How can we apply concepts and tools and ideas on climate change and economics in Idaho for the prosperity of the people and natural systems?

I recently participated in a panel put together by Boise State’s Hazard and Climate Resilience Institute as part of their Resource Nexus for Sustainability Grand Challenge. Together with 3 other economists (including the moderator), we met virtually to talk about the role of economics as a discipline for advancing the social goal of sustainability put in the context of the climate crisis. The name of the event was “Can economics help save the world?” (I’ll add the link to the video when it’s available.)

The discussion was pleasant, I think. Although to be honest, I can’t say I truly remember what went on. It was very dynamic and “real-time” in the sense that we tried addressing participant’s questions as they appeared in the chat–thus serving for a kind of authentically and beautifully chaotic episode of collective consciousness.

In preparation for the event, a few questions were distributed for panelists to organize their ideas around central topics chosen by the moderator. These questions were not easy and my answers to them kept evolving through the couple of weeks we had to prepare for the event.

So much of what I wanted to say may not have come across the way I wanted to or may not have been said simply by the very non-curated nature of live events. I want to post my evolving thoughts around these questions because the process of discovering those answers was truly edifying and spurred what felt like a moment of self-actualization. I’ll post them one at a time to keep things tractable, but I’ll add links to other reflections at the bottom of each commentary.

Without further ado, please join me in the discovery of some quite provocative questions put together for us by someone who genuinely was seeking to find new ideas and host a fun but illuminating discussion.

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Q8: How can what we have talked about today be applied in Idaho for the prosperity of the people and natural systems?

• Learn from Tribal Nations: They can teach us so much about being stewards of nature!
• Start a forum for respectful economic discussion: Economists need to start working together with other economists and with other researchers.  How about a forum/platform group of economists4thefuture? Maybe we can start something like a newsletter, something informal where the participants share short updates on how their work can inform consumer choices, producer choices, policy? It doesn’t have to be peer-reviewed and wait years for publication. We can start putting out the knowledge that’s actionable in a format that’s easy to access by everyone. Entertain those forums, discussion boards and invite people outside of the field to contribute. Economics is too important to leave to the “economists.”
• Working with big companies (Idaho Power, Simplot, Jervois, etc) Working with all these large companies that are big emitters and important players in the distribution and use of natural resources (in the world, 100 companies are responsible for 71% of carbon emissions). They have much power and influence and can make big impacts.
• Here’s a controversial one: Have universities work together! How about BSU and UoI work together? There’s so much to do on rangeland management, wildfire suppression, and a myriad other relevant topic. 
• Updating curriculums at universities? What are we teaching at universities? What textbooks are we using? What kind of projects do we invite students to work on?
• Push for better methods to aid decision-making than traditional tools like Benefit-Cost Analysis. To the extent that we can, shape the agendas in our workplaces to include climate change in our scenario planning or program/policy appraisal. Propose better methods for our traditional BCAs, etc.

Can we really assign a dollar value to the services provided from our ecosystems?

I recently participated in a panel put together by Boise State’s Hazard and Climate Resilience Institute as part of their Resource Nexus for Sustainability Grand Challenge. Together with 3 other economists (including the moderator), we met virtually to talk about the role of economics as a discipline for advancing the social goal of sustainability put in the context of the climate crisis. The name of the event was “Can economics help save the world?” (I’ll add the link to the video when it’s available.)

The discussion was pleasant, I think. Although to be honest, I can’t say I truly remember what went on. It was very dynamic and “real-time” in the sense that we tried addressing participant’s questions as they appeared in the chat–thus serving for a kind of authentically and beautifully chaotic episode of collective consciousness.

In preparation for the event, a few questions were distributed for panelists to organize their ideas around central topics chosen by the moderator. These questions were not easy and my answers to them kept evolving through the couple of weeks we had to prepare for the event.

So much of what I wanted to say may not have come across the way I wanted to or may not have been said simply by the very non-curated nature of live events. I want to post my evolving thoughts around these questions because the process of discovering those answers was truly edifying and spurred what felt like a moment of self-actualization. I’ll post them one at a time to keep things tractable, but I’ll add links to other reflections at the bottom of each commentary.

Without further ado, please join me in the discovery of some quite provocative questions put together for us by someone who genuinely was seeking to find new ideas and host a fun but illuminating discussion.

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Q7: Can we really assign a dollar value to the services provided from our ecosystems?

Can we? Can we do it right? Do we need to? Should we?

Quantification exercises are interesting in that they help us visualize trade-offs–granted that we can quantify things in a comparable manner. But it is very slippery slope as this is one step away from making the planet a commodity: Mother Earth = producer of raw materials and people = means of production.

Professionally, I’ve learned that many times numbers are not really what people are after and they can actually be misleading or lead to complacency*. So, even if we can measure natural components in $ terms, these numbers are kind of meaningless.

After speaking with clients over and over and over, and presenting results over and over and over, I keep confronting the situation in which many if not most of them are totally not impressed and almost disappointed when they see the numbers. They are like well, can you translate this to “improved quality of life?” can you translate this to improved quality of experience? Can you turn this to stronger sense of stewardship or connection with nature?

They hire us to give them numbers. We have a lot of fun at it and we get to be super creative and give ourselves pads on the back saying thanks to us, the number nature is receiving is not zero. The clients are super excited because they haven’t seen the numbers yet. They understand very well the benefits of what they are proposing but they really want to see just how big the number is. Then, they see the number and they’re like, well it doesn’t mean anything to me. Kind of like the Deep Thought, the super incredibly powerful computer in the hitchhikers guide to galaxy, when asked the answer to the ultimate question of life, the universe and everything. And the answer is 42. Totally useless.

From a personal standpoint, I believe we cannot assign dollar values to the services provided by ecosystems, and that’s because if we do, we imply nature is replaceable. That there’s a substitute. The cost of losing the bees is the wages I need to pay for people to pollinate the flowers. That’s wrong. I believe nature is irreplaceable and therefore priceless.

