Ecological Economics

Historical Context

Ecological economics (EE) emerged in the mid to late 1980s partially as a response to growing dissatisfaction with the efforts of mainstream or neoclassical economics (NCE) in accounting for environmental welfare effects. Economics did have well-developed links to environmental or natural resources by the mid-20th century, with the establishment of the field of natural resource economics. Here, natural resources were the center of interest, but the primary original focus was upon how to optimize (in present value monetary terms) the intertemporal allocation of natural resources. There was limited [Page 163]concern for external environmental costs and benefits, and broader issues of system-wide sustainability.

The 1960s and early 1970s marked the birth of significant global environmental awareness with notions such as environmental toxicity, limits to growth, and steady-state economics. This provided an intellectual hotbed for both neoclassical economics-based environmental economics and the more radical perspective encapsulated by EE after the mid-1980s. Environmental economics originally focused on waste or pollution market failures with a traditional incrementalist view aligned with neo-Keynesian market economics that merged free market and government intervention (for market failure) ideas. The theoretical and applied scope of environmental economics was gradually extended, and by the late 1980s the field had opened up substantially and become popular in its supporting role to the rapid uptake of sustainable development notions (for example, the Brundtland Report and the work of David Pearce). The status of environmental aspects was raised significantly in economic reasoning, with much wider recognition of the potential for integration and the application of market-based policy for environmental management and sustainability. Arguably, this work was the main predecessor to the influential 2006 Stern Report highlighting the immense magnitude of the economic consequences of climate change.

However, many scientists in the environmental field believed that the close association of NCE with mainstream market economics placed too many paradigmatic restrictions for an effective sustainability science. They resisted the assumption and optimism of NCE that partial fixes via market correction and subsequent pricing and substitution would be sufficient to sustain nature's support of humankind. A consequential meeting of sympathetic economists, ecologists, and other key interested scientists at the Wallenberg Symposium in Stockholm in 1982 led to the establishment of the new transdiscipline of ecological economics. By the late 1980s, EE was well established, with the creation of the International Society of Ecological Economics (ISEE), the influential journal Ecological Economics, and many university courses and programs throughout the world.

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