Editing Ecological economics (section)

== Topics ==
Among the topics addressed by ecological economics are methodology, allocation of resources, weak versus strong sustainability, energy economics, energy accounting and balance, environmental services, cost shifting, modeling, and monetary policy.

=== Methodology ===
{{Thermodynamics|cTopic=[[Laws of thermodynamics]]}}
A primary objective of ecological economics (EE) is to ground economic thinking and practice in physical reality, especially in the laws of physics (particularly the [[laws of thermodynamics]]) and in knowledge of biological systems.  It accepts as a goal the improvement of human well-being through development, and seeks to ensure achievement of this through planning for the sustainable development of ecosystems and societies. Of course the terms development and sustainable development are far from lacking controversy. [[Richard B. Norgaard]] argues traditional economics has hi-jacked the development terminology in his book ''Development Betrayed''.<ref>Norgaard, R. B. (1994) Development Betrayed: The End of Progress and a Coevolutionary Revisioning of the Future. London: Routledge</ref>

Well-being in ecological economics is also differentiated from welfare as found in mainstream economics and the 'new welfare economics' from the 1930s which informs resource and environmental economics.  This entails a limited preference utilitarian conception of value i.e., Nature is valuable to our economies, that is because people will pay for its services such as clean air, clean water, encounters with wilderness, etc.

Ecological economics is distinguishable from [[neoclassical economics]] primarily by its assertion that the economy is embedded within an environmental system. Ecology deals with the energy and matter transactions of life and the Earth, and the human economy is by definition contained within this system. Ecological economists argue that neoclassical economics has ignored the environment, at best considering it to be a subset of the human economy.

The neoclassical view ignores much of what the natural sciences have taught us about the contributions of nature to the creation of wealth e.g., the planetary endowment of scarce matter and energy, along with the complex and biologically diverse ecosystems that provide goods and [[ecosystem services]] directly to human communities: micro- and macro-climate regulation, water recycling, water purification, storm water regulation, waste absorption, food and medicine production, pollination, protection from solar and cosmic radiation, the view of a starry night sky, etc.

There has then been a move to regard such things as [[natural capital]] and ecosystems functions as goods and services.<ref>Daily, G.C. 1997. ''Nature's Services: Societal Dependence on Natural Ecosystems''. Washington, D.C.: Island Press.</ref><ref>Millennium Ecosystem Assessment. 2005. ''Ecosystems and Human Well-Being: Biodiversity Synthesis''. Washington, D.C.: World Resources Institute.</ref>  However, this is far from uncontroversial within ecology or ecological economics due to the potential for narrowing down values to those found in mainstream economics and the danger of merely regarding Nature as a commodity.  This has been referred to as ecologists 'selling out on Nature'.<ref>{{cite journal | last1 = McCauley | first1 = D. J. | year = 2006 | title = Selling out on nature | journal = Nature | volume = 443 | issue = 7| pages = 27–28 | doi = 10.1038/443027a | pmid = 16957711 | bibcode = 2006Natur.443...27M | s2cid = 6814523 }}</ref>  There is then a concern that ecological economics has failed to learn from the extensive literature in [[environmental ethics]] about how to structure a plural value system.

=== Allocation of resources ===
[[File:Uneconomic Growth diagram.jpg|thumb|The marginal costs of a growing economy may gradually exceed the marginal benefits, however measured.]]
[[Resource economics|Resource]] and neoclassical economics focus primarily on the efficient allocation of resources and less on the two other problems of importance to ecological economics: [[Distribution (economics)|distribution]] ([[equity (economics)|equity]]), and the scale of the economy relative to the ecosystems upon which it relies.<ref name="Daly">Daly, H. and Farley, J. 2004. ''Ecological Economics: Principles and Applications''. Washington: Island Press.</ref> Ecological economics makes a clear distinction between growth (quantitative increase in economic output) and development (qualitative improvement of the [[quality of life]]), while arguing that neoclassical economics confuses the two. Ecological economists point out that beyond modest levels, increased per-capita [[consumption (economics)|consumption]] (the typical economic measure of "standard of living") may not always lead to improvement in human well-being, but may have harmful effects on the environment and broader societal well-being. This situation is sometimes referred to as [[uneconomic growth]] (see diagram above).