*In the past, I’ve been frustrated because someone with decision-making power told me we didn’t need to set up a benefit-cost analysis or an ecosystem valuation. I thought they said that because they didn’t know how to set these up. They’d say things like it’s 10% economics and 90% political economy. If there’s a case for something to happen, no number is going to make a difference.

After many years working in the field, I’m not convinced that decision-makers are all that blind and narrow-sighted. I am not convinced they give nature a default value of zero. I honestly think we should expand our arsenal of terms and values, from benefits to people and services to concepts like “quality of life”. I think we need to work with engineers that are often the ones asking for the Benefit Cost Ratio of things and bring them along that discussion of really evaluating nature in a holistic manner. And the key word here is holistic, not integrated. We are not forcing things together. We are weaving, there’s co-creation involved.

Is “green” growth possible? What are your views on the concept of a circular economy?

I recently participated in a panel put together by Boise State’s Hazard and Climate Resilience Institute as part of their Resource Nexus for Sustainability Grand Challenge. Together with 3 other economists (including the moderator), we met virtually to talk about the role of economics as a discipline for advancing the social goal of sustainability put in the context of the climate crisis. The name of the event was “Can economics help save the world?” (I’ll add the link to the video when it’s available.)

The discussion was pleasant, I think. Although to be honest, I can’t say I truly remember what went on. It was very dynamic and “real-time” in the sense that we tried addressing participant’s questions as they appeared in the chat–thus serving for a kind of authentically and beautifully chaotic episode of collective consciousness.

In preparation for the event, a few questions were distributed for panelists to organize their ideas around central topics chosen by the moderator. These questions were not easy and my answers to them kept evolving through the couple of weeks we had to prepare for the event.

So much of what I wanted to say may not have come across the way I wanted to or may not have been said simply by the very non-curated nature of live events. I want to post my evolving thoughts around these questions because the process of discovering those answers was truly edifying and spurred what felt like a moment of self-actualization. I’ll post them one at a time to keep things tractable, but I’ll add links to other reflections at the bottom of each commentary.

Without further ado, please join me in the discovery of some quite provocative questions put together for us by someone who genuinely was seeking to find new ideas and host a fun but illuminating discussion.

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Q6: Is “green” growth possible? What are your views on the concept of a circular economy?

How not to use strong words? Green growth is an impossible fairy tale idea and it is also undesirable. We might as well call that green colonialism, green imperialism, green exploitation, green displacement and possible genocide of indigenous peoples, or green destruction of the environment.

Besides big words, I have a few concrete things to say. First, green growth is impossible. There’s no empirical evidence that we can achieve it. It relies on this thing called absolute decoupling which means, separating economic production from environmental resource use. It’s far stricter than efficiency, it means can we produce more stuff in absolute terms using less stuff in absolute terms, and that’s impossible, it goes against the first law of thermodynamics: the law of energy conservation*.

Second, pursuing “green growth” goals is undesirable because, given that we cannot decouple economic production from ecological resource extraction, “green growth” really means “green colonialism.” It will rely on extractive industries in the Global South or in the lands of indigenous communities.

I am from the country where the most environmental defenders are killed in the world. These are little guys against the large corporate interests driven by greed and justified/supported by energy transition policies in the Global North. I don’t think there’s going to be a green growth without widespread violations of human rights. There are geopolitical processes that take countries to exploit faster: like paying back debts. Debts that are determined in currencies not controlled by the local country. If we are going to measure the impacts of green growth, we need to look at the process of creating things green technologies. If the price reflects all those violations, you’ll see they’d be infinitely expensive.

* There’s the whole conservation of energy/ energy balance principle. The first law of thermodynamics. In a closed system, whatever resources we use, must end up somewhere and much of that is waste (because of the second law of thermodynamics: Entropy is produced when energy is used). We cannot grow forever, we’d be producing infinite waste—and in any case, we live in a closed system with limited resources. Even if we are super-efficient, where are we going to get the physical stuff to keep growing? The global South? The indigenous lands? That’s neocolonialism. And anyway, who said that growing forever is actually what we should be doing? What are we going to do when we reach 100% green technologies? 0-carbon emitting technologies? We are going to keep burning trees to open lands for soy and cattle, we are going to keep using industrial agriculture and continue depleting the Earth’s soils, we are going to have a green fleet with which to continue overexploiting the oceans. We are not going to solve anything in the end. Green growth cannot tackle the heart of the problem: our obsession with profit.

Why not all waste is recycled you ask? It’s because of the second law of thermodynamics. The whole entropy thing, the second law: as you put energy in a system, entropy is created: the things we produce, generate waste. You need to put energy to keep things organized, you need to add energy to recycle things and clean things and remove pollution. Creating civilization required energy. Fossil fuels prove that energy but create entropy: generate heat and cause climate change. Entropy increases.

In recent years, significant attention has focused on the idea of degrowth. How do you feel about this concept?

I recently participated in a panel put together by Boise State’s Hazard and Climate Resilience Institute as part of their Resource Nexus for Sustainability Grand Challenge. Together with 3 other economists (including the moderator), we met virtually to talk about the role of economics as a discipline for advancing the social goal of sustainability put in the context of the climate crisis. The name of the event was “Can economics help save the world?” (I’ll add the link to the video when it’s available.)

The discussion was pleasant, I think. Although to be honest, I can’t say I truly remember what went on. It was very dynamic and “real-time” in the sense that we tried addressing participant’s questions as they appeared in the chat–thus serving for a kind of authentically and beautifully chaotic episode of collective consciousness.

In preparation for the event, a few questions were distributed for panelists to organize their ideas around central topics chosen by the moderator. These questions were not easy and my answers to them kept evolving through the couple of weeks we had to prepare for the event.

So much of what I wanted to say may not have come across the way I wanted to or may not have been said simply by the very non-curated nature of live events. I want to post my evolving thoughts around these questions because the process of discovering those answers was truly edifying and spurred what felt like a moment of self-actualization. I’ll post them one at a time to keep things tractable, but I’ll add links to other reflections at the bottom of each commentary.

