Customer Reviews

Ecological Economics: Principles And Applications

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Edit of 21 Dec to add links.

Dr. Herman E. Daly may well be a future Nobel Prize winner ...he is especially well-regarded in Norway and Sweden, where he has received prizes one step short of the Nobel. He is the author, co-author, or primary contributing editor of many books that fully integrate the disciplines of economics and ecology. I bought the three most recent for the purpose of selecting one to give out at my annual Global Information Forum. I ended up choosing For the Common Good: Redirecting the Economy toward Community, the Environment, and a Sustainable Future, in part because it is available in paperback and is not a more expensive "trade" publication; and in part because it is strong in laying out specific ecological policy areas in the context of a strong theological or ethical perspective. More on that in its own review.

Of the three books (the third one that I reviewed is Valuing the Earth: Economics, Ecology, Ethics) this, the text-book, is assuredly the most up-to-date and the most detailed. If you are buying only one book for yourself, this is the one that I recommend, because these are important issues and a detailed understanding is required with the level of detail that this book provided. It should, ideally, be read with "Valuing the Earth" first (see my separate review of that book, from the 1970's updated with 1990's material and new contributions), then "For the Common Good", and finally the text book as a capstone. But if you buy only one, buy this one.

Tables of contents rarely do justice to the contents but in this case, they excel. This is one of the most intelligent, structured, useful outlines it has been my privilege to examine. Read the Table of Contents information provided by the publisher to satisfy yourself. From Part I with three chapters (An Introduction to Ecological Economics) to Part II with 4 chapters (The Containing and Sustaining Ecosystem: The Whole) to Parts III and IV (Microeconomics and Macroeconomics, respectively, five and four chapters each) to Part V with four chapters (International Trade), and finally to Part VI (Policy) with chapters on General Policy Design Principles, on Sustainable Scale, on Just Distribution, and on Efficient Allocation, the content of the book is elegantly organized and accurately described.

Readings and other references make this a true textbook suitable for policy adults, graduate students, and undergraduates. It is the perfect single book in this field, not least because of its appreciation for religious vision and ethics as a foundation for making decisions that favor sustainable community over corporate greed and government fiat.

Dr. Joshua Farley as co-author appears to have brought a rich background as first an understudy and then an original contributor in his own right. God willing, America will one day have a President that uses the co-authors as primary advisors, along with E. O. Wilson, Brian Czech, and J. F. Rischard, among a handful I particularly respect. I feel a real sense of privilege in having discovered these three books and the work of Dr. Daly. At the age of 52, as I see America and the world inflamed by ideologues and crooks betraying the public trust, I cannot help but feel that those of us old enough and experienced enough to think for ourselves have a 20-year intellectual and moral battle ahead of us, one that will determine the future of the Earth. Anyone old enough to drive needs to read at least one of his books, but those of us old enough to feel fully equal to the task of confronting our sell-out Senators and sell-out Representatives need to arm ourselves with the specifics that Drs. Daly and Farley offer us, and join the battle for managing the commonwealth in favor of all of us.

See also, with reviews:
The Future of Life
Shoveling Fuel for a Runaway Train: Errant Economists, Shameful Spenders, and a Plan to Stop them All
High Noon 20 Global Problems, 20 Years to Solve Them
Biomimicry: Innovation Inspired by Nature
Green Chemistry and the Ten Commandments of Sustainability, 2nd ed
Natural Capitalism: Creating the Next Industrial Revolution
Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage

