VI ecology and economy: two sides of the same issue

“There are no environmental problems. Not a single one. The basic causes of the problems ... are found in the economic system itself”. Lloyd Timberlake, International Institute for Environment and Development (IIED), United Kingdom.

One key to the process of sustainable development is the realization that ecology and economy are interconnected – for better and for worse. At present, ecology and economy often reinforce each other in a negative direction, giving a downward spiral of events or unsustainable development. The poverty of the developing countries and the wasteful overconsumption of the developed countries are both in their own way guilty of causing environmental degradation. Environmental degradation in both the developed and developing countries undermines biological production systems and health, which will in the long term limit the potential for economic activities.

Luckily, ecology and economy can also interact in a positive way. Measures to improve the environment may seem to be costly drains on the economy in the short term, but evidence is beginning to accumulate that many of these measures are also economic in the long term.

Industries are discovering that efficient use of materials and energy – recycling, introduction of new production techniques, utilization of waste heat – are desirable from an economic viewpoint as well as to satisfy legal requirements and respond to pressure from consumers. In the developing countries, areas with successful afforestation and soil conservation projects are also beginning to reap the benefits in terms of economics and self-sufficiency.

A new branch of economics called environmental economics is based on the idea that present economic systems and market forces often create environmental problems because they do not reflect the environmental costs of activities, especially costs that appear at other places and other times. Environmental economics aims to steer development in a more sustainable direction by using various economic tools such as taxes on carbon or other resources, fines levied on polluters, marking of “green” consumer products, and use of incentives to increase recycling of materials.

These measures, if seriously employed, could greatly improve the environmental situation and force deep changes in all spheres of society. Some say that this will not be enough, however. Ecological economics, another new discipline, questions the basic tenets of modern economics: continual growth and the accruement of interest on capital. Ecological economists are now working on the question of how to create a stable and healthy economy without interest and continual growth. They argue that production systems should be restructured and that local cycles of capital-extensive production, trade, consumption and recycling should replace centralized, capital-intensive production and waste treatment. These communities would be much like the self-sufficient farming communities of old but would use appropriate labour-saving and environmental technology driven by solar, biomass or other renewable energy. Ecological economists argue that this system would not only be energy-and resource-efficient but would also help restore the human values of small, diverse, self-sufficient local communities.

When discussing the issue of growth it may be useful to look to nature as a model. Young ecosystems such as young forests or fields normally have high net growth (accumulation of biomass). As the ecosystem matures and resources become scarce, net growth declines because more and more energy is used to maintain the forest’s large biomass and complex functions. A mature forest is resource-efficient and highly productive in terms of photosynthesis, but has little or no net growth. The growth of individual trees or stands of trees is balanced by death and decomposition of other trees.

Compare this to our economic systems. Industrialized countries have experienced rapid economic growth owing to new technology and the exploitation of fossil fuels. Viewed ecologically, however, resources will eventually set limits. Materials and energy may become scarce or production potential may be reduced because of environmental degradation (pollution, erosion, health problems). As a result, industries and communities need to exert more effort to obtain and recycle materials, control pollution, increase energy efficiency, etc. Profits are reinvested, giving low net growth in the mature economy. As in the forest, gross production could nevertheless remain high.

The discussion of how to develop economic systems that can safeguard environmental interests has just begun. It will undoubtedly be one of the main points of environmental debate in the years to come, and is a highly relevant topic for environmental education.