economics and ecology are almost alike, but do they neglect one another?
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Aid - Agora for Interdisciplinary Debate 14 October 2013, University of Helsinki, Finnish Center of Excellence in the Philosophy of the Social Sciences. Economics and ecology are almost alike, but do they neglect one another? - PowerPoint PPT PresentationTRANSCRIPT
Economics and ecology are almost alike, but do they neglect one another? Olli Tahvonen, Department of Forest Sciences, University of Helsinki
Economics point of view
1 Some similarities between ecology and economics
2 Toward interdisciplinary setup in research on natural resources
3 Problems in interdisciplinary research Forest sciences Begon et al. and "basic lack of trust"
Aid - Agora for Interdisciplinary Debate 14 October 2013, University of Helsinki, Finnish Center of Excellence in the Philosophy of the Social Sciences
Scientific imperialism –troll
Terrible!
Neoclassical economics –troll
Horrible!
Sociobiology –troll Disgusting!
Thomas Malthus (1766-1834)
Charles Darwin (1809-1882)
Malthus borrowed from nature"the laws of natural increase in the animal vegetable kingdom"and forecasted a dismal economicfuture to mankind
Darwin read Malthus’ essay and received some useful ideas for developing the theory of natural selection
Economics Ecology
In ecology the exponential and density dependent growth modelsoriginate from Malthus
A Marshall (1842-1924)‘In economics biologicalanalogies will displacemechanical analogies’
JM. Keynes (1883-1946)‘Darwinian theory is a vast generalization ofRicardian economies’
Time
0 50 100 150 200 250
Population size
0
50
100
150
200
250
density dependent growthexponential growth
On similarities
Economics Ecology
Theory of rational choice, consumer utility maximization
Optimal foraging behaviour of animals, fitness maximization
Model for production and profit maximizing firm
Optimal investments, optimal growth, interest rate, discounting, dynamic optimization, trade offs
Game theory and interaction of strategically behaving actors; individuals, firms, nations,..
Resource allocation and optimization models for plants
Models for optimal life history strategies, reproduction value, discounting, dynamic optimization, trade offs
Evolutionary game theoryanimals, trees, genes,...
On similarities
Economics Ecology
"Tragedy of the commons" humans
"Tragedy of the commons" non-humans
Examples:- enclosure (UK 1500-1900)- all environmental problems -congestion,...
Solutions:- taxes, market for permits, quotas- social pressure, punishment- privatization -individual morality
Concepts: n-person prisoner's dilemma , cheating, punishment, externalities, common property resources, public goods, free riding,...
Concepts: n-person prisoner's dilemma, cheating, punishment, collapsing tragedy, component tragedy, social goods,...
Examples:- resource competition- parent-offspring conflicts- sexual conflicts- tall plant populations - virulence of parasites
Solutions:- kin (group) selection- punishment- "parliament of the genes"- diminishing returns
On similarities
Virus phages overexploiting a host bacteria
Production activities overexploiting atmosphere
Economics Ecology
Economics Ecology
"Tragedy of the commons" humans
"Tragedy of the commons" non-humans
Examples:- enclosure (UK 1500-1900)- all environmental problems -congestion,...
Solutions:- taxes, market for permits, quotas- social pressure, punishment- privatization -individual morality
Concepts: n-person prisoner's dilemma , cheating, punishment, externalities, common property resources, public goods, free riding,...
Concepts: n-person prisoner's dilemma, cheating, punishment, collapsing tragedy, component tragedy, social goods,...
