• Selected
• Entire List

Abstract:
In this paper I address the question of exactly how to measure biodiversity by reviewing and conceptually comparing ecological and economic measures of biodiversity. It turns out that there are systematic differences between these two classes of measures, which are related to a difference in the philosophical perspective on biodiversity between ecologists and economists. While ecologists tend to view biodiversity from a conservative perspective, economists usually adopt a liberal perspective. As a consequence, ecologists and economists generally appreciate biodiversity for different reasons and value its different aspects and components in a different way. I conclude that the measurement of biodiversity requires prior value judgments as to what purpose biodiversity serves in ecological-economic systems.

biodiversity, dissimilarity, diversity indices, ecosystems, entropy, evenness, heterogeneity, philosophy, product diversity, species diversity, theory of choice

Abstract:
Our aim in this essay is to identify and analyze some of the difficulties with interdisciplinary integration of economic and ecological contributions to the study of biodiversity loss. We develop our analysis from a widely accepted definition of economics which is based on the concept of scarcity. Taking a closer look at this notion, we find that economics actually limits itself to a very particular aspect of scarcity, which we denote as relative scarcity. We describe in what respect the economic approach towards biodiversity is based on this notion, and also reflect on the specific understanding of the relation of humans and nature behind the economic approach. We then turn to absolute scarcity as another notion of scarcity, and show that this is not within the scope of economics, but has been a theme of ecology and ecological economics. We describe in which way ecological and ecological-economic approaches towards biodiversity are based on the idea of absolute scarcity, and also reflect on the specific understanding of the human-nature relationship behind this notion of scarcity. Against this background, we discuss the roles of economics and ecology for nature conservation. We conclude that the interdisciplinary integration of ecology and economics requires a philosophical underpinning, and suggest a framework for further research.

absolute and relative scarcity, biodiversity, economics, ecology, interdisciplinary integration, philosophy

Abstract:
Biodiversity provides insurance against the uncertain provision of ecosystem services which are being used by risk-averse economic agents. I present a conceptual ecological-economic model that combines (i) current results from ecology about the relationships between biodiversity, ecosystem functioning, and the provision of ecosystem services with (ii) economic methods to study decision-making under uncertainty. In this framework I (1) determine the insurance value of biodiversity, (2) study the optimal allocation of funds in the trade-off between investing into biodiversity protection and the purchase of financial insurance, and (3) analyze the effect of different institutional regimes in the market for financial insurance on biodiversity protection. I conclude that biodiversity acts as a form of natural insurance for risk-averse ecosystem managers against the over- or under-provision with ecosystem services. Therefore, biodiversity has an insurance value, which is a value component in addition to the usual value arguments, such as direct or indirect use or non-use values. In this respect, biodiversity and financial insurance are substitutes. Hence, the availability, and exact institutional design, of financial insurance influence the level of biodiversity protection.

biodiversity, ecosystem functioning, ecosystem services, insurance, risk aversion, uncertainty

Abstract:
Strong sustainability, according to the common definition, requires that different natural and economic capital stocks be maintained as physical quantities separately. Yet, in a world of uncertainty this cannot be guaranteed. To therefore define strong sustainability under uncertainty in an operational manner we propose to use the concept of viability. Viability means that the different components and functions of a dynamic, stochastic system at any time remain in a domain where the future existence of these components and functions is guaranteed with sufficiently high probability. We develop a unifying and general ecological-economic concept of viability that encompasses the traditional ecological and economic notions of viability as special cases. It provides an operational criterion of strong sustainability under a mild form of uncertainty and for medium spatial and temporal scales. We illustrate this concept and demonstrate its usefulness by applying it to livestock grazing management in semi-arid rangelands.

capital (natural and economic), ecological-economic systems, ecosystem services, funds, rangeland management, stocks, sustainability, uncertainty, viability

Abstract:
We develop a general and unifying methodology for ecological economics which integrates philosophical considerations on the foundations of ecological economics with an adequate operationalization. We argue that the subject matter and aims of ecological economics require a specific combination of inter- and transdisciplinary research, and discuss the epistemological position on which this methodology is based. In accordance with this understanding of inter- and transdisciplinarity and the underlying epistemological position, we develop an operationalization which comprises simultaneous analysis on three levels of abstraction: concepts, (generic) models and case studies. This provides a systematic and integral view on ecological economics, and thus allows one to see the relationship between contributions to the field that have so far been perceived as very heterogeneous and largely unrelated. At the same time, this methodological framework may provide orientation for the further development of ecological economics.