Without further ado, please join me in the discovery of some quite provocative questions put together for us by someone who genuinely was seeking to find new ideas and host a fun but illuminating discussion.

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Q5: In recent years, significant attention has focused on the idea of degrowth. How do you feel about this concept?

I believe degrowth puts forward is a reasonable and noble goals for worldwide economic change that are worth pursuing regardless of their function in addressing climate and ecological crises. Degrowth proposes the planned reduction of energy and resource use designed to bring the economy back to balance with the living world in a way that reduces inequality and improves well-being.

It’s really too bad that the name is loaded simply by invoking the word “growth” and making the whole proposal sound like a destructive process. But marketing aside, degrowth is absolutely sensible: The whole thing is that we can choose what sectors to grow, for example regenerative agriculture and clean energy, as well as which sectors we need to shift resources away from, like all those that simply put profit for the sake of profit at the center of their existence–for instance anything that utilizes planned obsolescence, that protects patents over important knowledge and products for the well-being of society, and immoral marketing prices that manipulate children’s emotions to create demand for unnecessary products.

In my mind it just says let’s produce less waste. It’s like deciding to eat less when the goal is to lose weight. And we don’t seem to have a problem understanding the mechanism in contexts like food intake: more is only better when there’s not enough. When there’s already an excess, it makes things worse*. Degrowth means we are going to consume less junk (flash news for you: much of what we consume with so much pleasure is garbage). When we stop to think about it, much of what we consume is stuff we don’t need and we don’t event want and make us anxious and angry! (very much in the way David Fincher portrays in the super great movie Fight Club).

I also really like the degrowth pursuit because it is built on principles of justice. It doesn’t mean people are going to be worse off and poor people are going to get their stuff taken away. It means we are going to be producing less garbage and w are going to try to stop mechanisms designed to channel resources from the poor towards the rich. It means we are going use public transit instead of each have 3 cars. Built-in obsolescence and one-time-use products would be the first things to go under a degrowth regime, for example. That’s a good thing for most people. Not for those profiting but most of those already profit enough!

It’s not news and philosophers have examined this idea of balance since for ever. They keep concluding things along the lines that it is balance, and not growth, the essence of prosperity. We would do better if we focused more on our system values and what we truly care for than if we just focus on GDP and willfully confuse excess for progress.

Now… the downsides

The question that often comes up is whether degrowth is practical at a global scale. I don’t know. I think scaling things up almost necessarily involves moving away from sustainability. However, we can think of a world with spread-out “degrowthist” communities, rather than a degrowthist world. In any case, think that pursuing degrowth objectives is a desirable thing. I think it’s an invitation to re-examine what we truly value as a society and what kinds of behaviors and morals we want to pass on to future generations.

In addition, I don’t think pursuing degrowth objectives is enough to get us where we need because I believe degrowth is incompatible with the economic system we have: capitalism. And being realistic, I don’t think we are going to change capitalism. However, I do think we can update capitalism; I think we can-reimagine capitalism, and to imagine a capitalism that brings about the radical change we need in the human-environment relationship, we need to re-examine and achieve similarly radical change in how we carry our human-to-human relationships. This is as much about being better people as it is about saving the planet.

* So, 1/5 of children in the world suffer from physical stunting, but 2/5 of those over 18 are overweight. Worldwide obesity has tripled since 1975 and childhood obesity has increased ten-fold. Today, more people die of obesity than of undernutrition. And obesity is related to diabetes, high-blood pressure, respiratory and cardiovascular issues—all important comorbidities. So why not advice people to eat less? Why not put in place regulations and incentives for food producers to sell the right foods? To stop targeting children with advertisement?

How can economics change/improve in the future? Should the change be radical or incremental? Is there evidence that suggests such a change is happening?

I recently participated in a panel put together by Boise State’s Hazard and Climate Resilience Institute as part of their Resource Nexus for Sustainability Grand Challenge. Together with 3 other economists (including the moderator), we met virtually to talk about the role of economics as a discipline for advancing the social goal of sustainability put in the context of the climate crisis. The name of the event was “Can economics help save the world?” (I’ll add the link to the video when it’s available.)

The discussion was pleasant, I think. Although to be honest, I can’t say I truly remember what went on. It was very dynamic and “real-time” in the sense that we tried addressing participant’s questions as they appeared in the chat–thus serving for a kind of authentically and beautifully chaotic episode of collective consciousness.

In preparation for the event, a few questions were distributed for panelists to organize their ideas around central topics chosen by the moderator. These questions were not easy and my answers to them kept evolving through the couple of weeks we had to prepare for the event.

So much of what I wanted to say may not have come across the way I wanted to or may not have been said simply by the very non-curated nature of live events. I want to post my evolving thoughts around these questions because the process of discovering those answers was truly edifying and spurred what felt like a moment of self-actualization. I’ll post them one at a time to keep things tractable, but I’ll add links to other reflections at the bottom of each commentary.

Without further ado, please join me in the discovery of some quite provocative questions put together for us by someone who genuinely was seeking to find new ideas and host a fun but illuminating discussion.

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Q4: How can the discipline change/improve in the future?

• Given the projections on future global and local environmental changes, do you think Economics has to change to better promote a transition to sustainability – or at minimum, help maintain stability?
• If yes, should the change be radical or incremental?
• Is there evidence that suggests such a change is happening?

We need radical change in the discipline but that alone won’t matter if not accompanied by radical change in the political economy of the world: the political management of the economy, and that won’t change without a strong and healthy democracy and without us first reflecting and reconsidering what is virtuous and what are the values we want to build our societies on.

We know we need radical transformation, and I think we can say that most people in society would be better off if we came up with a good transformation (it wouldn’t be pareto efficient, because the richest would be made worse off). So, in that sense yes, economics has to change. But also, the world economic system has to change.

I think economics as a discipline can have a radical change very fast (if we can afford to change our curriculums and the group of people that award Nobel Prizes). Now, can the world economic system change radically? That’s a more delicate question. Because we need to think about what is politically feasible. If you throw a lot of change to people, they’re not going to like it and it may backfire. Also, that transformation is going to require not just political support but GOOD GOVERNANCE. So, we need to really use the tools and systems in the governance sphere to make those changes.

