Ecological Economics – Science as a project exchanging knowledge

Aug 6, 2018 by

“There are thousands of alternatives but to identify them, we need to think in different sciences”, said Sigrid Stagl who is the Institute Head of the ecological economics at the Wirtschaftsuniversität Wien. During her lecture with the title “Ecological Economics: the environment of the economy” we were not only talking about economic growth in relation to ecological aspects, the distribution of global wealth and therefore social inequality. We were  also discussing why it is important to see the full world picture and to think in comprehensive perspectives instead of focusing on just one special aspect.

The most important part of her presentation was to question the current economic system which is based on efficiency and economic growth and does not point out the integrated perspectives behind them. Neoclassical economics are based on Newtonian physics: it relies on action and reaction and therefore does not reflect the complexity of an economic system. The reality is too complex for such a framework. Efficiency is always seen as a panacea, environmental aspects and social welfare are seen as secondary goals. Growth as a measure of production says nothing about welfare but it is used as if it does.

She took some time to explain the rebound effect in environmental economics, (or quantity effect) which is the quantitative difference between the possible conservation of resources which occur from an increase in efficiency in the production side and the savings (resources, money) that are actually made. As an example, she stated the reaction pattern that occurs, when a car drives more efficiently by saving fuel, leading to a lower per-mile fuel cost and this influences driving behaviour: people would more likely use their car and drive longer distances. Therefore, the rebound effect explains why the savings potential of a technology is not or only partially used.

Another part of her presentation was the socio-ecological economics, which describes the interconnected dynamics of economic and social systems and the physical environment. We discussed the Planetary Boundaries concept, which presents a set of nine planetary boundaries within which humanity can continue to develop and thrive for generations to come. Not only are biophysical boundaries important for a sustainable future of the world, but so are social thresholds which include among other things like life expectancy, education or social support. The top 1% captures 27% of total growth and the income growth rate for the top percentage is rising. Sigrid Stagl appeals: “We have to ask ourselves, what we are aiming for?”. We need to integrate the social and environmental dimensions into our economics instead of only looking for land, labour and capital.

What is stuck in our heads is the famous metaphor that Sigrid Stagl showed at the very beginning of her presentation: when looking at a problem, all we see is the tip of the iceberg. Under the tip lies a big, hidden part of complex decisions and a system that has to be identified before judging a problem. In accordance to that, economics is a complex system that can often not be understood with just one simple solution. We like the approach that it is not only important to step out of our comfort zones but to think out of the box in a full world perspective. That will identify the thousand alternatives we are looking for.

Written by: Hannah-Heidi Schindler and Julian Dittmann

Based on the lecture by: Sigrid Stagl (“Ecological Economics: the environment of the economy”)