ecological economics, interdisciplinarity, philosophy of science, sustainability, transdisciplinarity

Abstract:
In the face of uncertainty, ecosystems can provide natural insurance to risk averse users of ecosystem services. We employ a conceptual ecological-economic model to analyze the allocation of (endogenous) risk and ecosystem quality by risk averse ecosystem managers who have access to financial insurance, and study the implications for individually and socially optimal ecosystem management, and policy design. We show that while an improved access to financial insurance leads to lower ecosystem quality, the effect on the free-rider problem and on welfare is determined by ecosystem properties. We derive conditions on ecosystem functioning under which, if financial insurance becomes more accessible, (i) the extent of optimal regulation increases or decreases; and (ii) welfare, in the absence of environmental regulation, increases or decreases.

ecosystem quality, ecosystem services, ecosystem management, endogenous environmental risk, insurance, risk-aversion, uncertainty

Abstract:
Agro-biodiversity can provide natural insurance to risk-averse farmers by reducing the variance of crop yield, and to society at large by reducing the uncertainty in the provision of public-good ecosystem services such as e.g. CO2 storage. We analyze the choice of agro-biodiversity by risk-averse farmers who have access to financial insurance, and study the implications for agri-environmental policy design when on-farm agro-biodiversity generates a positive risk externality. While increasing environmental risk leads private farmers to increase their level of on-farm agro-biodiversity, the level of agro-biodiversity in the laissez-faire equilibrium remains inefficiently low. We show how either one of two agri-environmental policy instruments can cure this risk-related market failure: an ex-ante Pigouvian subsidy on on-farm agro-biodiversity and an ex-post payment-by-result for the actual provision of public environmental benefits. In the absence of regulation, welfare may increase rather than decrease with increasing environmental risk, if the agro-ecosystem is characterized by a high natural insurance function, low costs and large external benefits of agro-biodiversity.

agro-biodiversity, ecosystem services, agri-environmental policy, insurance, risk-aversion, uncertainty

Abstract:
The ecological literature suggests that biodiversity reduces the variance of ecosystem services. Thus, conservative biodiversity management has an insurance value to risk-averse users of ecosystem services. We analyze a conceptual ecological-economic model in which such management measures generate a private benefit and, via ecosystem processes at higher hierarchical levels, a positive externality on other ecosystem users. We find that ecosystem management and environmental policy depend on the extent of uncertainty and risk-aversion as follows: (i) Individual effort to improve ecosystem quality unambiguously increases. The free-rider problem may decrease or increase, depending on the characteristics of the ecosystem and its management; in particular, (ii) the size of the externality may decrease or increase, depending on how individual and aggregate management effort influence biodiversity; and (iii) the welfare loss due to free-riding may decrease or increase, depending on how biodiversity influences ecosystem service provision.

biodiversity, ecosystem services, ecosystem management, free-riding, insurance, public good, risk-aversion, uncertainty

Abstract:
Agro-biodiversity can provide natural insurance to risk averse farmers. We employ a conceptual ecological-economic model to analyze the choice of agro-biodiversity by risk averse farmers who have access to financial insurance. We study the implications for individually and socially optimal agro-ecosystem management and policy design when on-farm agro-biodiversity, through ecosystem processes at higher hierarchical levels, generates a positive externality on other farmers. We show that for the individual farmer natural insurance from agro-biodiversty and financial insurance are substitutes. Whilean improved access to financial insurance leads to lower agro-biodiversity, the effects on the market failure problem (due to the external benefits of on-farm agro-biodiversity) and on welfare are determined by properties of the agro-ecosystem and agro-biodiversity's external benefits. We derive a specific condition on agro-ecosystem functioning under which, if financial insurance becomes more accessible, welfare in the absence of regulation increases or decreases.

agro-biodiversity, ecosystem services, agro-ecosystem management, insurance, risk-aversion, uncertainty

