costs that can be expressed in monetary terms. The authors identify the limitations of the BCA application to the organic practices. It “poorly reflects the scarcity of resources, underestimating the future by the practice of discounting. Moreover, it also considers production factors as substitutes, ignoring either the existence of a restrictive resource or 151 whether availably of a resource is critical for the ecosystem” (Flores, Limitations of

Neoclassical Economics for Evaluating Sustainability of Agricultural Systems: Comparing

Organic and Conventional Systems 2004, 78). The study was intentionally limited to provide a direct BCA comparison between conventional and organic practices. Even within this narrowed view of the costs and benefits associated with the organic alternative, this comparison favored the organic alternative. In the discussion below, these flaws are corrected and the social and Ecocentric benefits excluded from the study are factored in.

Accounting stance – scale

The accounting stance as described within the thesis has been defined as the geographic boundaries that include the costs and benefits contained therein; this notion may here be expanded to include the social and cultural implications of the agroecological

(organic) alternative to conventional industrial agriculture. Although these attributes may defy quantification, they can be directly linked to moral factors under consideration.

Therefore, this qualitative dimension of analysis is included, in addition to the quantitative results of the Flores and Sarandon comparative study.

Social considerations include attempts to quantify attributes of farmer satisfaction, such as self-management, capability to control inputs and fix prices, labor requirements and self-sufficiency. Also included is consumption of production by the farmer, rather than sales, an idea that is not considered in a NRE BCA. Ecological considerations include soil physical properties, conservation, and biodiversity.

Who pays – who benefits

The individual farmer pays with both direct labor and the expense of inputs for production. The direct benefits of production, crop yield, accrue to the farmer.

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Consumption of production also benefits the farmer, although this benefit is left out of the

NRE BCA because it does not generate income. Social considerations described in the accounting stance are included as qualitative benefits. Ecological benefits, described above, have value that can be quantified via the calculation of the discount rate with and without Best Management Practices, the organic practices. Using the discount rate that

“breaks even” with no loss of investment under the Organic regime and comparing it to the discount rate that maximizes production under the conventional regime (at the expense of soil health), provides the basis for the valuation of ecological benefits.

This means that ecological benefits are included in this Ecocentric version of the

BCA. Ultimately, the benefits accrue to the farmer – net profit and consumables. In addition, benefits accrue to society, which besides consumables include reduced externalities associated with non-point source discharges of sediment, N, and P, and biocide residuals. The organic practices reduce or eliminate the use of these inputs. Benefits accrue to future generations as the soil’s capacity for regeneration is maintained. Finally, benefits accrue to the soil biology and the hosts of creatures that share the farmlands, demonstrating respect for biodiversity values. These benefits embody the deontological moral factors of total view, and that encompasses benefits to society writ large, and future life. They also include the moral factor of fairness in the distribution of benefits that include labor as well as capital interests. No harm results from the elimination of externalities and maintaining soils integrity, and agency (moral patients) is provided to the life that shares this Earth estate.

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What’s in – what’s out

The accounting above for who pays and who benefits captures the consideration for what’s in and what’s out of the Ecocentric BCA. Included in the analysis is consideration of qualitative attributes with agroecological practices. The analysis includes quantification methodology to evaluate the cost of the ecological benefits, the price being the revenue forgone due to the constraints imposed by production methods and limits that foster soil health. Newly included are the ecological considerations of soil biota, water conservation, biodiversity, and reduced externalization of production byproducts. This echoes the inclusion of the moral factors listed above, especially the one that requires no harm.

Discount Rate

These important environmental considerations influence the discount rate. The basic maximum discount rate is set by the capacity of the soils to maintain integrity within the context of regenerative production practices. Risk is included in this maximum rate.

Reverting to the example presented in chapter four, a farmer knows the productive capacity of his soils using conventional methods, because they are extractive practices, he knows there will be a decline in productivity over time. This can be accompanied by erosion as well but offset with the implementation of best management practices (BMPs). The cost of the BMPs, year after year, reduces the overall value of production. Putting simple numbers to this example: the farmer earns $100k per year and the productivity of the soils decline

1% per year factoring in erosion. Installing BMPs to forestall erosion costs $15k. The decline in revenue over 10 years @ 1% per year amounts to a loss of $10k if we are using a 10% discount rate.

PV = (-$1,000) (1/0.10) = -$10,000

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As we saw in chapter four, at this discount rate the farmer would chose to not invest in the BMPs. However, if the farmer chose a lower discount rate of 5%, the result would reverse. The value of losses would be -$20,000, making the $15,000 investment positive.

