Biophysical Economics

Email posted on March 3, 2009

Dear Charlie:

I hope I don't need to say how big a fan I am of your work and presentations. I also find this energy list very useful and informative. Thanks.

May I only ask one funny question. How is this "biophysical economics" different from what we used to know as "ecological economics"? Taking a quick look at the web site and the description that you've got there, I really could not find anything there that ecological economics would not approve and subscribe to. I am aware that with the recent excitement about ecosystem services and their
valuation, something that to my mind entirely belongs to environmental economics only, some of the gurus of ecological economics have, indeed, watered down the field. But I would think that still ecological economics remains what it was supposed to be originally.

In open source there is such a notion as "threading". That is when a project splits into two, when instead of joining forces and pursuing one common goal, the project team falls apart. Usually this happens when two leaders emerge and can't find a way to reconcile and share the glory.

Generally threading in the open source community is regarded as dilution of forces, and a negative phenomenon.

I'm sorry if I may sound a bit too straight. But I know that you're like that yourself and I'm ready to accept that it's probably due to my negligence or ignorance.

Anyway, would appreciate some comments or leads to where I can find good answers.
Thanks, A
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Response from Charlie:

Karin Limburg asks me the same question, and is mildly offended or maybe hurt that I do not cut EE enough slack. She is right down the hall (lucky me!) so I do not think you are guilty of negligence or ignorance.

The short answer: there is no difference given Costana's original Venn diagram. The longer answer: hmmm. I was thinking something like this earlier today and asked Marvin, who manages the site, to add something. Marvin could you forward that to Alexy? Maybe there is something more we should use.

Alexy there should be no difference but there is. I just gave yesterday a summary of my "intellectual history" vis a vis these issues to my Biophysical economics class. It went something like this:

"I was originally very excited about the formation of ecological economics and I liked Costanza's original definition "Wherever ecology and economics overlap" (with a Venn diagram). I went to the meeting in San Jose in 1994 in great anticipation and was excited to see, what was it, 3000 people there. But while there my friend Tommy Shlichter, a very perceptive person, came up to me and said "As far as I can tell, you are the only real ecologist here". I don't know if that was true but it caught something --that ecological economics has been dominated overwhelmingly by economists or those who have been toilet trained to think as they would have us --putting monetary values on parrots or ecosystems or whatever and then turn the same basically neoclassical crank. It is also dominated by people more interested in policy than how the world works. (OK that is a caricature but it has more than a little reality.)

Since my earliest interest in these issues, guided by HTO, and because I am an ecologist and a scientist, I have been interested in looking at economic systems as ecosystems using the scientific method in its broader sense... that is my toilet training. In about 1978 I became increasingly turned off to modeling in ecology (I fancied myself a modeler) because I thought many basic models (logistic, Lotka Volterra, Ricker etc ) were BS (See Hall 1988 on my web site). It got me in a lot of trouble at Cornell because I would speak out about my thoughts on this. We would have seminar after seminar by famous (theoretical) ecologists that I thought were indefensible.... and I still think that true. Recently I met one of these types, a good one, who said to me "I had to learn all that hard math in grad school and what are we left with? Nothing." Wish I could remember his name. Not everyone will agree.

So I spent 8 years learning economics with Cutler and Robert -- thinking that since there were far more economists and they were better mathematicians and had far more time and data to develop their theories I was astonished to find the same things in economics as ecology: the basic models just made no biophysical sense and there was a vast confusion of scientific rigor with mathematical rigor.

I thought we were going to attack this problem in Ecological Economics but with very few exceptions (Dung, obviously Georgescu-Roegen) no one was interested in exposing the bullshit of conventional economics which I thought necessary before going forward. Going forward then meant to me building an economics on something real. The recent collapse of the value and even the meaning of a dollar in the stock market, housing etc indicates that we need something besides money to build our economics on. Energy/resources are not perfect but are closer than dollars to express value (I will send you my Dow Jones analysis to lend a little credibility to that idea). Money corrected for inflation (which we do not do properly) of course ultimately has to follow, not lead energy and other indices of real wealth.

So in my opinion, and do not repeat this too loudly in Burlington, EE had its chance but focused on the wrong issues, or at least did not put the economics house in order before going about its business. In fact it is not even interested in putting the economic house in order, and I have a string of rejections to prove it (or something). But I have had dozens of people I respect say essentially the same thing to me.