Abstract:
While economists have been contributing to the discussion of various aspects of sustainability for decades, it is just recently that the term “sustainability economics” was used explicitly in the ecological, environmental, and resource economics community. Yet, the contributions that use the term “sustainability economics” do not refer to any explicit definition of the term, and are not obviously joined by common or unifying characteristics, such as subject focus, methodology, or institutional background. The question thus arises: What is “sustainability economics”‘ In this essay, we systematically define and delineate “sustainability economics” in terms of its normative foundation, aims, subject matter, ontology, and genuine research agenda.

economics, efficiency, epistemology, fairness, future, justice, human-nature-relationship, ontology, philosophy of science, sustainability, uncertainty

Abstract:
We analyze the optimal dynamic scale and structure of a two-sector economy, where each sector produces one consumption good and one specific pollutant. Both pollutants accumulate at different rates to stocks which damage the natural environment. This acts as a dynamic driving force for the economy. Our analysis shows that along the optimal time path (i) the time scale of economic dynamics is mainly determined by the lifetime of pollutants, their instantaneous harmfulness and the discount rate; (ii) economic scale and structure, as well as resulting welfare, may be non-monotonic, and (iii) environmental damage may exhibit an inverted U-shape form. These results raise important questions about the optimal design of environmental policies in a multi-pollution economy. We suggest a system of dynamic Pigouvian emission taxes, each of which should be levied specifically on one particular pollutant. We show that the optimal time path of each tax level is determined by the characteristics not only of that particular pollutant but also of all other pollutants.

dynamic economy-environment interaction, multi-pollutant emissions, non-monotonic development, optimal scale, stock pollution, structural change

Abstract:
Since 1990 the price for low quality waste paper on the German market is characterized by price ambivalence, i.e. it is at times positive and at times negative. The underlying reason is given by three institutional and technical characteristics of the market: (i) As a result of waste management laws the supply of waste paper is mostly independent of its price and its demand. (ii) Disposal of waste paper is not free but generally costly, e.g. by dumping or incineration. Alternatively, it may be used as a secondary resource in the production of new paper. (iii) The use of the secondary material as a productive input by the paper industry is technically limited. We develop a simple dynamic model of the German waste paper market compatible with the institutional and technical characteristics, and show how price ambivalence occurs.

price ambivalence, waste paper, secondary resources, costly disposal, environmental law

Abstract:
We analyze a dynamic and stochastic ecological-economic model of grazing management in semi-arid rangelands. The ecosystem is driven by stochastic precipitation. A risk averse farmer chooses a grazing management strategy under uncertainty such as to maximize expected utility from farming income. Grazing management strategies are rules about which share of the rangeland is given rest depending on the actual rainfall in that year. In a first step we determine a myopic farmer's optimal grazing management strategy and show that a risk averse farmer chooses a strategy such as to obtain insurance from the ecosystem: the optimal strategy reduces income variability, but yields less mean income than possible. In a second step we analyze the long-run ecological and economic impact of different strategies. We conclude that a myopic farmer, if he is sufficiently risk-averse, will choose a sustainable grazing management strategy, even if he does not take into account long-term ecological and economic benefits of conservative strategies.

Ecological-economic model, semi-arid rangeland, grazing management, risk aversion, uncertainty, sustainability

Abstract:
We perform a model analysis to study the origins of limited resilience in ecological-economic systems. We demonstrate that the resilience properties of the ecosystem are essentially determined by the management institutions and consumers' preferences for ecosystem services. In particular, we show that complementarity of ecosystem services in human well-being and open access of the ecosystem to profit-maximizing harvesting firms may lead to limited resilience of the ecosystem. We conclude that the role of human preferences and management institutions is not just to facilitate adaptation to, or transformation of, some natural dynamics of ecosystems. Rather, human preferences and management institutions are themselves important determinants of the fundamental dynamic characteristics of the ecological-economic system, such as limited resilience.

ecological-economic systems, ecosystem services, institutions, natural resource management, preferences, resilience

Abstract:
We examine the price ambivalence of low quality waste paper (grades 1.02 and 1.04) on the German market. Since 1990 the price of these grades is at times positive and at times negative. The underlying reason is the combination of three institutional and technical characteristics of the market: (i) As a result of waste management legislation the supply of waste paper is mostly independent of its price and its demand. Supply is bounded from below by collection and utilization quotas fixed by the Regulation on Packaging Waste enacted in 1991. (ii) The only alternative to costly disposal of waste paper by dumping or incineration is its use as a secondary resource in the production of new paper, as only the paper industry is capable of using waste paper in a productive manner in significant amount. (iii) Yet, its use as a substitute for primary inputs is technically limited. In this article, we describe the technical and institutional conditions leading to price ambivalence and discuss the consequences for supply, demand and trade of waste paper.