The difference between a farmer’s alternative rate of return (ARR) and the discount rate that is required to sustain the soils, if positive, is an investment in the soil health. For example, if the farmer’s ARR was 8% and her sustaining DR is 5%, then she has invested

DR is directly connected to the value of the overall proposition, inclusive of all the benefits.

This approach to discounting limits the maximum rate of interest, the discount rate to the actual regenerative capacity of the soil. In this way, there is can be dynamic relationship between soil health and the discount rate. The more resilient (healthy) the soils, the higher the discount rate. In other words, as the investment in the soils via a lower discount rate, improves the biological health of the soil, the return on that investment comes in the form of higher productivity. This example truly demonstrates the essence of a positive feedback cycle.

BCA – shortcoming / assumptions (low organic yield)

With its higher discount rate, the neoclassical NRE BCA described in chapter four resulted in a favorable disposition toward conventional industrial farming. An essential shortcoming was the silent assumption that chemical inputs are preferable to biologically regenerative soils. This approach to reducing the value Earth’s estate, limited to the concept

155 of natural capital to be extracted, is flawed. Rather, recognition of the values associated with regenerative capacity is necessary.

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Obligation

The purpose of this thesis is to support the foundational claims that humanity is at an evolutionary turning point, and that the alternative pathways embody rival value systems underpinning rival ethical ideologies. A discrete choice must be made between them to direct NRE methodology and consequences. The NRE examples provided are intended to demonstrate the consequences associated with each rival value system. There are distinct differences between them, with the default demonstrating an inability to actualize a thriving

Human - Earth relationship. This grounds the overarching claim that we have an obligation to make a conscious decision and act to uphold our choice. The thesis posits this means adopting NRE principles for continued development of the human story that respects moral obligations to the rest of life, with which we share both our heritage and our destiny.

The Claim - Moral Obligation

It is now time to unpack the concept of moral obligation in order to substantiate the claim that society is now obligated to choose which pathway it will take, or more clearly put, to choose our consequences. This idea of obligation employs Simone Weil’s concept of human obligation described in two moral essays, Draft for a Statement of Human

Obligation and Human Personality (Weil 1981). The premise they defend is that freedom is an internal attribute of man, but freedom is also synonymous with responsibility, and therefore obligations exist as a result of any quest for freedom. These obligations are consistent with a covenant, or promise, and are non-negotiable. In this sense, freedom is not liberty. According to Weil’s thinking, people are afforded liberty externally, and this transitions from a moral political construct toward a legalistic framework. Rights are consistent with contracts versus covenants; and therefore, provide for freedom of choice.

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Rights so defined are negotiable, and as a morally neutral notion they carry no positive obligations. In The Need for Roots, Simone Weil establishes a hierarchy in which rights are subordinate to obligations. With the opening sentence she declares “The notion of obligations takes precedence over that of rights, which is subordinate and relative to it”

(Weil 1952, 3). In Weil’s view, the notion of rights is a legal one (in French le droit means both “right” and “the law”) and is linked to quantity, exchange, and property (Bell 1998).

This concept of rights is distinctly consistent with the theory of the instrumental value system. In contrast, moving from rights, which Weil believed to principally be a Roman idea, to the Greeks, who Weil believes gave us a notion of justice. As we observed earlier,

Plato characterizes justice as embodying both intrinsic and instrumental values. This thesis posits that if we follow the lead of philosophy in this area, humanity has a non-negotiable obligation to bear responsibility for the consequences of our actions, both individual and collective. This obligation extends to the value system we choose to frame the

Human/Earth relationship.

Dignity – Cornerstone

This thesis stipulates that dignity is a universal birthright. With this cornerstone we can secure the foundation of moral obligation. This capacity of the person includes individual responsibility for personal identity, identity associated with meaning and values.

As well, human beings are bounded by physical constraints: “the misery of necessity”.

The reality of this world is necessity. The part of man which is in this world is the part which is in bondage to necessity and subject to the misery of need. (Weil 1981)

It is with these constrains that individuals have moral obligations that guide action. These

NRE moral factors have been stipulated in the thesis and include; no harm, promoting good, well-being, and total view, among others. Considering the moral factor of total view, 158 this reasoning can be extended to conclude that society has a parallel, non-negotiable moral obligation to individuals, other societies, and to future generations.

Obligation and Responsibility

Weil’s premise has defined freedom as an internal attribute of man, that freedom is synonymous with responsibility, and obligations exist as a result. This necessitates that obligations are expressed by responsible action, anchored by human dignity, and bound to the moral factors, such as for example doing no harm. This is an appeal to conscience, an overture to recognize that the consequences of action (or inaction) establish the individual’s identity linked to an expression of meaning and values. The individual is further defined by the consequences of his or her actions in this context. The responsibility to abide by moral factors with respect for universal human dignity is a non-negotiable obligation. With consideration for moral patients, that is, moral agency extended to non-humans, the obligations bound by human dignity can be argued to extend with agency to the balance of all the lifeforms sharing this planet, as well as with communities of life (ecosystems) and the inanimate structures (rivers, mountains, oceans) that support life. This translates to universal respect for life and its concomitant supports, bound by the deontological moral factors stipulated in the thesis.