Examples:- resource competition- parent-offspring conflicts- sexual conflicts- tall plant populations - virulence of parasites
Solutions:- kin (group) selection- punishment- "parliament of the genes"- diminishing returns
On similarities
Resource economics Ecology
Fisherman-fish open-access dynamicsPredator-prey dynamics
1910 1920Lotka Volterra ,
dx dyx y , y x
dt dt
1968 1976Smith Wilen ,
dx dEF x qEx, kE pqx c
dt dt
On similarities
Similarities between ecology and economics
Biological population Recruitment Growth of Individuals Aging Mortality
Environmental variablesand energy resources
Mortality by predatorsexplained e.g. byoptimal foraging theory
Mortality by humans (another predator)specified by Maximum Sustainable Yield objective(or a variant)
Other populations,spatial structure
Ecology: dynamic pool fishery model
Harvesting of biological renewable resources
Biological population Recruitment Growth of Individuals Aging Mortality
Environmental variablesand energy resources
Mortality by predatorsexplained e.g. byoptimal foraging theory
Mortality by humans (another predator)explained by Maximum Sustainable Yield objective(or a variant)
Other populations,spatial structure
Fisherman or fishing firmObjective: max the present value of profit
Market structure, demand,other investment possibilities
Factors of production, labour, man made capital,...
Natural resource (capital stock)described by a dynamic biomass model
Other harvesters, Institutional setup:open access, sole owner,common property, government control
Economics of fisheries Ecology: dynamic pool fishery model
Harvesting of biological renewable resources
Other harvesters, Institutions: open access, sole owner, common property, government control
Biological population Recruitment Growth of Individuals Aging Mortality
Environmental variablesand energy resources
Mortality by predatorsexplained e.g. byoptimal foraging theory
Mortality by humans (another predator)explained by Maximum Sustainable Yield objective(or a variant)
Other populations,spatial structure
Fisherman or fishing firmObjective: max the present value of profit
Market structure, demand,other investment possibilities
Factors of production, labour, man made capital,...
Natural resource (capital stock)described by a dynamic biomass model
Other harvesters, Institutional setup:open access, sole owner,common property, government control
Economics of fisheries Ecology: dynamic pool modelInterdisciplinary setup
Harvesting of biological renewable resources
Interdisciplinary setup
Pros1 Gives reasonable picture on resource use2 Similar theoretical structure and math methods can be used for various resources (fish, trees,...)3 Enables to use existing ecological data4 Economic optimization may reveal inconsistencies in ecological models5 Economic results become more understandable and practically relevant
Cons1 Models become more complex2 Economists: "This is not anymore economics", "This does not change anything that is economically essential" 3 Ecologists: "Is it sure that fisherman optimize something?"
Other harvesters, Institutions: open access, sole owner, common property, government control
Biological populationRecruitmentGrowth of IndividualsAgingMortality
Environmental variablesand energy resources
Mortality by predatorsexplained e.g. byoptimal foraging theory
Other populations,spatial structure
Fisherman or fishing firmObjective: max the present value of profit
Market structure, demand,other investment possibilities
Factors of production, labour, man made capital,...
Interdisciplinary setup
The interdisciplinary setup => "Dynamics and control of structured populations“
Common field in economics, demography, mathematical biology, epidemiology, applied mathematics and medicine
Vintage capital models, optimal harvesting of size-structured populations, fishery induced evolution, optimal control and HIV/AIDS, optimal control in cancer chemotherapy,...
Other harvesters, Institutions: open access, sole owner, common property, government control
Biological populationRecruitmentGrowth of IndividualsAgingMortality
Environmental variablesand energy resources
Mortality by predatorsexplained e.g. byoptimal foraging theory
Other populations,spatial structure
Fisherman or fishing firmObjective: max the present value of profit
Market structure, demand,other investment possibilities
Factors of production, labour, man made capital,...
