Ecological Economics: Creating a Sustainable and Desirable Future Robert Costanza Gordon Gund Professor of Ecological Economics and Director, Gund Institute of Ecological Economics Rubenstein School of Environment and Natural Resources University of Vermont Burlington, VT 05401 http://www.uvm.edu/giee Gund Institute for Ecological Economics, University of Vermont Practical Problem Solving Requires the Integration of: • Vision a. How the world works b. How we would like the world to be • Tools and Analysis appropriate to the vision • Implementation appropriate to the vision Gund Institute for Ecological Economics, University of Vermont Solar FInite Global Ecosystem Energy Energy Growing Energy Source Economic Sink Functions Subsystem Functions "Empty Resources Resources World" Recycled Matter Waste Heat World Primary Energy Supply by Source, 1850-1997 Anthroposphere QuickTime™ and a Cinepak decompressor are needed to see this picture. Marc Imhoff Biospheric Sciences Branch NASA Empty World Energy Planning? The Challenge: SustainableGund Institute Management for Ecological Economics, of an Ever-Changing University of Vermont Planet OIL AND GAS LIQUIDS 2004 Scenario Updated by Colin J. Campbell, 2004-05-15 Net Energy from Oil and Gas Liquids B EROI/Net Obviously, “B” is the most difficult one Energy embodied in to estimate. It can be divided into 4 all feedbacks “tiers” of increasing comprehensiveness: energy necessary to discover, Tier 1 (direct energy feedback only), extract or capture, Tier 2 (tier 1 plus embodied in capital) process and deliver the Tier 3 (tier 2 plus embodied in labor and definitions government services) energy, plus any Tier 4 (tier 3 plus damage to ecosystem external costs of the services and other external costs) process (i.e. damage to ecosystem services) Energy Supply A “A” can be tricky if there are C Process joint products (i.e. biodiesel Gross energy Energy input and silage) delivered to point of use With A, B, and C all converted to energy of the same quality: Energy Return on Investment (EROI) = A/B Net Energy = A - B Energy Capture Efficiency = A/(B+C) Energy Payback Time = time for flow of A to equal lump sum of B Atmosphere QuickTime™ and a decompressor are needed to see this picture. Weather-related economic damages have increased Hurricane Katrina approaching Louisiana coast FInite Global Ecosystem Solar Energy Energy Energy Source Growing Sink Functions Economic Functions "Full Subsystem World" Resources Resources Recycled Matter Waste Heat Ecological Economics oikos = “house” logy = “study or knowledge” nomics = “management” Literally: management of the house (earth) based on study and knowledge of same Integrated Questions/Goals: • Ecologically Sustainable Scale • Socially Fair Distribution • Economically Efficient Allocation Methods: • Transdisciplinary Dialogue • Problem (rather than tools) Focus • Integrated Science (balanced synthesis & analysis) • Effective and adaptive Institutions See: Costanza, R., J. C. Cumberland, H. E. Daly, R. Goodland, and R. Norgaard. 1997. An Introduction to Ecological Economics. St. Lucie Press, Boca Raton, 275 pp. Gund Institute for Ecological Economics, University of Vermont ”Empty World" Model of the Economy Property rights Individual Utility/welfare Private Public Consumption (based on fixed Building Manufactured preferences) capital Goods Cultural Education, Training, Economic GNP Norms and Labor and Policy Research Process Services Improvement Investment Land (decisions about, taxes government spending, education, science and technology policy, etc., based on existing property rights regimes) “Full World” Model of the Ecological Economic System positive impacts on human capital capacity being, doing, relating Well Being having, being (Individual and Ecological Community) Complex property services/ doing, relating rights regimes amenities IndividualCommon Public - having, having - being Consumption (based on changing, Solar adapting Energy Restoration, Wastes preferences) Natural Capital Conservation Evolving Education, training, Goods Human Capital Economic GNP Cultural research. and Norms and Production Policy Institutional Process Services rules, norms, etc. SocialCapital Investment (decisions about, taxes Building Manufactured community spending, Capital education, science and technology policy, etc., based negative impacts on all forms of capital on complex property rights regimes) Materially closed earth system Waste heat From: Costanza, R., J. C. Cumberland, H. E. Daly, R. Goodland, and R. Norgaard. 