Ecological economics is a relatively new field that I believe will be central to economics in this century. This text book presents the basics. It is more comprehensive than most other works in this area, and also has greater depth. (If this is your first expedition into ecological economics, though, you might want to try instead "Beyond Growth", by one of this book's co-authors.)
This text book points out that ever-greater material consumption provided by never-ending economic growth is the agreed-upon end for traditional economics and most of modern society. The problem with this conventional approach is that it is impossible to achieve, and probably would be undesirable anyway even if we could achieve it.
The text offers a fresh approach to one of the most important economic problems of our time. Conventional economics papers over the problem of just distribution of wealth by buying off the poor with the offer of a larger slice of an ever-growing economic pie. Unfortunately, using conventional economic measures like GDP, the pie may look larger even as it is actually shrinking. This ultimately helps no one, least of all the poor. The book argues convincingly that a steady-state economy offers hope of real progress in this area.
I don't agree with some of the author's points. The authors spend a lot of time arguing about determinism, relativism, and nihilism, and state that rejection of all these doctrines is necessary for someone to have any opinions on policy. Their argument seems to be that belief in an ultimate end such as God is necessary to believe that anything matters at all. The book's logic here strikes me as a lot less airtight than the authors seem to think. I know plenty of Christians who believe that due to the imminent Second Coming of Christ, humanity's future isn't likely to extend more than a few decades into the future. This belief understandably leads to a certain disregard for the whole concept of sustainability. Many believers in God also think that what we do to the earth doesn't matter very much, because it is all part of God's plan, and anyway the afterlife is what really counts. The atheists of my acquaintance tend, on average, to be much more concerned about humanity's long-term future, since they can't count on God to pull a rabbit out of a hat.
The text's authors criticize the idea that sustainability can be achieved by internalizing all external costs and benefits. Such internalization has problems, certainly, but I think the problems are more solvable than the authors do. I very much liked the text's analysis of goods as excludable or non-excludable, and rival or non-rival. For nonexcludable rival goods (such as fisheries) the authors state that rational self-interest creates an invisible foot that kicks the common good in the rear--one of the many memorable phrases in this book.
I was glad to see a discussion of the positional nature of welfare--meaning that above a certain subsistence level our sense of well-being is largely dependent on how we compare to those around us. I think this is a very important subject that is entirely ignored by conventional economics. What's the point of trashing the planet to achieve higher incomes, if we're not actually any happier as a result of those higher incomes? (After all, even a glance at People Magazine is enough to show that it's possible to be very rich and utterly miserable.) The text's authors admit that quantifying what really makes people happy is difficult, but point out that on something as important as this, it is better to use an economic measure that is vaguely right rather than precisely wrong. Bravo!
I disagree with much of the authors' discussion of monopolies. I think that monopolies under certain circumstances can be helpful in achieving sustainability. Since this is the subject of some of my own research, though, I won't discuss it here.
I especially enjoyed this book's chapters on policy. The nutshell here is that sustainability is the proper criterion for the overall scale of the economy, and that justice is the proper criterion for distribution. The authors make a good case for the necessity of using input quotas to restrict depletion of resources, which I hadn't realized before. I would have liked to have seen more discussion of population issues, though.
Overall, a very good book for someone who is interested in ecological economics and wants to go in deeper.

"Ecological Economics" is a recent publication written by H.E. Daly and J. Farley. The former is a well-known academic in the field of ecological economics. Although it is tempting to state that the book would make an excellent textbook for undergraduate students, or even high school students with an interest in economics and the environment, the authors note that the it is not really a textbook because it is not "a presentation of accepted concepts and propositions of a well-defined academic discipline". Indeed, the authors do not claim that ecological economics is a discipline in its own right, but rather a transdiscipline. In other words, ecological economics is a move away from the traditional concepts that have become enshrined in neoclassical economics, but still "under construction". This means that the contents of the book remain under debate in current economic thought, and any follow up texts may differ significantly from this all-encompassing attempt to introduce us to the transdisciplinary field of ecological economics.

The text may thus be inappropriate for readers who do not already possess an understanding of the history of economic thought and knowledge of the problems with the underlying assumptions and failures of existing economic models. Nevertheless, the text is simple enough to be understood by newcomers to the field as it contains the principles on which neoclassical economics is based, covering microeconomics, macroeconomics, international trade and policy. What is different in this book is that all aspects of economics are viewed from the point of our natural environment. In fact, an extensive section on "the containing and sustaining ecosystem" precedes the more traditional topics mentioned above.