=== Weak versus strong sustainability ===
{{Main|Weak and strong sustainability}}
{{See also | Nicholas Georgescu-Roegen #Criticising neoclassical economics (weak versus strong sustainability)}}
<imagemap>
File:Nested_sustainability-v2.gif|right|The three nested systems of [[sustainability]] - the economy wholly contained by society, wholly contained by the biophysical environment. Clickable.|275px|thumb
poly 123 35 134 30 171 41 196 65 194 98 167 119 121 123 79 101 73 64 101 40[[Economics|Economic]]
poly 67 52 41 70 41 111 71 150 123 167 169 163 207 147 234 113 239 83 218 49 190 32 204 77 194 111 167 125 115 126 83 110 62 78 64 60  [[Society|Social]]
poly 243 58 258 83 255 133 230 168 202 185 158 195 114 195 63 181 27 153 10 115 13 78 31 54 46 39 38 71 36 116 66 148 118 169 163 169 209 153 237 118 242 81 [[Environment (biophysical)|Environment]]
</imagemap>

Ecological economics challenges the conventional approach towards natural resources, claiming that it undervalues natural capital by considering it as interchangeable with human-made capital—labor and technology.

The impending depletion of natural resources and increase of climate-changing greenhouse gasses should motivate us to examine how political, economic and social policies can benefit from alternative energy. Shifting dependence on fossil fuels with specific interest within just one of the above-mentioned factors easily benefits at least one other. For instance, photo voltaic (or solar) panels have a 15% efficiency when absorbing the sun's energy, but its construction demand has increased 120% within both commercial and residential properties. Additionally, this construction has led to a roughly 30% increase in work demands (Chen).

The potential for the substitution of man-made capital for natural capital is an important debate in ecological economics and the economics of sustainability.
There is a continuum of views among economists between the strongly neoclassical positions of [[Robert Solow]] and [[Martin Weitzman]], at one extreme and the [[Pessimism#Entropy pessimism|'entropy pessimists']], notably [[Nicholas Georgescu-Roegen]] and [[Herman Daly]], at the other.<ref>{{cite journal | last1 = Ayres | first1 = R.U. | year = 2007 | title = On the practical limits of substitution | url = http://pure.iiasa.ac.at/7800/1/IR-05-036.pdf| journal = Ecological Economics | volume = 61 | pages = 115–128 | doi = 10.1016/j.ecolecon.2006.02.011 | s2cid = 154728333 }}</ref>

Neoclassical economists tend to maintain that man-made capital can, in principle, replace all types of natural capital.  This is known as the [[Strong vs Weak sustainability|weak sustainability]] view, essentially that every technology can be improved upon or replaced by innovation, and that there is a substitute for any and all scarce materials.

At the other extreme, the [[Strong vs Weak sustainability|strong sustainability]] view argues that the stock of natural resources and ecological functions are irreplaceable.  From the premises of strong sustainability, it follows that [[economic policy]] has a [[fiduciary]] responsibility to the greater ecological world, and that sustainable development must therefore take a different approach to valuing natural resources and ecological functions.

Recently, Stanislav Shmelev developed a new methodology for the assessment of progress at the macro scale based on multi-criteria methods, which allows consideration of different perspectives, including strong and weak sustainability or conservationists vs industrialists and aims to search for a 'middle way' by providing a strong neo-Keynesian economic push without putting excessive pressure on the natural resources, including water or producing emissions, both directly and indirectly.<ref>Shmelev, S.E. 2012. Ecological Economics. Sustainability in Practice, Springer</ref>