Price ambivalence, Waste paper, Primary and secondary resources, Waste disposal, Environmental regulation

Abstract:
Ecosystem resilience, i.e. an ecosystem’s ability to maintain its basic functions and controls under disturbances, is often interpreted as insurance: by decreasing the probability of future drops in the provision of ecosystem services, resilience insures risk-averse ecosystem users against potential welfare losses. Using a general and stringent definition of ‘insurance’ and a simple ecological-economic model, we derive the economic insurance value of ecosystem resilience and study how it depends on ecosystem properties, economic context, and the ecosystem user’s risk preferences. We show that (i) the insurance value of resilience is negative (positive) for low (high) levels of resilience, (ii) it increases with the level of resilience, and (iii) it is one additive component of the total economic value of resilience.

ecosystem resilience, economic value, insurance, risk, risk preferences

Abstract:
Resilience as a descriptive concept gives insight into the dynamic properties of a system. Sustainability as a normative concept captures basic ideas of inter- and intragenerational justice. In this paper we specify the relationship between resilience and sustainable development. Based on an ecological-economic model where two natural capital stocks provide ecosystem services that are complements for human well-being, we derive conditions on the dynamics of the ecological-economic system and the sustainability criterion, such that a) resilience of the system in a given regime is both necessary and sufficient for sustainable development, b) resilience of the system in a given regime is sufficient, but not necessary, c) resilience of the system in a given regime is necessary, but not sufficient, and d) resilience of the system in a given regime is neither necessary nor sufficient for sustainable development. We conclude that more criteria than the resilience of the current state of the system have to be taken into account when designing policies for sustainable management of ecological-economic systems.

ecosystem resilience, sustainable development, management of ecological-economic systems

Abstract:
Studying the sustainable use of ecosystem services under uncertainty requires the consideration of the stochastic dynamics of the system under study, risk and time preferences, risk management strategies and normative views pertaining to sustainability. To gather this information for an important ecological-economic system, we conducted a survey of commercial cattle farmers in semi-arid rangelands of Namibia, a system that features risks on various space and time scales. Here we present a description of the research aims, design and conduction of the survey, and analyze and discuss the homogeneity and representativeness of our survey population. The survey consisted of a mail-in questionnaire and in-field experiments. We combined two existing farm-address databases, reaching 77% of the estimated 2,500 cattle farmers. The return rate of questionnaires exceeded 20%, and response rate to individual questions surpassed 95% and 90% for the majority of non-sensitive and sensitive questions, respectively. Distinct sub-sample groups within the survey population did not differ in the analyzed characteristics with the exception of ethnicity, regional location of farmland and an intentionally induced bias for residency on farm. It has turned out that we have undersampled distinct population segments of farmers, such as indigenous farmers or farmers not belonging to the main interest group of commercial cattle farming. Notwithstanding, we consider the survey to be highly successful, yielding a rich dataset which allows diverse analyses.

survey, cattle farming, semi-arid, rangeland management, sustainability, risk

Abstract:
The guiding principle of sustainability is widely accepted in today´s international policies. The principle contains two seperate objectives of justice with regard to the conservation and use of ecosystems and their services: (1) global justice between different people of the present generation ("intragenerational justice"); and (2) justice between people of different generations ("intergenerational justice"). Three hypotheses about the relationship between these objectives are logically possible and are, in fact, held in the political and scientific discourse on sustainable development: independency, facilitation and rivalry. Applying the method of qualitative content analysis we evaluate political documents and the scientific literature on sustainable development by systematically revealing the lines of reasoning and determinants underlying the different hypotheses. These determinants are the quantity and quality of ecosystem services, population development, substitutability of ecosystem services by human-made goods and services, technological progress, institutions and political restrictions.

sustainable development, ecosystem services, intragenerational justice, intergenerational justice, ecological justice, sustainability research