The last portion of the book outlines that the text focuses on three issues: the allocation of resources, the distribution of income and the scale of the economy relative to the ecosystem. In particular, the latter is emphasized. In part six, the book comes to the conclusion that three policy actions are required. They include that a quantitative limit be set to reflect sustainable scale, deciding on ownership of scarce resources, and finally, after political decisions have been made, trading and efficient market allocation.

The guiding viewpoint of the authors is heavily focused on policy. The book does cover some of the new thinking and models of ecological economics, such as the laws of thermodynamics, Pigouvian taxes, stock-flow and fund-service resources by Georgescu-Roegen, and other established theories in ecological economics. What is lacking is an attempt to remodel some of the neoclassical work, but we can forgive the authors this gap since the book is a not meant to be a theoretical academic paper. However, academics in this field may consequently find that they disagree with large portions of the text.

A strength of the book is its inclusion of references to well-known papers in the field, which makes it a very useful text for graduate students in the field. In addition, the layout is handy. It contains excellent tables and excerpts that summarize important concepts and complex issues. The text is interspersed with "Think about it!" questions, that force the students to apply the recently reviewed concept to an alternative situation, and helps them to develop a deeper understanding of the implications. At the end of each chapter, there is a "Big Ideas to Remember" section, which outlines key phrases and concepts that students need to know. Each section of the book, furthermore, contains a brief summary. This is not so much a review of the section as a reminder of what is really being said and what the author's viewpoints are. Some of the chapters that contain more complex ideas also have brief summaries.

In general, this book should be applauded for an excellent effort to cover the key ideas current in ecological economics. However, there are gaps and weaknesses in the text, such as the fact that only a few ecological economics theories are covered. In a way, the book attempts to dictate what we should do or think, rather than presenting students with a more overall, open-minded presentation of ideas in the field. I would have preferred the book to encourage more thought-provoking alternatives to some of the solutions presented.

Here at last is a book that sees ecological economics not as a branch of economics or a school of economics but as a broader and deeper system of ideas that includes the sound elements of conventional economics. Herman Daly, the Grand Old Man of the steady state economy, and Joshua Farley, his able younger follower, have produced a comprehensive and very readable synthesis. Traditional economists see natural resources as a subsystem of the world economy. This book presents the economy as a subsystem of the global ecosystem. The effect is like that of climbing a tall tower and seeing that a familiar city was all along part of an island whose fields and forests are in danger of disappearing under the advancing suburbs. The authors have not shied away from including controversial ideas, and there are some that I do not agree with, but that just adds to the stimulation. Not only have I adopted this as the textbook for a course in ecological economics, but I would like to see it read by all economists. This is not a specialist branch of economics; it is the only kind of economics appropriate to the new century.

And I'm not just saying that because I like ecological economics. Before this I used to hate even the idea of textbooks...mostly the fault of high school I guess, but also many college courses. In fact that is the reason why I hesitated to buy this book, but I'm glad I did. This is the only textbook I have been able to read straight through (though slowly and critically) and maintain my focus, interest, and energy. It's very well written and organized, and it's honest and upfront, highlighting debates and differences in opinions, as well as their implications. It is even entertaining on a fairly regular basis.

No prior knowledge of economics or natural sciences is necessary, though of course having some helps to make it an easier read. The 2nd edition should take care of some of the minor typos and other editing mistakes. I have seen no serious flaws in the book.

If you
1) Have an open mind
2) Respect solid, provocative arguments that challenge the status-quo
3) Are interested in the nature of the relationship between humans and our environment, economics, ecology, sustainability, social justice, or democracy
4) Have tried a standard econ. course and was frustrated by the hordes of inane and offensive or otherwise false assumptions, contradictions and overall lack of scholarly rigor
You will probably enjoy this book.

I also suggest getting the companion workbook, especially if you are
1) A student (of any age, shape or form)
2) Interested particularly in the fields of environmental policy/management, economics, or ecological economics or
3) Interested in the education system and education reform.