=== Energy economics ===
[[File:Cost and exergy for heating energy in Finland.jpg|thumb|275px|Exergy analysis can be performed to find connections between economic value and the physical world. Here the costs of heating (vertical axis) are compared with the exergy content of different energy carriers (horizontal axis). Red dots and trend line indicate energy prices for consumers, blue dots and trend line indicate total price for consumers including capital expenditure for the heating system. Energy carriers included are district heating (D), ground-source heat pump (G), exhaust air heat pump (A), bioenergy meaning firewood (B), heating oil (O) and direct electric heating (E).<ref name="Muller">{{Cite journal |doi = 10.1016/j.enbuild.2011.09.034|title = Estimating exergy prices for energy carriers in heating systems: Country analyses of exergy substitution with capital expenditures|year = 2011|last1 = Müller|first1 = A.|last2 = Kranzl|first2 = L.|last3 = Tuominen|first3 = P.|last4 = Boelman|first4 = E.|last5 = Molinari|first5 = M.|last6 = Entrop|first6 = A.G.|journal = Energy and Buildings|volume = 43|issue = 12|pages = 3609–3617| bibcode=2011EneBu..43.3609M | s2cid=154294592 | url=https://ris.utwente.nl/ws/files/6530603/estimating.pdf }}</ref>]]
{{Main|Energy economics}}
A key concept of energy economics is [[net energy gain]], which recognizes that all energy sources require an initial energy investment in order to produce energy.  To be useful the energy return on energy invested ([[EROEI]]) has to be greater than one.  The net energy gain from the production of coal, oil and gas has declined over time as the easiest to produce sources have been most heavily depleted.<ref>{{cite book |title= Energy and Resource Quality: The ecology of the Economic Process |last1=Hall |first1=Charles A.S. 
|last2= Cleveland |first2=Cutler J.
|last3=Kaufmann |first3=Robert
|year=1992 |publisher= University Press of colorado |location= Niwot, Colorado }}</ref> In traditional energy economics, surplus energy is often seen as something to be capitalized on—either by storing for future use or by converting it into economic growth. 

Ecological economics generally rejects the view of energy economics that growth in the energy supply is related directly to well-being, focusing instead on [[biodiversity]] and [[creativity]] &ndash; or natural capital and [[individual capital]], in the terminology sometimes adopted to describe these economically. In practice, ecological economics focuses primarily on the key issues of [[uneconomic growth]] and [[quality of life]]. Ecological economists are inclined to acknowledge that much of what is important in human well-being is not analyzable from a strictly economic standpoint and suggests an interdisciplinary approach combining social and natural sciences as a means to address this. When considering surplus energy, ecological economists state this  could be used for activities that do not directly contribute to economic productivity but instead enhance societal and environmental well-being. This concept of [[dépense]], as developed by [[Georges Bataille]], offers a novel perspective on the management of surplus energy within economies. This concept encourages a shift from growth-centric models to approaches that prioritise sustainable and meaningful expenditures of excess [[resources]].<ref>{{Cite book |url=https://www.taylorfrancis.com/books/edit/10.4324/9780203796146/degrowth-giacomo-alisa-federico-demaria-giorgos-kallis |title=Degrowth: A Vocabulary for a New Era |date=2014-11-19 |publisher=Routledge |isbn=978-0-203-79614-6 |editor=Giacomo D'Alisa |editor2=Federico Demaria |editor3=Giorgos Kallis|location=London |doi=10.4324/9780203796146}}</ref> 

[[Thermoeconomics]] is based on the proposition that the role of energy in [[biological evolution]] should be defined and understood through the [[second law of thermodynamics]], but also in terms of such economic criteria as [[productivity]], [[Economic efficiency|efficiency]], and especially the costs and benefits (or profitability) of the various mechanisms for capturing and utilizing available energy to build biomass and do work.<ref>[[Peter A. Corning]] 1 *, Stephen J. Kline. (2000). [https://archive.today/20120630072317/http://www3.interscience.wiley.com/cgi-bin/abstract/71007254/ABSTRACT Thermodynamics, information and life revisited, Part II: Thermoeconomics and Control information ] Systems Research and Behavioral Science, Apr. 07, Volume 15, Issue 6, Pages 453 – 482</ref><ref>[[Peter Corning|Corning, P.]] (2002). “[http://www.complexsystems.org/abstracts/thermoec.html Thermoeconomics – Beyond the Second Law] {{webarchive|url=https://web.archive.org/web/20080922072349/http://www.complexsystems.org/abstracts/thermoec.html |date=2008-09-22 }}” – source: www.complexsystems.org</ref> As a result, thermoeconomics is often discussed in the field of ecological economics, which itself is related to the fields of sustainability and sustainable development.