1997. An Introduction to Ecological Economics. St. Lucie Press, Boca Raton, 275 pp. Beyond the Confrontational Debate on the Environment More realistic vision of human behavior • Multiple motivations (personality types, culture, etc.) • Limited knowledge and “rationality” • Evolving preferences • Satisfaction based on relative, rather than absolute, consumption, plus a host of “non-consumption” factors • Central role of emotions in decision- making and evading social traps • Embedded in multiscale, complex, adaptive, systems Gund Institute for Ecological Economics, University of Vermont Phineas Gage We devote a huge chunk of our brains to recognizing faces and reading other people’s emotions and intentions. This is essential to allow social capital to form and to build rules and norms that can avoid free rider problems and other social traps. Quality of Life (QOL) as the interaction of human needs and the subjective perception of their fulfillment, as mediated by the opportunities available to meet the needs. Qualit y of Life How How Needs Human Need ar e Fulfillment Met Needs is Perceived Opportunities Subsistence to meet human Reproduction Subjective needs, now and Security Well-Being in the future Affection (happiness, Understanding utility, welfare) (Built, Human, Participation Social, and for individuals Leisure and/or groups Natural Capital Spirituality and time) Creativity Identity Freedom Envision- Policy ing, evolv- ing social norms From: Costanza, R., B. Fisher, S. Ali, C. Beer, L. Bond, R. Boumans, N. L. Danigelis, J. Dickinson, C. Elliott, J. Farley, D. E. Gayer, L. MacDonald Glenn, T. Hudspeth, D. Mahoney, L. McCahill, B. McIntosh, B. Reed, S. A. T. Rizvi, D. M. Rizzo, T. Simpatico, and R. Snapp. 2006. Quality of Life: An Approach Integrating Opportunities, Human Needs, and Subjective Well-Being. Ecological Economics (in press). COOL POWERPOINT 1-from ESR Observed Life Satisfaction versus Predicted Life Satisfaction 10.00 LS = .78*HDI + .26*NCI + ? Life Satisfaction Human Development Index Natural Capital Index No Social Capital Index 9.00 (Index of Built and (based on value of Human Capital) Ecosystem Services 2 R = 0.7241 8.00 Ghana 7.00 China Philippines Nigeria India 6.00 Bangladesh 5.00 4.00 Observed Satisfaction Life 3.00 2.00 1.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 Predicted Life Satisfaction Predicted Life Satisfaction (LS) From: Vemuri, A. W. and R. Costanza. 2006. The Role of Human, Social, Built, and Natural Capital in Explaining Life Satisfaction at the Country Level: Toward a National Well-Being Index (NWI). Ecological Economics (in press). Comparison Between Quality of Life and Its Components Between Burlington VT, and a Selection of Intentional Communities 5.00 4.00 3.00 2.00 1.00 Average Score (1=not at all to 5= very greatly) Total Quality of Life From: Mulder, K., R. Costanza, and J. Erickson. 2006 Th capital to quality of life in inten Built Capital Natural Capital Human Capital Burlington tional and unintentionalSocial communities. Capital 1 (Friends & Family) Intentional Communities Social Capital2 (Neighbors) e contribution of built, human, social and natural Ecological Economics (in press) A range of goals for national accounting and their corresponding frameworks, measures, and valuation methods ___________ Economic ___________ Economic Welfare Human Goal Income Welfare Marketed Weak Strong Sustainability Sustainability Basic value of 1 + non- 2 + preserve value of the wefare assessment of Framework marketed goods marketed goods essential natural effects of income and the degree to and services and services capital other factors which human produced and consumption (including needs are consumed in an distribution, fulfilled economy household work, loss of natural capital etc.) Non- GNP MEW HDI (Gross National (Measure of Economic (Human environmentally Product) Welfare) Development Index) adjusted measures GDP (Gross Domestic Product) NNP (Net National Product) NNP’ Environmentally (Net National Product ISEW HNA adjusted measures including non- ENNP SNI (Index of Sustainable (Human Needs produced assetts) (Environmental Net (Sustainable National Economic Welfare) Assessment) National Product) Income) SEEA SEEA (System of (System of Environmental Environmental Economic Accounts) Economic Accounts) Market values 1 + Willingness 2 + Replacement Appropriate to Pay Based 3 + 4 + Costs,+ Consensus Valuation Values (see Production Constructed Methods Table 2) Preferences Building Values Dialogue From: Costanza,from: Costanza, R., S. Farber, R., B.S. CastanedaFarber, B. and Castaneda M. Grasso. and 2001. M. GreenGrasso. national 2000. accounting: Green national goals accounting: and methods. goals Pp. 262-282and in: Cleveland, C. J., D. I. methods. Stern and Chapter R. Costanza in: Cleveland, (eds.) The economicsC. J., D. I. oSternf nature and and R. theCostanza nature of(eds.) economi Thecs. nature Edward of economics Elgar Publishing, Cheltenham, England and the economics of nature. Edward Elgar