Problems in interdisciplinarity 1: Economics & production ecology in forest sciences
How ecologists can include social dimensions in their studies? 1 Work closely with stakeholders and end-users 2 Extend ecological concepts to cover social dimensions 3 Work closely with social scientists
Forest scientists have traditionally applied 1 & 2
Why ecologists may include social science aspects in their studies?Purely instrumental motives vs. non-instrumental motives
The outcome:1 Many features in forest sciences (and policy) represent strange economics
2 Forest sciences (and policy) have been devoted to the MSY –idea -forest management becomes an objective "ecological-technical fact" - this happens(?) to favor the strongest interest group (industry) and the forestry profession itself =>moral hazard problem 3 Many interesting questions are difficult to study due to the narrow orientation of the production ecology research in forestry
4 Some production ecologists have found it inconvenient that economists may use their models in interdisciplinary context and then argue against their MSY -type of results
Problems in interdisciplinarity 2: The case of Begon et al. (1986, 1990, 1996, 2006, 737 pages)
Perhaps the leading ecology textbook in the globe
Contains a section on "Harvest management"
The authors first introduce MSY, its popularity and some biological overexploitation risks
The authors then admit that social and economicaspects cannot be neglected in this context
Begon et al introduce the economic model by Gordon (1954) but refer to two ecologists
Comment: the main economic message of the model is neglected (the open access case) and the "ecologically favourable" result remains unclear
Next they introduce discounting and explain that if the discount rate is 10% p.a. "90 fish now are as valuable as 100 fish in one year's time"
Comment: 90 1 0 1 99 100fish . fish not fish
They continue: commonly used discount rate is 10%, although after inflation it should be only 2-5%and explain that economists´ justification for this is to incorporate "risk" i.e. for economists
"a bird in the hand is worth two in the bush"
Comments:- risk does not, as a general rule, work similarly as increased discount rate- the overall explanation of risk in fishery economic models by the above phrase "a bird..." does not make sense
Next Begon et al . write that economic reasoning more or less neglects the facts that fish in the water can grow and reproduce. Thus economics =>wrong investment decisions
Comment: the growth of fish and population reproduction is (of course) included in fishery economic models
Finally Begon et al. write that if the discount rate is high compared to population productivity, it makes economic sense to "liquidate" the whole biological population
Begon et al. conclusion:
- this is ecologically disdainful way of treating the hungry mouths of the future
- "new economics" must be forged that takes into account jobs lost, that alternative sources of food must be found and that there are values assigned not only to things that can be bought and sold
Comments:- the "stock liquidation" was discovered by a mathematician/economist/biologist C. Clark (1973, Science)- it was presented as a descriptive idea and Clark concludes his paper:
"In view of the likelihood of private firms adopting high rates of discount, the conservation of renewable resources would appear to require continual public surveillance and control of the physical yield and the condition of the stocks."
Please, do not kill the messenger!
Message: privatization of biological or renewable resources may not save them from extinction
- as a normative idea "stock liquidation" makes economic sense only if the given population does not have any other values besides raw material
- as such the stock liquidation idea does not necessarily represent shortsightedness
Is this section in Begon et al. harmless?
- not an exception; it crystallizes a quite common view* ( Lummaa et al., 2012, Jennings et al. 2001) - students may become quite suspicious =>better to keep "distance" with economics and concepts like "profits" and "discounting“, and use ecological concepts instead
- Stevens et al. (2007): the process to bring different disciplines together is still slow; one reason is the basic lack of "trust"
=> around the globe the section may have significant influence on students’ "basic lack of trust" and willingness to collaborate with economists
*" Economists are not able to see far, a serious problem in environmental protection " J. Hiedanpää, Economics.In Interdisciplinary environmental research (in Finnish), Lummaa et al. (Eds.), Gaudeamus, 2012.
Comment: when economists study natural resources they apply infinitly () long time horizon.
Problem 1: In economics, values are based on human preferences and this typically leads to trade-offs and substitutability although the approach allows something to have an infinite value and no substitution possibilities
Ecologists sometimes take different ethical approach =>one explanation behind the "basic lack of trust"?
Should be noted that in the practical policy context the difference between the approaches may remain small
Conclusions
Problem 2: How scientists in different disciplines motivate their students (and themselves)?
Business as usual strategy (in economics, ecology, physics, ...): 1. Make students (and yourself) believe that the discipline they (and you) have chosen is absolutely superior compared to neighboring disciplines 2. Apply straw man arguments to eliminate neighboring sciences (cf. Begon et al.)
To some extent this is "The tragedy of the commons" or prisoner's dilemma -problem
The scientists in ecology and economics should know well how to proceed in solving such problems
Alternative strategy: Yet to be discovered – suggestions?
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