[[Exergy]] analysis is performed in the field of [[industrial ecology]] to use energy more efficiently.<ref>{{cite web|url=http://exergy.se/goran/thesis/ |title=Exergy - a useful concept |author=Wall, Göran |publisher=Exergy.se |access-date=2012-12-23}}</ref> The term ''exergy'', was coined by [[Zoran Rant]] in 1956, but the concept was developed by [[Josiah Willard Gibbs|J. Willard Gibbs]]. In recent decades, utilization of exergy has spread outside of physics and engineering to the fields of industrial ecology, ecological economics, [[systems ecology]], and [[Energy flow (ecology)|energetics]].

=== Energy accounting and balance ===
{{See also|Net energy gain}}

An energy balance can be used to track energy through a system, and is a very useful tool for determining resource use and environmental impacts, using the First and Second laws of [[thermodynamics]], to determine how much energy is needed at each point in a system, and in what form that energy is a cost in various environmental issues.{{Citation needed|date=November 2009}}<!-- <ref name="Cutler" /> --> The [[energy accounting]] system keeps track of energy in, energy out, and non-useful energy versus [[work done]], and transformations within the system.<ref>{{cite web |url=http://telstar.ote.cmu.edu/environ/m3/s3/05account.shtml |title=Environmental Decision making, Science and Technology |publisher=Telstar.ote.cmu.edu |access-date=2012-12-23 |url-status=dead |archive-url=https://web.archive.org/web/20100105164509/http://telstar.ote.cmu.edu/environ/m3/s3/05account.shtml |archive-date=2010-01-05 }}</ref>

Scientists have written and speculated on different aspects of energy accounting.<ref>Stabile, Donald R. "Veblen and the Political Economy of the Engineer: the radical thinker and engineering leaders came to technocratic ideas at the same time," ''American Journal of Economics and Sociology (45:1) 1986, 43-44.</ref>

=== Ecosystem services and their valuation ===
{{See also|Ecosystem valuation|Price of life}}
Ecological economists agree that ecosystems produce enormous flows of goods and services to human beings, playing a key role in producing well-being. At the same time, there is intense debate about how and when to place values on these benefits.<ref>Farley, Joshua. "Ecosystem services: The economics debate." Ecosystem services 1.1 (2012): 40-49. https://doi.org/10.1016/j.ecoser.2012.07.002</ref><ref>{{cite journal | last1 = Kallis | first1 = Giorgos | last2 = Gómez-Baggethun | first2 = Erik | last3 = Zografos | first3 = Christos | year = 2013 | title = To value or not to value? That is not the question | journal = Ecological Economics | volume = 94 | pages = 97–105 | doi = 10.1016/j.ecolecon.2013.07.002 | bibcode = 2013EcoEc..94...97K }}</ref>

A study was carried out by Costanza and colleagues<ref>{{cite journal |author1=Costanza, R. |author2=d'Arge, R. |author3=de Groot, R. |author4=Farber, S. |author5=Grasso, M. |author6=Hannon, B. |author7=Naeem, S. |author8=Limburg, K. |author9=Paruelo, J. |author10=O'Neill, R.V. |author11=Raskin, R. |author12=Sutton, P. |author13=and van den Belt, M. |year=1997 |title=The value of the world's ecosystem services and natural capital |journal=Nature |volume=387 |issue=6630 |pages=253–260 |url=http://www.esd.ornl.gov/benefits_conference/nature_paper.pdf |doi=10.1038/387253a0 |bibcode=1997Natur.387..253C |s2cid=672256 |url-status=dead |archive-url=https://web.archive.org/web/20120730185431/http://www.esd.ornl.gov/benefits_conference/nature_paper.pdf |archive-date=2012-07-30 }}</ref> to determine the 'value' of the services provided by the environment. This was determined by averaging values obtained from a range of studies conducted in very specific context and then transferring these without regard to that context.  Dollar figures were averaged to a per hectare number for different types of ecosystem e.g. wetlands, oceans. A total was then produced which came out at 33 trillion US dollars (1997 values), more than twice the total [[GDP]] of the world at the time of the study.  This study was criticized by pre-ecological and even some [[Environmental economics|environmental economists]] &ndash; for being inconsistent with assumptions of [[financial capital]] [[valuation (finance)|valuation]] – and ecological economists – for being inconsistent with an ecological economics focus on biological and physical indicators.<ref>{{cite journal|author1=Norgaard, R.B.  |author2=Bode, C. |year=1998|title= Next, the value of God, and other reactions|journal=Ecological Economics|volume= 25|issue=1 |pages= 37–39|doi=10.1016/s0921-8009(98)00012-3|bibcode=1998EcoEc..25...37N }}</ref>