I think we’re passed the point where civic disobedience will take us anywhere. I think we need to try to fix the system from inside, and we still have a tool that can help—and it’s a tool we should really start protecting carefully—it’s called democracy. I think the type of radical change we need involves democratizing the means of production so that it’s ultimately the people, and not the rich and not the oligarchs, who are making the production decisions and choosing the production technologies, and the objectives for producing things. I think if we the people had control over those decisions, we wouldn’t care about the interest of shareholders. I think we’d base this on can we provide enough for our families and our communities to have good lives now and in the future. Maybe 7 generations ahead. I think for most of us, the people, enough would be enough. But I think it all starts with voting for those who get it and perhaps more importantly, NOT VOTING FOR THOSE WHO DON’T GET IT.

• Is there evidence that suggests such a change is happening?

Is there evidence that we are democratizing means of production? That we are voting for those who get it and that we are NOT VOTING for those who don’t get it?

I don’t really study these trends, I think that’s a question for political scientists and sociologists and anthropologists. But from the fringe, all I can say with confidence is that it’s hard to say because politics is a circus and it’s impossible for me to discern signal from noise.

I find hope in efforts and proposals like the Red Deal of the Red Nations, the People’s agreement of Cochabamaba, and Europe’s DiEM25 Green New Deal for Europe.

I don’t know if the rise in crypto is a sign that people want to democratize the means of production—not that crypto is a useful means of production…

I see hope in the appearance of collaborative partnerships in the agricultural resources management world between state and federal agencies, NGOs, landowners and Tribal Nations. I think that kind of community-based collaborative management configuration is the way forward. And it seems that at least in the realm of agricultural resources management it’s picking up. I’d like to see it in realms of energy, water management, urban design, zoning and housing decisions, etc.

What are some of the things that economists have done right? Are there things you would consider failures?

I recently participated in a panel put together by Boise State’s Hazard and Climate Resilience Institute as part of their Resource Nexus for Sustainability Grand Challenge. Together with 3 other economists (including the moderator), we met virtually to talk about the role of economics as a discipline for advancing the social goal of sustainability put in the context of the climate crisis. The name of the event was “Can economics help save the world?” (I’ll add the link to the video when it’s available.)

The discussion was pleasant, I think. Although to be honest, I can’t say I truly remember what went on. It was very dynamic and “real-time” in the sense that we tried addressing participant’s questions as they appeared in the chat–thus serving for a kind of authentically and beautifully chaotic episode of collective consciousness.

In preparation for the event, a few questions were distributed for panelists to organize their ideas around central topics chosen by the moderator. These questions were not easy and my answers to them kept evolving through the couple of weeks we had to prepare for the event.

So much of what I wanted to say may not have come across the way I wanted to or may not have been said simply by the very non-curated nature of live events. I want to post my evolving thoughts around these questions because the process of discovering those answers was truly edifying and spurred what felt like a moment of self-actualization. I’ll post them one at a time to keep things tractable, but I’ll add links to other reflections at the bottom of each commentary.

Without further ado, please join me in the discovery of some quite provocative questions put together for us by someone who genuinely was seeking to find new ideas and host a fun but illuminating discussion.

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Question 3: What are some of the things that economists have done right? Are there things you would consider failures?

What we have done right: I think people don’t understand that economics is hard, not because of maths and lingo, but the thing we focus on: human beings (although maybe we should focus on the economy…), and human beings have these things called “free will” and “culture.” What this means for us is that studying causes and effects is quite challenging: we have to account for human responses on the individual level but also as society—and when you look at complex systems, simply aggregating individual choices doesn’t really for predicting social responses.

So, having said that, because in economics everything is related to everything, and because we can’t study people in the lab the way physicists and chemists study material substances, we have had to develop pretty clever techniques to actually tease out what causes what. Some of us are getting pretty good, innovative, and versatile at borrowing tricks from statistics, computer science, and psychology (and even business, anthropology and sociology!) I think as a discipline we do push the empirical boundary when it comes to application of fancy things like Machine Learning, Bayesian methods, and Randomized Control Trial design.

What we have done wrong: I don’t want to spend too much time here, I can talk for DAYS AND DAYS at a time here. But I think the most important harm we consistently do is forget to question the foundational assumptions in our thinking–ideas that happen to be dangerously importantly in shaping political and social narratives.  Mainly, I think we fail to question the assumptions that competition is the most important force of nature and that growth is the ultimate goal of a social organism. Competition is not the only force of nature: evolution happens as much through cooperation as it does through competition. Also, the word for a natural living organism that keeps growing is cancer. It’s not a good thing.

Why do I add “dangerously” above? Because we forget that economics has been very important as a story-telling force–maybe because of its “political” origins (it was “political economy” at the beginning). And historically, we have helped fuel this narrative that competition is the most important force of nature, and that growth is the ultimate goals for a social organism. And we haven’t really questioned those assumptions with enough scrutiny. We have forgotten how strong the stories we tell can be in shaping the political discourse and the social myths.

Economists need to be careful about the assumptions we take and how we go about pushing recommendations. I think we have misled much of the policy discussion and action simply by focusing on getting numbers when what is required is developing frameworks. I think economists need to be held to higher standards of responsibility for their conclusions. It really is a matter of “risk.” There’s a high risk of things getting weaponized (policy-makers are obsessed with numbers because they give them a sense of precision, validity, and confidence). We should be more responsible. Our papers should pass more than “peer revision.”

To summarize, our problem is with our theoretical foundations and perhaps our professional “misconduct*”. But when it comes to empirical work, we can be quite competent, innovative, and versatile.

Considering the interactions between the economy and the environment, what do you think the major contribution of contemporary economics has been in promoting the current state of affairs?

I recently participated in a panel put together by Boise State’s Hazard and Climate Resilience Institute as part of their Resource Nexus for Sustainability Grand Challenge. Together with 3 other economists (including the moderator), we met virtually to talk about the role of economics as a discipline for advancing the social goal of sustainability put in the context of the climate crisis. The name of the event was “Can economics help save the world?” (I’ll add the link to the video when it’s available.)