Obligations Honesty Usufruct Rights Commensurability

Table 12. Obligatory Deontological Moral Factors

The thesis posited that a broader view of consequentialism is necessary for the moral foundation of NRE for the Ecozoic. Moreover, the argument has been made that we can naturally combine deontological moral factors as demands of consequential evaluation and derive an applicable consequential theory. Thereby promising a fulsome ethical theory as a foundation for NRE in the Ecozoic. These moral factors have been applied to the NRE examples originally presented in chapter four. The objective was to present the actual results in chapter four, the consequences of Technozoic NRE applications together with the relative roles of the state and sciences in the process. Following the development of an ethical model in chapter five – the alternative Ecozoic evaluation of the examples provided a view of the alternative results that can be expected.

The overarching objective is to present alternative consequences that can be envisioned, and the choices leading to those consequences. The fundamental differences in the Technozoic choice and the Ecozoic alternative include:

1. Adopting an Ecocentric Worldview – abandoning the Anthropocentric limitation

2. Extending moral agency (moral patients) to the life with whom we share Earth

3. Prioritizing effectiveness over efficiency, this prioritization is cost effective - long run

4. Including consideration for qualitative values that are irreducible to money

5. Expecting (insisting) Corporate and Government Institutions respect and adopt virtue

ethics as a guiding premise for their existence.

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This general discussion of obligation is concluded with a discussion that addresses the thesis contention that we must chart a course to the Ecozoic or bear the consequences of the Technozoic. The responsibility that must be borne is effectively characterized by

Hans Jonas, extending his seminal work The Phenomenon of Life to detail our obligations.

Jonas – The Imperative of Responsibility

Society has obligations and responsibilities to all of life, which shares the same foundations in dignity as individual humans; this is the moral factor of ‘total view’ that has been enlisted by movements to grant legal status to ecosystems or rivers, and is supported in this thesis. Whereas individual action, guided by moral factor, can predictively result in

‘good consequences’, (do no harm and enforce dignity), in the context of collective action this is no longer true. Collective action means using large-scale social power to act without predictive knowledge concerning consequences and creates a moral problem.

The gap between the ability to foretell and the power to act creates a novel moral problem. With the latter so superior to the former, recognition of ignorance becomes the obverse of duty to know and thus part of the ethics that must govern the evermore necessary self-policing of our outsized might. (Jonas 1984, 8)

many people have now observed, collective technical ability has outstripped any inherent capacity for moderation, and so requires conscious consideration of moral factors applied to, and by, the collective wishing to implement it. Current neoclassical NRE, along with government and corporate institutions, does not provide such consideration. The

Technozoic approach to problems, demonstrated by our planetary crises, is to develop more technological solutions, ideally ones that can be monetized. As Einstein’s famous quote says, “We cannot solve our problems with the same level of thinking that created them”.

We require a new social imperative that contemplates our overarching responsibility. NRE can evolve to provide this thinking. This paradigm shift can reorder NRE priorities and 161 include the broader set of moral factors illustrated by the many examples in this thesis.

This will be no small task – to shift from the technological imperative that for at least four centuries has compelled mainstream societies to dominate natural systems.

[The current imperative] needs no advocates in the Western world of the twentieth century: intoxication has taken place. As things are with us, the technological drive takes care of itself – no less through the pressure of its self-created necessities than through the lure of its promises, the short-term rewards of each step, and not least with its feedback coupling with science. There are times when the drive needs moral encouragement, when hope and daring rather than fear and caution should lead. This is not one of them. In the headlong rush, the perils of excess become uppermost. (Jonas 1984, 203)

The clincher argument for a new paradigm to guide all human action is to be found in Weil’s in Oppression and Liberty, which demonstrates that the Technozoic path is a repetition of historical totalitarian behavior. We must recognize that the old liberal individualism of societies (into Nation-States) mirror the same relational shortcomings as are occurring in individuals. The full human collective, both individuals and societies, are obligated to the non-negotiable stewardship of the Earth estate, which is clearly required to sustain all life. We have usufruct obligations to future generations as well. The conclusion is that the pathway forward for humanity will requires the reintroduction of morals and values into Natural Resources Economics, a revolution requiring a complete paradigm shift, but one that will enable NRE to help benefit all life and facilitate a flourishing Earth/Human relationship.

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