Ecological Economics, Its Contribution and Success

Subject: Economics
Pages: 8
Words: 2366
Reading time:
9 min
Study level: PhD


Globalization has led to multi-disciplinary approaches being developed in a bid to tackle the problems that are coming up. The relationships that exist between the economic systems of the world and the ecosystem have been of great concern to the economic world. In a bid to address the effects of economic development on the ecosystem of the world, environmental economics was developed.

However, it was found to be too broad and ignoring some specific economic issues that had to be addressed in regard to the environment. To address these issues specific to the ecosystem, proponents like Daly came up with ecological economics.

This branch of economics was designed to analyze the cost-benefit issues that arise from the relationship between the ecosystem and the environment. It has been successful in coming up with economic analysis models that are used in many countries in the world. However, it has been dogged by controversies on the approaches that are to be used in the analyses of environmental issues due to some seeming inefficiencies in its approaches. There is a need for further investigation to find more efficient approaches that can be used to help in analyzing these problems. Ecological economics is a very important branch of economics that affects our life, the environment, and the technology we use and hence there is a need to have it researched future.


Environmental economics has been concerned with tackling the issues between the environment and human economic activities. This branch deals with the study of issue which existed between the world environmental policies and their repercussions on the development of the world economy. It was concerned with analyzing cost and benefit concerned with environmental policies. Adoption of safe environmental policies has been an issue of concern given that some countries like the United States have refused to ratify the Kyoto Protocol based on its impact on its environment. (Patterson, 1996)

Issues concerning economic activities and the environment have been dealt with environmental economics for a long time until ecological economics came into being. Ecological economics addresses the environmental issue more than environmental economics. While environmental economics dealt with world policies on the environment and their impacts on the economy of the world, ecological economics tries to relate economic matters with ecology. This is however controversial since many people don’t see the economy as part of the global ecological system. It adopts a more pluralistic approach in regard to its focus on the environment.

It seeks to find lasting solutions to environmental sustainability. This concept was developed when economists identified some sites that harbored rare species of plants and animals. There was an immediate call for their conservation and consequently, those occupying those sites were compensated in exchange for using them for any developmental activity. This compensation had to be quantified in terms of the profit that these people would have gained by carrying developmental activities on these sites.

Ecologists and economists have found it necessary to work together in tackling issues concerning environmental change. There have been controversies in the approach of the subject since economists applied principles of their field of study while ecologists applied principles of their area and hence it was difficult to approach the issue of ecological economics.

Ecological economics has risen up as a new academic discipline that will concentrate more on studying the relationship between ecology and the environment. Since the emergence of the field, it has made several contributions on matters concerning the environment and ecology. Its main area of concern is an analysis of the cost-benefit effects that exist between economic activities and the environment.

The rise of ecological economics has been expected to bring improvements in the way we manage the environment in relation to our economic activities. However, it may not have achieved its expectation since there is still a lot of controversies in the way it analyzes economic issues. Despite the controversy, it has achieved a lot in terms of analyzing issues relating to the two branches.

This paper will look in detail at the intended contribution of ecological economics. It will also assess the success of the discipline in tackling ecological and environmental issues. (Norgaad, 1994)

Defining ecological economics

As defined above, ecological economics deals with the relationships that exist between ecology and the economy. It is also referred to as green economics. It seeks to address the dynamic and spatial interdependence that exists between human economies and natural ecosystems. It is a multidisciplinary subject bringing together different disciplines which claim legitimacy to address natural, economic, and social issues that affect human life. It provides a link between the different subjects. (Erkman, 1997)

Findings and discussions

It is seen to focus more on ecology than traditional environmental economics. It provides policy solutions to environmental issues focusing on long-term sustainability that can be achieved within the context of the relationship existing between the environment and economics. Unlike environmental economics, it focuses more on social, political, economical, and behavioral aspects of the environment and economics hence creating interdependence between the two. (Spash, 1999)