The discussion was pleasant, I think. Although to be honest, I can’t say I truly remember what went on. It was very dynamic and “real-time” in the sense that we tried addressing participant’s questions as they appeared in the chat–thus serving for a kind of authentically and beautifully chaotic episode of collective consciousness.

In preparation for the event, a few questions were distributed for panelists to organize their ideas around central topics chosen by the moderator. These questions were not easy and my answers to them kept evolving through the couple of weeks we had to prepare for the event.

So much of what I wanted to say may not have come across the way I wanted to or may not have been said simply by the very non-curated nature of live events. I want to post my evolving thoughts around these questions because the process of discovering those answers was truly edifying and spurred what felt like a moment of self-actualization. I’ll post them one at a time to keep things tractable, but I’ll add links to other reflections at the bottom of each commentary.

Without further ado, please join me in the discovery of some quite provocative questions put together for us by someone who genuinely was seeking to find new ideas and host a fun but illuminating discussion.

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Question 2: Considering the interactions between the economy and the environment, what do you think the major contribution of contemporary economics has been in promoting the current state of affairs?

I think concepts like the “commons,” the “human development index,” the “social cost of carbon,” and measures of inequality like the “Gini coefficient” or the “Palma Ratio” are very important contributions of economics. They illustrate the importance of governance/management, goal setting and choice of metrics, of getting prices right, and of considering distributional outcomes.

I can talk for ever about each one of the four, but the summary is that they show economists CAN(!) think holistically and in terms of systems and that we have tools for managing social and environmental resources. Tools that are way more flexible and versatile than markets or government regulation. (I will add my definition of each one of these for those who aren’t already familiar with these concepts.)

If I had to pick only one to talk about would be the concept of the “commons.” In part because that work traces back to Elinor Ostrom, who is an amazing female scholar and the first of (2) women to get the “Nobel Prize” in economics—and a very relieving exception among Nobel Prize recipients. (For those do not know, the Nobel Prize in economics is not a real Nobel Prize. It’s a private effort by some bankers in Sweden and it consistently favors their worldview, not really contributions of economics to the world.)

The commons are these widely misunderstood resources. Commons are shareable resources, of nature or of society, that people—we the people—chose to manage through self-organizing rules and institutions: not necessarily relying on markets or a government. So, these are managed resources by what I’ve seen other fields call community-based collaborative management groups or coops.

The commons are amazing because they allow for grass-roots structures that promote collaborative governance. The allow the co-creation and co-production of goods FOR THE COMMUNITIES THAT ARE INVOLVED. Instead of selling the commons to allow individuals to profit and instead of labeling them as public lands for state agencies to manage, I think we need more commons for the people to manage, they provide opportunities for the “invisible handshake of social norms*” to deliver rules and expectations that can improve the well-being of a community in a more resilient and equitable fashion than either markets or governments can. (*I should add a related note to this post on the famous, and perhaps widely misunderstood idea of the “invisible hand”.)

Comment on the “Tragedy” of the Commons: As a related note, I find it important to share that when Garret Hardin described the tragedy of the commons, he talked about resources that were not commons at all! They were open-access resources that were not being managed. So, the whole tragic story is based on a false premise. Garret Hardin talked about how grazing land and fish stocks tend to be over-exploited by individual users and so are depleted for all, and the recommendation was that to manage such resources required either government regulation or better yet private ownership. In fact, Garret Hardin famously never observed/studies an actual example of the commons before pushing his theory.

In contrast, Elinor Ostrom did study the evidence and looked at hundreds of examples of managing the commons. It turns out they have lots of potential. We need to bring the commons back on stage: the market can provide the private goods for those willing AND ABLE to pay, and the government/state can provide the public goods for all citizens. We need all three realms.

The real tragedy is that the commons have been mistakenly deemed as predestined to catastrophe and the narrative has pushed to sell them! That’s how the privatization efforts have really been justified land-grabs. I love the idea of the commons. They are a space for the invisible handshake of social norms to work its magic and give a space for creativity and co-creation of goods the communities involved want! It cannot be more democratic than that.

The Human Development Index is a way to measure well-being by putting in an index performance metrics on education, health, and income. As it stands is not great, but it shows that economists can look at things holistically… or at least in an integrated manner. It shows that we thing beyond GDP-per capita as a proxy for measuring whether people are living better lives. (Just to clarify, I don’t like the word “development,” it’s the modern word for “colonization.” Why should we say a community where people live with less than $1/day than a community where they live with $50/day a day if the firs community is rural and its members don’t pay rent and grow their own food and have a harmonious relationship with nature while the latter has been pushed to live in shanty town, have no running water, are exposed to pollution and toxic waste, and can’t afford to live with dignity?) So, I like that things like the HDI represent that we (economists) can look at a dashboard of metrics to get a better idea of how a community is doing and whether economic institutions and activities are helping that community achieve better quality of life.

The Social Cost of Carbon is the benefit to society from removing one metric ton of CO2 from the atmosphere. Honestly, I think the numbers are not interesting*, but the idea that it encapsulates is what’s useful: it implies there is a common social goal and that actions in one place have consequences elsewhere, and that these consequences can manifest in multiple ways and be associated with a cascade of events. It’s useful because it forces us to use our systems-thinking. I like this idea because it allows economists to discuss matters of environmental justice, sustainability, and ultimately what are the social values we want to use to organize our economies: what gets produced and who gets what and why.

* It is not interesting in part because the models we have for getting at it, while elegant and sophisticated, miss the point by design. The number is not what matters but what matters is bringing the discussion to the table and invite to the table all affected voices.

