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Ecological Economics—and What It Can Teach Us

By Gunnhildur Fríða Hallgrímsdóttir

As the climate crisis continues to send shockwaves throughout our society, the search for solutions grows ever more desperate. As we get closer to the root of our questions, we realize that many of our issues come from the underlying assumptions that economics makes. A new branch of economics, ecological economics, tries to tackle those questions by changing the assumptions we make about the world.

Ecological economics is a trans-disciplinary field, bridging ecology and economics: it looks at the economic system embedded within a social system which is in turn embedded within an ecological system—the sum of all ecosystems on the earth (the biosphere). It recognizes the importance of efficient allocation of resources, but also seeks to understand the complex relationships between economic development and resource exploitation. The environmental problems humans face are not simply market-based, but also stem from human mismanagement of resources and an inadequate understanding of future impacts. Therefore, it differs from environmental economics, which is considered a sub-branch of economics that accepts the neoclassical paradigm and frames the environmental problem within markets. Within this field, market solutions that can mitigate negative externalities and tradeoffs (e.g. sticks and carrots) are considered in order to solve this problem. At its core, environmental economics seeks to extend market thinking to the environment assuming that market allocation of resources is also most optimal for the environment. Ecological economics does the opposite, applying ecological thinking to the market, assuming that the market economy should follow the laws of natural economies and should exist within the natural economy (see Figure 1). But why “ecological”—what, one may ask, does economics have to do with ecology?

Figure 1: Positioning the Economy Within the Environment

Note: As described above, the above diagram underscores the economy's inherent dependence on (and existence within) the environment and natural world.

When explaining to people what the field of ecology studies, Charles Darwin would describe it as “The Economy of Nature.” The words “ecology” and “economy” come from the same root, the Ancient Greek word oikos, meaning “home” or “household”: i.e., the systems of relationship, the goods and services that keep us alive. At its core, ecological economics wants to study interactions beyond a market system, pushing the definition of what a “market” is. If we define an economy as interactions between agents who allocate resources and utility, then economies have existed way before we invented currency, and are inherently natural to the world. When a tree bears fruit, a bird eats the fruit and disperses the seed, creating the conditions that allow for the growth of another tree. Is that not an economical interaction?

Natural economies such as these have existed far longer than our currency-based economy and can teach us a lot about the longevity of economies. When ecologists study the growth of a species, exponential growth is regarded as a characteristic of an early-stage economy, similar to how economics talks about “catch-up growth” for developing countries. The difference, however, lies in the way that ecology defines its “steady state” as no growth, as the population reaches its carrying capacity. Contrarily, economics assumes western countries have hit some form of “steady state growth” at around 2-3% GDP growth annually, which does not sound like much until one remembers that GDP in these economies doubles roughly every 30 years. There is a reason why things in nature only grow up to a certain point, as resources around us are limited.

So as we try to remodel the way we think about our world, changing our assumptions about scarcity, savings, and the meaning of abundance, we could certainly use a few principles from Ecology:

  1. Symbiosis. Nature is full of symbiotic interactions, where both individuals benefit from the exchange, rather than constant competition for resources where neither species benefits. With such symbiosis, there is no zero-sum game: The contributions of each party create a whole that is greater than the sum of its parts. A flower must support a thriving bee community that pollinates every year by providing them with delicious honey, understanding that mutually beneficial interactions are far more effective than always competing for resources. In a recent interview, author Richard Powerscomments, “there is symbiosis at every single level of living things, and you cannot compete in a zero-sum game with creatures upon whom your existence depends.” And yet, we continue to operate our economic systems from the foundation of competition.

  2. Biological and human diversity. Biological and genetic diversity is crucial for strong ecosystems, because the more diverse a gene code an ecosystem has, the easier it is to rebound from species collapse and crises. Diverse human communities are stronger and more resilient, as different perspectives and talents can bring together the best of us.

  3. We are stronger together. A strong community can help us go through almost anything. Old-growth forests know that they are stronger together, they exchange information through the “Wood Wide Web.” Older trees tell younger trees how to fight off disease and when it's best to produce fruit, all through the mycelium network that grows beneath them. Similarly, communities with a strong social fabric are more resilient to disaster, stronger when each member puts aside their personal interests and acts in the interest of the collective.

  4. A disease from the bottom root affects the health of the strongest trees. No matter how small the infected root is, root-based disease can kill off an entire tree. We understand this in a human context to be protecting democracy, community, and marginalized groups: the small reflects the large, and the health of the whole system requires the flourishing of each part. Dr. Martin Luther King Jr.’s saying, “no one is free until we are all free,” applies to this—oppression of one group is oppression of all.

  5. Cyclicality and abundance. Natural economies do not face scarcity because they are based on a renewable resource that fuels everything else: sunlight. Basing our economy on non-renewable resources creates manufactured scarcity, where we operate under short-term boom and bust cycles. A healthy economy experiences abundance, prosperity, and an environment where organisms do not have to worry about whether they will be able to feed themselves tomorrow. Humans can transcend resource scarcity by embracing cyclicality and tapping into sources of abundance.

These principles are by no means an exhaustive list of what the field of ecology has to offer to deepen our understanding of economics. But in terms of breaking down the axioms and core definitions that traditional economics fixates on, it can take us a long way. Viewing economics simply as a framework around relationships and exchange allows us to articulate values that get lost in market economies, like reciprocity, happiness, cooperation, and love. There is no time like the present to bring out the best things in our economies and in us—and to learn how we can flourish together through ecological economics.

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