It has valuable supplemental information as well as suggestions on how to advance your knowledge and possibly put you into a career path. The pedagogical philosophy espoused in the book is great from my perspective--a student frustrated with the hypocrisies and contradictions of academia and our current education system. Farley makes it clear that fundamental education reform is necessary in order to advance democracy and for us to continue to develop into our greatest human potentials.

The authors of this book demonstrate a deep understanding of the negative role and impact on econmic growth that results from speculation in national and international currencies,stocks,and other financial assets.This book is especially strong in chapters 13 and 14 where they discuss macroeconomics and the effects of worldwide speculative activity.The Nobel Prize winning chemist,Fredrick Soddy,whose 1930's book " Wealth,Virtual Wealth,and Debt ", demonstrated an excellent understanding of the dangers of speculative finance,is given his due along with Keynes(pp.256-257),who had always understood the severe negative impacts speculative finance can have on both economic growth and income distribution.

The intellectual rigor of the authors suffers on pp.224-225 when they discuss Adam Smith's Invisible Hand .It is simply not the case that Smith took the view(micro economic decision making in the aggregate always leads to an optimal macro economic outcome )foisted on him.Smith himself was well aware of the great dangers of speculation(see Smith's extensive discussions on pp.290-340 of the Wealth of Nations[1776,Modern Library(Cannan)edition] and the need to prevent it from occurring in the first place ,as well as the negative consequences of the Invisible Hand process that could only be overcome by government action(see pp.734-741 on the necessity for the government to provide universal education supplied for free for those unable to pay).

I should begin by saying that there is apparently a newer edition of this book available (newer than the edition that I read and am going to review). I glanced at the table of contents and it looks like there are some brand new sections in the newer edition that are not in this edition so I would recommend that anyone thinking of reading this book attempt to get the newest addition if you can afford it.

This book really needs to be read by anyone with even a passing interest in economics. Economic theory is like quick sand and it is easy to get lost in interminable debates about really esoteric aspects of theory. These debates are extremely important since even the most esoteric aspects of economic theory can have huge consequences in terms of policy and peoples real lives. But, in my opinion, there are some practical questions facing us today that are so urgent we cannot really wait for definitive solutions to these esoteric theoretical debates before deciding to act. Of course we need some theory on which to base our practical policies but it is not always necessary to delve into the very depths of theory in order to know which policies are likely to be effective in producing desirable results. At this level there is likely to be a possibility for more general agreement even between theorists working in differing frameworks. This book will convince most readers that the ecological problems we are facing as a species are very urgent indeed and that there are some very workable policies which would most likely be extremely effective in meeting those challenges. And I am not just talking about global warming. In fact the problem of global warming is just one of the many, many issues that are discussed in this book so it really is not necessary to engage in endless discussions about whether global warming is a hoax or not (an absurd hypothesis in my opinion) since even if it were a hoax there are still plenty of other problems that are awaiting solutions. That the human species is beginning to have a real and serious effect on the biosphere and on the earth's stocks of non-renewable resources is undeniable whatever your opinion about global warming.

I know that textbooks are not usually the most exciting reading. After the 2008 crash I decided I wanted to learn a little bit more about economics in order to become a more informed citizen so I purchased and read a number of economics textbooks (as well as many other books). I can honestly say that out of all the textbooks I read this was the only one that I actually looked forward to picking up and reading. It is well written and extremely informative.

The book begins by explaining why the circular flow diagram which is presented at the beginning of every intermediate economics textbook is guilty of what the philosopher Alfred North Whitehead called "misplaced concreteness". The circular flow diagram is a diagram which charts the flow of value through the economy and since value is an abstract entity there is no reason this flow cannot continue to grow to infinity. The problem is that this circular flow of value is dependent on a physical flow of what the authors call 'throughput' which is the transformation of low-entropy energy into high-entropy waste. This flow cannot grow to infinity. It is limited by the finite stock of non-renewable resources on the earth and by the finite flow of energy from the sun. This principle is a fundamental law of the universe so in a field like economics where even the most basic principles are open to disagreement (the source of value for example) this particular principle is a paragon of certainty. The economy simply cannot continue to grow forever. To deny this would be tantamount to denying the second law of thermodynamics. The only question is whether we are close to reaching a point where growth is uneconomic and unsustainable or whether that point is still in the distant future. The authors do an excellent job of presenting the case that we are near or perhaps beyond that point.