The Gini coefficient and the Palma ratio (ratio between the income share of the top 10% and that of the bottom 40%) are possible ways to measure inequality. I like the Palma ratio better as it overcomes some of the Gini’s over-sensitivity to the changes in the middle of the distribution. But essentially, they summarize the dispersion of whatever you are measuring (e.g., income, access to land, access to public services, vulnerability to climate risk, etc.) across the entire distribution of that that you are measuring. And they give you a sense of how unequal is the distribution of [fill in the blank]. Based on the 10% emitting 48% of carbon in the atmosphere and the bottom 50% emitting 7%, we can think of a Palma ration of about 6.85 (48/7). If it was perfectly equal, the ratio should be 0.2 (10/50).

In light of the planetary challenges we are faced with, what role do you see economics playing in working towards sustainability?

I recently participated in a panel put together by Boise State’s Hazard and Climate Resilience Institute as part of their Resource Nexus for Sustainability Grand Challenge. Together with 3 other economists (including the moderator), we met virtually to talk about the role of economics as a discipline for advancing the social goal of sustainability put in the context of the climate crisis. The name of the event was “Can economics help save the world?” (I’ll add the link to the video when it’s available.)

The discussion was pleasant, I think. Although to be honest, I can’t say I truly remember what went on. It was very dynamic and “real-time” in the sense that we tried addressing participant’s questions as they appeared in the chat–thus serving for a kind of authentically and beautifully chaotic episode of collective consciousness.

In preparation for the event, a few questions were distributed for panelists to organize their ideas around central topics chosen by the moderator. These questions were not easy and my answers to them kept evolving through the couple of weeks we had to prepare for the event.

So much of what I wanted to say may not have come across the way I wanted to or may not have been said simply by the very non-curated nature of live events. I want to post my evolving thoughts around these questions because the process of discovering those answers was truly edifying and spurred what felt like a moment of self-actualization. I’ll post them one at a time to keep things tractable, but I’ll add links to other reflections at the bottom of each commentary.

Without further ado, please join me in the discovery of some quite provocative questions put together for us by someone who genuinely was seeking to find new ideas and host a fun but illuminating discussion.

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Question 1: In light of the planetary challenges we are faced with, what role do you see economics playing in working towards sustainability?

Answer:

I think economics is going to be critical.

First, climate change is the result of GHG emissions, and GHG emissions are the result of economic actions. Thus, to address climate change, we need to study the economics of actions in the realms of production, trade, redistribution, and consumption.

Second, whether we like it or not, climate change is a crisis of economic inequality as much as anything else. The richest 10% of the world are responsible for 48% of the world’s emissions depending how you count, and the top 1% emit 100 times more than the bottom half. The bottom half, that’s 50% of the world’s population emits 7% of the world’s emissions (see the figure below). This means there are going to be a lot of questions about redistribution or resources and responsibilities, and if we are going to address some of the root causes of climate change, we are going to have to think about how to turn around the Neoliberal economic agenda that has been driving economic inequality for the last 40-50 years.  

Third, the role of government is going to be HUGE in managing the climate crisis and other planetary crises, not only because government is going to have to make decisions about how to spend money on disaster mitigation and disaster response actions but also because most emissions come from actors that have increasingly more political power. We reach a moment where economics will have to stop denying its origin and come back to “political economy”: the political management of the economy. We’re going to have to take a careful look at conflict of interests within governments to ensure good governance–which is a key ingredient, together with sound economics, to manage risk and manage disaster in an equitable manner.

Finally, for better or worse things have evolved in such a way that economics is the language of policy, and policymakers listen to economists more than they listen to other social scientists when it comes to making decisions about economic interventions.

NOTES:

* The economy is essentially the organization of how material stuff gets produced, consumed, traded, or assigned. So economics is the study how things gets produced, how people go about selling and buying those things, and how the government goes about influencing those relationships between buyers and sellers (or how my hero Dr. Ha Joon Chang says: 95% of economics is common sense—made look difficult with the use of jargon and mathematics). Economics will be critical because it is precisely the production technologies and incentives for choosing production technologies and targets what have caused climate change.

Commentary on the role of consumers: As consumers, we have some power over what we consume, but I personally believe that whole idea of consumer choice and consumer power is overstated. I learned recently that the whole idea of the carbon footprint calculator that we can use to find how to reduce our carbon footprint was a marketing trick from BP to have the public believe they are largely responsible for halting climate change! Without denying the fact that consumption is problematic, we don’t choose to be part of the current version of the consumption system.

Can economics help save the planet?

Climate change is arguably the biggest challenge that humanity is facing. Most people agree that this is happening, that it is happening mainly as a result of human activities, and that we need to be doing something about it. Many wonder whether we need to change the economic system in order to address this issue. The response from the economics profession, dominated by neoclassical economists, is that the solution to the climate crisis is more markets, not less markets. These economists have urged us to use markets more widely in terms of both setting the goals of environmental policy, and creating the means of managing the environment. Does the profession have the tools to measure, in monetary terms, the costs and benefits of climate change? Do climate economy models help us identify the economically optimal level of GHG emissions? Are market-based mechanisms better at achieving climate goals than laws and regulations? What steps should the profession take in order to help spur climate action, globally, nationally, and locally?

You can guess my short answer to the first 3 questions. It’s the reason for the fourth question. Here I’m sharing a few thoughts I’ve been developing, but before I lay them out, I want to start by saying that “changing your mind is a good way of finding out whether you still have one.” Somebody else came up with that. For those of us afraid of commitment, I’d broaden that up and say opening your mind is a good way of figuring out whether you still have one.

I say this because it’s pretty clear that we need an economic transformation. What kind of transformation do we need? That’s a tough discussion. But we need a shift from current way of doing business, and that’s going to need a transformation in economic goals, in social goals, and perhaps a deep deep reflection on our values systems.

It’s difficult to open up your mind and maybe change it—especially when your paycheck depends on it. And that’s probably why we see these discussions being led by students and not so much professionals (and definitely not professors!). In the spirit of the original approach to wisdom, we need to keep asking questions and challenging the status quo (the Socratic method was basically that, wasn’t it?). We don’t learn otherwise.

Now, three points that are related to the questions: can economics help save the planet; and here, I am going to assume that when saying “can economics help”, it’s also meant “can the economy help”.