Like other fields in economics, it takes into consideration the existence of natural resources as important in achieving sustainable human development. It considers natural resources as important in forming the bases through which human beings derive capital and energy to drive their economies. But unlike other fields of economics, it takes into consideration two aspects of the economy that are considered vital to achieve sustainable economic growth. (Hall et al., 2001)

Ecological economics regards equity in the distribution of these natural resources as very crucial in achieving sustainable development. It seeks to create an equitable distribution of these natural resources through studying the imbalance that exists between different components of the ecosystem by looking closely into the level of their interdependence and the energy flow changing in the ecosystem. In this regard, it seeks to define the concept of sustainability as dependant on the scale of the economy relative to the strength and scale of the ecosystem that is supporting it.

This is important in ensuring that there is no undue pressure that is exerted on different components of the economy which has to lead to the disappearance of some species of plants and animals due to the diminishing of some components of the food chain. There has to be a balance in the distribution of resources if the world has to achieve sustainable economic development. (Duchin, 1996)

Ecological economics also considers the relationship that exists between quantitative growth and development in terms of improvement of the quality of life that exists in the ecosystem. It recognizes that natural capital cannot be replaced with human capital and hence there is a need to use natural capital in a sustainable manner. It argues that human capital is dependent on natural capital but human capital drives the natural capital. It tries to create a relationship between the two important capitals.

In light of the above, ecological economics can then be said to be concerned more with achieving sustainable growth within the context of ecology. In the course of its development, it has come to be identified with trade-offs that are undertaken as a matter of preserving the ecosystem in the face of economical development.

This has been described as the concern of the first phase of ecological development of the world. This phase has been aimed at bringing more social objectives in the development and integrating the two in order to achieve sustainable development. Ecological economics, therefore, tries to include all the stakeholders in the world whose life is affected by development. It tries to integrate the social community, the government, and the forces in the marketplace in order to ensure sustainable development. It applies the empirical analysis of the trade-offs to be in line with economic development and the environment. (Segura and Martiez-Alier, 1994)

But as it has been argued, phase one of ecological economics is coming to an end since it has not fully integrated all aspects of development. It has been argued that there is a need to develop new economic approaches that can situate economic activities taking place in the world and social actors in a natural world in a more helpful way than has been devised by ecological economics.

The intended contribution of Ecological Economics

According to Daly who was a contributor to ecological economics, it was supposed to fill the gaps that existed in Neo-classical economic theories. It was supposed to provide a theory that would determine the scale that can be used to assess the performance of an economy. It was also supposed to come with a measure that can be imposed in the market in a time when the interests of the environment or the community are threatened by the efficiency of the economic policies. It was also supposed to ensure that there also the optimal performance of the market in the face of the above threats to the interest of the community or the environment. Some of the threats that can be classified under Daly’s contribution are the concepts of free trade and the opening of borders for the efficiency of trade.

As guided by Leontief (1966), Ecological Economics was intended to bring the interdependence between different parts that make the economy. It was supposed to bring together micro and macro gulf and promote their interdependence instead of the existing equilibrium approaches in the determination of prices. It was intended to express the input-output theory in the empirical analysis in terms of stocks and flows which could be translated into variables and other parameters.

The success of ecological economics

Ecological Economics has succeeded in bridging the micro and macro gulf and promoted their interdependence to provide another alternative to the approach of general equilibrium in determining prices. This has been achieved through operationalization of the input-output theory in which the interdependence among different parts of the economy is represented by the fact that inputs of one sector become the output of another sector and vise versa. In out-output table has been used in National Accounts systems in many countries. (Stern, 1997)


Ecological economics finds a firm base on the ground of economic thinking and practice in a real situation. It is aimed at improving the lives of human beings using economic development. It assumes that this can only be achieved through pursuing sustainable development in our ecosystem as regards the way society interacts with the ecosystem.