The authors present a detailed portrait of the various natural resources the economy relies upon in order to sustain its circular flow of value and divides them up in terms of whether they are excludable or rival. They explain in detail all the various market failures in determining a sustainable level of resource use (to take one example: it is often argued that the price of oil will rise as the stocks of oil become depleted which will reduce oil consumption. As the authors point out, however, price is not an adequate measure of scarcity in this case because price measures the scarcity of flow rather than the scarcity of stock and we can extract oil at virtually any rate we want which will keep the price artificially low even as the stocks are dwindling, pg113). The authors also do a good job arguing that economics is unavoidably a normative science and cannot, therefore, ignore questions of justice in regard to distribution through recourse to supposedly objective measures such as Pareto optimality (even the Pareto optimum implies the normative judgement that envy at another's good fortune is a moral failing rather than a welfare loss for example). The authors also take very seriously the ethical problem of intertemporal distribution. I find it interesting that conservatives seem obsessed with the ethical implications of bequeathing financial debt to future generations but pay very little attention to the ethical problems relating to the intertemporal distribution of natural resources (which seems to me a much more important problem).

One of the most important ideas in this book is the idea that natural resource depletion is NOT a linear process at least when dealing with ecosystems or natural species like fish populations. Ecosystems and species populations generally have a certain critical point of self-sustainability beyond which they will collapse on their own. An ecosystem is a complex, self-sustaining system but it cannot continue to be self-sustaining if it is depleted beyond a certain point. Similarly with species populations. If we deplete a species to the point where its birthrate is less than its death rate the species will go extinct even if human beings immediately refrained from continued harvesting. The really important point to be made about this is that the critical point beyond which ecosystems or species populations are no longer self-sustaining is, in general, very difficult if not practically impossible for us to calculate. This gives us a very powerful reason to err on the side of caution when determining limits to our harvesting of natural resources. We cannot simply assume that when things start to go bad we can pull back and the ecosystem or species population will regenerate. If we have already gone beyond the critical point beyond which ecosystems or species are no longer self-sustaining it will already be too late.

And finally the authors present a really excellent final section outlining policies they believe would be effective in addressing all of the issues raised in the book. I will not attempt to summarize them here but this is probably the most interesting and important part of the book.

I will end how I began: this book needs to be read!

-Brian

Unusual economic times call for unusual economics book reviews, right? To this end, I am writing a review of an economics textbook. Yes, a textbook, named Ecological Economics, Principles and Applications by Herman E. Daly and Joshua Farley. As society navigates through our global economic meltdown, I keep noticing that a lot of what I read in the media is fundamentally based on the assumption of an economic return to the good times. Maybe there will be more regulations; maybe GAAP rules will be stricter; maybe we'll have fewer or more or different automobile manufacturers. But surely we'll get back to good ol' growth of the economy (and how to do it forever), won't we? Far too few writers challenge our fundamental assumptions about the economy itself-- those same assumptions we used to dig ourselves into the present financial mess, not to mention the assumptions at the root of the ecological and human-rights crises that are now a daily fixture in the news. What if some of our assumptions about the fundamental purpose and functioning of the economy were wrong? Shouldn't we fix those old assumptions before we recreate the same "good times" that resulted in our present bad times? If the planet were unable to sustain our civilization unless we get the economy right this time, wouldn't we have an ethical duty to reconsider some of those assumptions?