I think this is the right way of asking the question and the answer lies within the question itself. We live in a world organized around the interest of the economy, not of the people. So, if we are able to flip that priority around, and say we need the economy to help the people and the environment rather than plan a way for the people and the environment to serve the economy, that’s a pretty good start already. So, I think yes, recognizing that we have the wrong starting values is the first step for those envisioning economic policy to start helping save the planet.

Second, and to add on. I believe the economy/economics can help and actually should help save the planet. The economy encompasses very important sectors of society that are directly responsible for the climate ecology crisis: production, consumption, and distribution. That last one is an important one from the resilience and justice angle, without which, I believe we are left with an immoral—rather than amoral—way of doing economics. My second point actually is that although economics prides itself on being neutral and objective and apolitical, it’s not amoral. If you study the assumptions that truly lay out the foundation of neoclassical economics, they do have some strong moral implications (anyone said pareto efficiency?). We need to practice moral economics. I believe in ecological economics because it first sets social and environmental goals that speak to a certain set of ethical values: equity, sustainability, and well-being, and then it goes about asking how we envision an economic system that is consistent with and serving of a society that’s ruled by those values.

I really want to emphasize the point of morality. Climate action is a moral issue, it involves moral considerations beyond GDP. Most people are not doing cost-benefit analysis when they decide what to do about climate change. People are worried about their grandchildren, their own children, about being stewards of nature, about climate justice and the unequal effect of climate change. Economists need to start considering value systems not just prices.

And then my third point. To a hammer, everything looks like a nail. We have some tools that are not suited for something like an EXITENTIAL CRISIS. They rely on strict assumption. We need to address that. And model reality. The problem with the tools we have and the mechanisms we propose to address the climate crisis (mainly carbon markets and carbon taxes) is that they are NOT STRONG ENOUGH. Green New Dealers in the US have made this interesting point: trying to fight climate change with things like taxes and permits is akin to trying to defeat Hitler with a fascism tax. The challenge of climate change is that it is literally an existential threat. It’s not a normal problem. We need something stronger than these market solutions that try to address externalities by getting prices right. These tools totally miss the enormity and urgency of the irreversibility of climate change.

So, short answer to can it help? It has to. But it will require transformation, within the discipline and within the global economic order. For both things you need people that are willing to change their minds. What would it take you to change your mind?

Point of View on Ecological Economics

This is a reflection of how a lost little person (i.e., your truly) went through a paradigm change and then found purpose in Ecological Economics.

“Every saint has a past, and every sinner has future.”

~Mathew Kelly

My dissertation work was funded by the Southeast Climate Science and Adaptation Research Center—a DOI effort seated at NC State’s department of applied ecology. The motivation of my work was the threat posed by sea level rise on Cape Romain, a wildlife refuge in South Carolina. I defended my dissertation just a few days after two important occurrences for the global discussion around climate change action: (1) the release of the IPCC’s special report on the catastrophic consequences of a global warming of 1.5 C above pre-industrial levels, and (2) the award of the economics Nobel Prize (not a real prize, by the way) to William Nordhaus for his work on climate change to find the optimal carbon tax.

Independently, each of these events was significant in determining the pace, tone, and direction of the global governance discussion that had started with the Paris Agreement in 2015. But in tandem, they canceled each other’s message. In other words, these works were incompatible: while the IPCC report (which was written by hundreds of experts based on the work of thousands of scientists using super computers and the latest science to represent the effects of climate change) said the world would basically end if we reached 1.5 C above pre-industrial levels (and we are already at least 1C over), Nordhaus’ (garbage) model estimated that reaching 1.5 C above pre-industrial levels (and more) was better for the world economy. For a student of environmental economics who was a month away from receiving a PhD, this was a critical collision of worldviews that made my academic foundations collapse. Today, I am grateful for the anxiety it created because it quickly drove me to reconsider my personal and professional paradigms and led me to a belief system that is more consistent with what I knew was real about the world before I had gotten indoctrinated into the neoclassical economics framework.

When I tell my story of conversion, I compare environmental economic to ecological economics in the following manner: in environmental economics, Nature is a house. In ecological economics, Nature is a home: it’s a place of relationships, of complex connections, where all living things take care of each other and affect each other. Where nothing goes unnoticed and anyone’s actions at any point have an impact on the others, at some point.

By the time I defended my dissertation, I had already started to work as an economics researcher for The New Climate Economy—an ambitious initiative presided by academic authorities, such as Lord Nicholas Stern at LSE (who wrote the famous Stern Review in 2006)—that sought to bring academic and political support to the argument for active climate policy as means to advance a progressive, sustainable, community-centered agenda of prosperity. The NCE was an effort to shift dominant neoliberal paradigms by proposing a new model of economic development for the XXI century. A model driven by the need to address climate change, hence its name: The New Climate Economy.

During my first few months at NCE, I discovered ecological economics by accident (miracle?). In it, I found solace and hope for my role in the world as a professional. Since that discovery, I have grown fond of heterodox approaches to economics in general and I have become a non-apologetic critique of the conventional approach and its supporters. Pluralist Voices Matter.

Why is EE important?

The planetary emergency, which is the consequence of a 2-century-long model of colonial exploitative economic growth fueled by Western greed (which is now being aggravated by added Eastern avarice and excess), is the most pressing and important ecological, scientific, political, and humanitarian challenge of our time: it threatens the integrity our Earth’s systems and is already causing devastating impacts on our Human systems. As such, climate change should occupy a space in everyone’s minds. At least everyone who has some interest in other humans, other species, the planet, or the future.[1] However, the economics profession is contributing very little to this discussion.

A recent assessment finds that between 2000 and 2019, 71% of the top 300 economics journals have published under 1% on climate change, and 95% under 1% on natural capital, ecosystem services or biodiversity (NEB). Comparatively, 58 of the top 100 journals have published an equal or greater number of articles on marriage than climate change, and 85 of the top 100 journals have published an equal or greater number of articles on sports than NEB (Butler-Sloss and Beckmann, 2021).