I think personally that peak oil, declining EROI, resource depletion, fresh water issues and so on will dicate the rest of civilization's days, and few will care about valuing ecosystems services even as they become more necesssary. But I would not argue that way. I am a scientist, or try to be, not a policy person, and I try to understand the role of energy in various ecosystems and species, including that which we call economics. Maybe this leads to my final point: that I find putting dollar values on everything (necessary and useful might that be) as uninteresting, as a kind of thing for people with green eyeshades with degrees in accounting (although of course figuring out how to do that is intellectually demanding). And I think that here is more intellectual creativity in attempting to figure out exactly how energy is the currency of ecosystems, including our economy, and how ecosystems respond to more and less available energy. Or maybe I am just interested in energy and not money. I respect and sometimes admire the efforts of others, but mostly it just deos not spin my wheels. I hope I do not sound arrogant, but you are seeking truth (whatever that is) and I try to provide that.

Now your comment on joining or splitting our efforts has blindsided me, as I have not thought about it that way. I do not know how to answer it. Maybe it is a political question and hence just bounces off my back like a duck! But I never wished to undermine anyone, and I do not know that what I am doing is better than other approaches, its just what I do. Let me think about that.

Well that was quite a ramble, and I do not know how well I did. But I did try to answer your question! I think you might be able to get some of my thoughts in order, so feel free to respond.

Charlie
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Follow-up by A:

In many respects you are preaching to the choir. As mentioned above, I also regard ecosystem valuation and monetary analysis to be more appropriate for what we know as environmental economics. I would dare say that ecological economics is still different from that. I guess I am thinking of ecological economics not just as 'Costanza' but also or even rather as 'Daly, Farley, et al.'. I don't think that you will need to persuade them that money is not what drives the system, and that energy/resources are way more important than dollars and stocks. In fact, I'm sure that Costanza would also agree with that.

Where I feel there may be a bit of a disconnect is with your goal to put everything on an entirely physical basis and drive everything by something like energy. I'd say that as long as we have the human component present and until we learn to exactly understand humans and their behavior as a product of energy flows through neural circuits and digestive tracts, we will have something way more uncertain and, perhaps, exciting than what the first principles will tell us. Not to diminish the importance of thermodynamics, of course, but the fact that we may have so different economic (whatever that word means), social and cultural organizations in places with with very similar levels of energy consumption. And vice versa, see for example, the well known graphs of human life satisfaction and life expectancy, as functions of energy use, which show that the same life satisfaction can be delivered by orders of magnitude different energy flows.

So there really may be more in human behavior than just energy transfer.

On the other hand, if you say that 'ecological economics' blew it, meaning that it had it's chance to build an alternative economics, but has forfeited the brand and is no longer regarded as respectful - that I would take seriously, and perhaps something to consider among ecological economists as a real threat. If that is really the case, perhaps, indeed, it is time to look for an alternative trademark and start regrouping our forces and ideas under a different brand name, be it biophysical economics or something else. Personally I don't think that it's that hopeless, and, must confess, that have some vested interests in the brand, especially after publishing my book last year on modeling for ECOLOGICAL ECONOMICS. It will be unfortunate to find out that Ecol. Econ. is done with. :-)

I'm also taking the liberty to add a couple more addressees to this thread, because it may turn out to be a more important issue to discuss than I thought at first. I do think that it is not helpful, when we get into feuds among ourselves over small differences and egos. I do think that we've got so much to do and so soon that we need to be very clear about the stand we take and the "tribe" we belong to. Otherwise it becomes confusing for others to identify us and to figure out where they should belong. I am not saying that 'biophysical economics' is a bad idea. Maybe it is indeed exactly where we all should be navigating towards. But then let's make it a 'tribal' decision and make sure we are not leaving our good buddies behind.

Cheers, A
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Response from Charlie

Hmm we do have a problem, It is not what you think but that you are a bottom responder and I am a top responder. So I will respond to you on the top!

OK lets see if we have any other particular differences:

I think the crux of whatever "disagreement" we might have (and I hope they are slight) is your statement:

"Where I feel there may be a bit of a disconnect is with your goal to
put everything on an entirely physical basis and drive everything by something
like energy."

For the record I am not saying that, or I do not mean to anyway. It is NOT my goal. And I believe energy is not exactly a driver but a companion to whatever we do (economic or otherwise ) and a constraint for sure. I am a systems ecologist, and surely I recognize that energy is only a part of whatever is going on. My objective is to study and hopefully understand energy, not to explain or manage the world in all of its complexities. Thus I have no argument here or before with your or anyone studying neural networks or whatever, not do I, as once accused, espouse an energy theory of value. All I was saying is that it is not my research focus. Energy is. And I have rarely if ever (I think) written a paper on policy or what policy should be other than let's get our understanding of our (economic or whatever) systems consistent with (my perception of) reality.