Enter Ecological Economics. Ecological economics (EE), as a field of study, uses the best science available about how the universe behaves, in order to envision an economy that works within the constraints of nature. Three fundamental issues are the core of EE: optimal scale of the economy, just distribution of resources, and efficient allocation. Compare this to traditional, neo-classical economics, which focuses singularly on efficient allocation via market mechanisms.

EE breaks down traditional academic silos. If there were laws of physics which scientists believed to be true under all circumstances-- say, the laws of thermodynamics --then wouldn't you expect economists to avoid negating those laws in their model of the economy? And let's say social scientists found that people do not always make rational, self-motivated decisions to maximize their happiness. Wouldn't you want economists to not assume the opposite in their model of how markets operate? EE also rightfully recognizes the economy as a subsystem within the larger ecology of the earth. This ecology certainly provides for the economy, but it also does a lot of other neat stuff. Take, for example, regulating climate and providing clean air and fresh water, for which there are no manufactured substitutes. As it turns out, much of that "other neat stuff" is not historically encompassed by the economy, nor is it amenable to efficient allocation on a market.

Ecological Economics, as a book, does a fantastic job of outlining the principles of EE. It explains the failings of old economic assumptions, and lays out a different set of assumptions grounded in science or rooted in principles of justice. The book covers its subject with appropriate humility for a new social science, an uncommon virtue among economic pontificators. It doesn't claim to have the territory fully mapped, but it is exploring in the right direction. By this time you've gathered that the book is not fiction (we'll leave the fiction writing to neo-classical economists), but it is an enjoyable read. The easy, lucid writing style belies the authors' status as professors of economics. While the book might not be the optimal read for laying on the beach, it is fine for lay-people. The book is full of examples relating the material to the real world, and I find many of the concepts immediately relevant to how I perceive reality. The content is nicely structured so you can skip over anything that gets too dense for your taste. Finally, the book is an efficient read. It is chock full of economic principles which would have taken me years of fumbling self-study to pick up on my own. The high-level sections are: An Introduction to Ecological Economics; The Containing and Sustaining Ecosystem: The Whole; Microeconomics; Macroeconomics; International Trade; and Policy.

I have heard it said that not all of the book's assertions are grounded in science or research, which is criticism I assume the authors would strive to address in future editions. On the whole, however, I find the book to be well grounded. I'll take Daly & Farley any day, compared to neo-classical economists who accept as fact the words of an 18th century moral philosopher. I have also heard the critique that Ecological Economics doesn't adequately cover the fundamentals of economics, which means a "real" student of economics would have to go back to a traditional economics text to fill in the gaps. I would reframe this critique as a misguided assumption about what students of economics must learn first. What do you imagine would happen if all budding economists were first grounded in what science knows of ecology, before internalizing the historic account of economic thinking which has brought society to our present global economic break-down? One book does not an economist make. But if it did, this is the book I would recommend. For the rest of us, Ecological Economics is a clear, useful, and enjoyable guide to turning over those old assumptions about what the economy is for and how it works.

Book recomendations, index, glossary, macroeconomics, microeconomics, a very didactic book made for anyone interested in the subject or people already familiar with economics. The first day I read 100 pages non-stop. Different from some other books on the theme, this is not a book to build anyones consciousness(and definitely not eco-economics for dummies)but a realistic transdisciplinary outlook on the subject.

I'm not really prone to hyperbole, but this may be the single most important book ever written. There could be another that is more complete, another that is more understandable, another that is more honest, and another that is more relevant and crucial for the policies that will determine what our world looks like in 100 years. However, you'd probably be very hard-pressed to find those qualities in such effective combination as here in "Ecological Economics".

This book can be understood to a large degree by someone with minimal training in economics or maybe even an intelligent person with none. There are some sections and some formulae that are difficult, but these are not really necessary to get the message. This book follows a logical plan and the authors show respect for their reader's intelligence by presenting a logical progression of theory. This book has a message but it is not preachy. The message simply arises from logic.

Actually, not only do I believe it should be required of government officials, but probably voters as well.