Not all economists have ignored climate change. Those who have addressed climate change are divided between environmental economists who see it as a micro-economic issue and address it within the frame of neoclassical economics, and ecological economists who do not see it as a microeconomics allocation issue and do not address it within the frame of neoclassical economics but instead are drawn to what we call heterodox economics (the humbler kind of economics). Because the neoclassical approach is built on foundations that are embarrassingly disconnected to reality, if we want a credible voice that can inform environmental (and social) policy and global governance to come out of the economics discipline, we must turn our hope to the EE subfield.

What is EE? (a convert’s version)

EE relates economics, energy, and the environment. It is founded upon the concerns of the 1960’s and 1970’s for limits to growth, the study of the flow of energy and materials in the economy (i.e., incorporating the Laws of Thermodynamics into economics), and the re-definition of externalities as a structural piece inherent in modern economic activity (Spash and Asara, 2018). Essentially, EE explicitly recognizes the economy as embedded within a larger ecological system as opposed to being independent of the biophysical systems—upon which it is totally dependent.

What do ecological economists focus on?

Clive L. Spash (2013) separates EE contributors into 3 main camps based on their theoretical and ideological positions: (1) the new resource economists (NRE), (2) the new environmental pragmatists (NEP), and (3) the social ecological economics (SEE). Basically, the NRE are embedded within the free-market ideology and think that “getting prices right” is the way forward. Contributors in this camp tend to focus on including fancy ecosystem functions in traditional economic models that assume markets can deliver efficient and optimal resource use. In turn, NEP focus on pushing methods and concepts because they are deemed to be effective under current political conditions and economic institutions (that is, capitalism and neoliberalism). The NEP tend to buy into the methodology and ideology of quantifying and pricing nature. In doing so, they advance work on concepts such as natural accounting, valuation of ecosystem services, green accounting, carbon trading, and biodiversity offsets and banking.

Finally, researchers in the SEE camp aim to address fundamental flaws in the assumptions of orthodox economics for example by incorporating into their work system dynamics, complexity, and emergence considerations.[2] The most evident distinction between SEE and EE, is that SEE is mostly concerned about the policy consequences of its arguments and openly claims ethical positions rather than neutrality. SEE include the degrowth movement and those focusing on distributional concerns (e.g., the colonial model critique). I would say researchers in the eco-feminist economics and ecological Marxism fields are also part of the SEE.

What is missing and where should EE go?

“Ecology without class struggle is gardening.”

~ Chico Mendes

The mostly widely accepted desirable end in conventional economics is the satisfaction of preferences through market allocation. In contrast, before deciding how to allocate resources, EE assesses the desirable ends of economic activity (production, consumption, distribution), the nature of available resources required to achieve those ends, existing institutions, and human nature. Implications from EE analyses may include that resources are not necessarily better allocated through the market. 

EE is also said to place economics in the context of philosophical themes that include limits to wealth creation, the meaning of the good life, how to achieve well-being individually and socially, ethics and behavior, the epistemology of value, and the psychological and social impact of ostentatious consumption (Spash and Asara, 2018). According to that definition of EE, I see two areas where the work put through by the discipline is failing to meet its definition:

1. EE as a discipline has failed to adequately address the connection between ecology and society—within which economies are also imbedded. Environmental justice (EJ), wealth inequality, and DEI considerations should be forefront concerns of ecological economics. After all, the only way the few can consume beyond ecological limits is by taking away from the many. Ideas from feminist economics and ecological Marxism can be incorporated so that EE work has implications for global environmental governance—which are rooted on institutions that support global resource and power inequalities (e.g., colonialism, nationalism, and racism).

• Besides EJ being at the forefront, I think EE needs to be more assertive and vocal about recommending the type of human activity that can be sustained by planetary boundaries and not just the scale. In other words, much attention has been given to the need to limit the scale of global throughput (e.g., discussions of steady-state and degrowth—which I find tend to merely criticize technological optimists by focusing on our inability to decouple economic growth and resource consumption and on rebound effects—or Jevons’ Paradox), but the quality of materials being returned to the environment—that is the amount of waste being generated—should also be a central concern. After all, if all the resource inputs were traced to their corresponding pollution outputs, general equilibrium modeling would show how ALL prices in the economy are wrong in terms of efficiency because EVERYTHING would be associated with an environmental externality.

REFERENCES

Butler-Sloss, S and Beckmann M. (2021). Economics journals’ engagement in the planetary emergency: a misallocation of resources? Eocnomists for future. Available at: https://econ4future.org/wp-content/uploads/2021/04/economics-journals-engagement-in-the-planetary-emergency-v3.pdf

IPCC, 2018: Global warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty [V. Masson-Delmotte, P. Zhai, H. O. Pörtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. Péan, R. Pidcock, S. Connors, J. B. R. Matthews, Y. Chen, X. Zhou, M. I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, T. Waterfield (eds.)]. In Press.

Kelly, M. (2019). Rediscover the saints: twenty-five questions that will change your life. Blue Sparrow.

Spash, C. L., & Asara, V. (2017). Ecological economics: From nature to society. In Rethinking Economics (pp. 120-132). Routledge.

Spash, C. L., & Ryan, A. (2012). Economic schools of thought on the environment: investigating unity and division. Cambridge Journal of Economics, 36(5), 1091-1121. Stern, N., & Stern, N. H. (2007

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[1] I am very passionate about this topic. Together with Salvi Asefi-Najafadaby, we have written extensively—and gotten published—on the inadequacy of neoclassical economics for addressing climate change. We have presented our work at graduate seminars at the University of Texas Rio Grande Valley and Boise State University. We even wrote a series of commentaries with the scandalous but click-baiting title “talking naked”.

[2] As I understand Spash (and he is hard to read), SEE expands EE in two accounts: (1) in differentiating reductionism from embeddedness (i.e., the implication is basically that we cannot every model the objective reality because just as biology cannot be understood from physics, human behavior cannot be understood from understanding human cells, and economic choices cannot be understood from understanding social patterns), and (2) by recognizing that economics as a social science is the study of humans by humans, SEE realizes that any explanation arising from economics is founded on a specific set of values and believes and is therefore always ethically and politically loaded.