I did say that I believe that EE has been too much about using a kind of economics that accepts and uses moneterization, but that does not mean those EE analyses should not be done or accepted. It is just not my thing, and I do believe that EE has been far too uncritical of conventional economics. But as Bob told me once "we review what comes in, and if you are not happy then submit a paper" --which I was rather remiss about. I have no wish to unhorse or disrespect EE but rather do wish to provide a forum for those with ideas similar to mine (and there are quite a few) can collect our thoughts.

Does that clarify? I think these thoughts are in my original letter to which you responded but maybe not stated clearly enough.

Charlie
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Comment by N:

Folks
My precaffeinated 2 cents is that another threading/dilution is on the horizon, which will piggyback whichever way our political paradigm changes. Ecological economics was written in a language that could be synthesized by the cultural metric of the time: money/economics was correlated with social power, so to get peoples attention living in a 'money' world, ecology academically had to be translated into money. 99% of world's banks are now technically insolvent and I see no way the entire system doesn't splinter, with new currencies and the social disruptions that accompany them. Ecology is important, because we live and value ecosystems as part of our lives. Economics is really how biological creatures interact with each other in a system with free markets, and prices, which may not always be the case. (I expect energy firms will be early on the list of nationalization to hide net energy decline from the public, and subsume it in the currency instead).

Ecological/ biophysical economics made a great stride in saying that the economy was part of the environment, and therefore had limits. But neither looked adequately at the demand side of human actors in a resource constrained world, other than some outdated theories such as Jevons, which assumes price elasticity, etc rather than a more basic separation of needs vs (everything else). Any future 'discipline' that honestly attempts holistic answers to living in a more durable fashion on the planet will have to delve more into the human nature/culture side of things. What happens with a new currency (or no currency) and economic crisis? Do parrots and rivers also experience deflation? Do we need to redo all the papers showing the 'worth' of the amazon and translate them into a local currency basket?

As heterodox as they are, these 2 disciplines still need a larger umbrella. Finances rule in society is over. If it recovers, (which I sincerely hope because it will buy us time), it will be weaker and play less central of a role - too much confidence is lost and too much awareness of energy, water, GHG etc limits exists, even if not publicly acknowledged. A longer term academic discipline integrating ecological and bio-cultural limits of human interaction of the planet will be needed - ecological ethology might be a more appropriate name. Both biophysical economics and ecological economics could move in this direction, though I expect another thread will emerge.

Off to get coffee so my discount rate for rest of morning is steeper, and I get more done...;-)

Cheers, N
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Follow-up comment from A:

Dear Charlie:

The first problem that you mentioned is easy to resolve. In fact I am also a top feeder,... eh, sorry, responder. It was only because you've responded to my original post at the bottom that I thought that this is what you prefer, and thought that it may make sense if you are inviting other people to the discussion and want to give them the story as it evolved.

Anyway, now we have a perfectly confusing chain of messages and responses and might as well continue responding anywhere we wish.

From what you write besides that, I can only conclude that there is even less controversy in our approaches and that we are equally open to studying energy, neural network, behavior patterns, or whatever else is needed.

This brings us back to the real crux of the problem: is EcEc really hopeless and discredited to the extent that we should shy away from the trademark, or there is still potential and we do not necessarily have to be ashamed of being associated with it. I do not know the answer to this.

I really like N's idea of perhaps searching for some sort of umbrella name that would include all the 'logical' economics and would have EcEc, BPhEc (biophysical economics), as well as other 'friendly' denominations (Georgian economics?) In which case I think it's crucial to make it clear that we have similar goals and it's only in the flavors and sauces that we may be different in.

If you see BPhEc as a forum to discuss ideas rejected by EcEc, I'd be really curious to see what are those ideas? Anyway, I'll be looking forward to see some more explanations on your web site, and do hope that we can stay on friendly grounds and help advance the strengths of our both denominations.

Thanks, A
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Final response from Charlie:

Now we are indeed on the same (top of) the page. I feel that I am sometimes misunderstood because I speak bluntly and, unknowingly and occasionally, at the bottom of a post.

In theory and going back to Costanza's original Venn diagram Ecological Economics should be the umbrella organization. I do not know if that is possible now but have no problem I guess. The Journal might make a stab at summarizing the sub cults and the reasons for them. But the de facto logic and normal operating procedures of the sub cultures is truly different. I personally am not too worried about how we slice the cake for we have what I need on the new BPE blog site. But I agree with your perspective but would rephrase it: I think we all have very serious issues with how conventional economics is done and we should be united against the common "enemy".

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