According to Daly, their ecological economics was supposed to use different approaches in order to become effective in analyzing the relationship between ecology and the economy. It was supposed to use the social and political approach in determining economic development. As an improvement over the neoclassic economic theories, it was supposed to separate macro and microeconomic and develop separate approach policies for each of the two economic components. (Gowdy and Erickson, 2005)


There were many theories that were laid down by the proponents of ecological economics. Although it embraces many economic theories, it is based on neoclassic economic theories which it tries to improve on. One of the greatest contributors of Ecological economics was Daly who proposed the macroeconomic theory which called for a split between neoclassic macroeconomics and microeconomics. There has been great stress on the input-output theory which has led to the development and operations of ecological economics.

Apparently many other scientists have put developed other theories to improve on ecological economics but all of them trace their roots to the neoclassic theory like Maxims capitalist theory. With disputes arising from the new displace, there have been many other theories that have been put forward to improve it further. (Suh and Kagawa, 2005)

Further investigations

However, Ecological Economics has been dodged by conflict on different approaches that are being used in the economic analysis. There are those who are advocating for analysis following the social aspects and those advocate analyses based on scientific means. This has polarized the International Society for Ecological Economics (ISEE), with different regions taking different approaches. There have been two avenues only which it can follow.

It can accept the neoclassical theory which it had disputed most of the time or learn from past mistakes. Accepting the neo-classical theory will mean developing mathematical models which link it with ecology while accepting learning from the past mistakes will mean moving away from the past approaches and develop new means of analysis that can interact well with other studies in another discipline. With time it has seen to embrace the second approach with new economists predicting the development of the second phase of ecological economics.

The new approach seeks to look at the product as a factor of three other products from the environment. It sees the end product of an economic system as determined by population, affluence, and the effects of technology. The population will be for the market that it is aimed at, while conventional means will be developed for measuring affluence like the consumption per capita. Technology on the other hand will be measured in terms of the energy used to produce the product.

This approach would take into place all the considerations of Ecological Economics and at the same time integrate it with other disciplines in the field of economics. These considerations provide a useful tool that can be used to gauge population growth and equate it with energy consumption in line with sustainable development.


Ecological economics has made some success in addressing the issue of the relationship that exists between the ecosystem and the economic systems that exist in the ecosystem. It has helped to analyze the cost-benefit issue that exists in the relationship and consequently draft trade-offs that can be used to compensate those who forego the implementation of economic programs in a fragile ecosystem.

However, it has not been able to fully address the thorny issue of environmental pollution that the world is facing and hence has not liberalized the world from these specific environmental threats. However, it is hoped that the new approaches that are being developed in ecological economics, it is going to be more responsive to the needs of the world in a bid to preserve the fragile ecosystems and at the same time attain sustainable development.


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Gowdy, J. &Erickson J. D. (2005): The approach of ecological economics, Ca.

Hall, C., Lindenberger, D., Kümmel, R., Kroeger, T., & Eichhorn, W. (2001): The need to reintegrate the natural sciences and economics, Bioscience 51: 663-673.

Leonfief, W. (1966): Input-Output Economics. New York: Oxford Bridge Journal of Economics 29(2): 207-222.

Norgaard, B. (1994). Development Betrayed. London: Routledge.

Patterson, M. (1996): Global warming and Global politics. London: Routledge.

Segura, H. and Martinez-Alier, J. (1994) Getting Down to Earth: Practical Applications of Ecological Economics, Island Press.

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Stern, D. I. (1997). Limits to substitution and irreversibility in production and consumption: A neoclassical interpretation of ecological economics, Ecological Economics 21, 197-215.

Suh, S. & Kagawa, S. (2005). Industrial Ecology and Input-Output Economics: An Introduction, Economic Systems Research 17(4): 349-364.

Professors comment on the paper.

Get right into what you think. The introduction is an explanation of what you read and is long. Again, you need to get right to the point. You need to illustrate how it strikes yu. What your profound action to it. What new ideas you can add or you think needs to be improved. Does it make sense and why? Be concise and critical about it.