The whole idea of treating ecosystems as goods and services to be valued in monetary terms remains controversial.  A common objection<ref>{{cite journal|last1=Brouwer|first1=Roy|title=Environmental value transfer: state of the art and future prospects|journal=Ecological Economics|date=January 2000|volume=32|issue=1|pages=137–152|doi=10.1016/S0921-8009(99)00070-1|bibcode=2000EcoEc..32..137B }}</ref><ref>{{cite journal|last1=Gómez-Baggethun|first1=Erik|last2=de Groot|first2=Rudolf|last3=Lomas|first3=Pedro|last4=Montes|first4=Carlos|title=The history of ecosystem services in economic theory and practice: From early notions to markets and payment schemes|journal=Ecological Economics|date=1 April 2010|volume=69|issue=6|pages=1209–1218|doi=10.1016/j.ecolecon.2009.11.007|bibcode=2010EcoEc..69.1209G }}</ref><ref>{{cite journal|last1=Farber|first1=Stephen|last2=Constanza|first2=Robert|last3=Wilson|first3=Matthew|title=Economic and ecological concepts for valuing ecosystem services|journal=Ecological Economics|date=June 2002|volume=41|issue=3|pages=375–392|doi=10.1016/S0921-8009(02)00088-5|bibcode=2002EcoEc..41..375F }}</ref> is that life is precious or priceless, but this demonstrably degrades to it being worthless within cost-benefit analysis and other standard economic methods.<ref>{{Cite book|last1=Vuong|first1=Quan-Hoang|last2=Nguyen|first2=Minh-Hoang|title=Better economics for the Earth: A lesson from quantum and information theories|date=2024|publisher=AISDL|isbn=979-8332865794}}</ref>  Reducing human bodies to financial values is a necessary part of mainstream economics and not always in the direct terms of [[insurance]] or [[wages]]. One example of this in practice is the [[Value of life|value of a statistical life]], which is a dollar value assigned to one life used to evaluate the costs of small changes in risk to life–such as exposure to one pollutant.<ref>{{cite web | url=https://www.epa.gov/environmental-economics/mortality-risk-valuation | title=Mortality Risk Valuation | date=20 April 2014 }}</ref> Economics, in principle, assumes that conflict is reduced by agreeing on voluntary contractual relations and prices instead of simply fighting or coercing or tricking others into providing goods or services.  In doing so, a provider agrees to surrender time and take bodily risks and other (reputation, financial) risks.  Ecosystems are no different from other bodies economically except insofar as they are far less replaceable than typical labour or commodities.

Despite these issues, many ecologists and conservation biologists are pursuing [[ecosystem valuation]]. [[Biodiversity]] measures in particular appear to be the most promising way to reconcile financial and ecological values, and there are many active efforts in this regard.<ref>{{Cite web|last=Carrington|first=Damian|date=2021-02-02|title=Economics of biodiversity review: what are the recommendations?|url=http://www.theguardian.com/environment/2021/feb/02/economics-of-biodiversity-review-what-are-the-recommendations|access-date=2021-02-03|website=The Guardian|language=en}}</ref> The growing field of [[biodiversity finance]]<ref>[http://www.socialedge.org/features/opportunities/archive/2008/02/23/weblogentry.2008-02-20.6191038944 SocialEdge.org.] {{webarchive|url=https://web.archive.org/web/20090215083840/http://www.socialedge.org/features/opportunities/archive/2008/02/23/weblogentry.2008-02-20.6191038944 |date=2009-02-15 }} Accessed: December 23, 2012.</ref> began to emerge in 2008 in response to many specific proposals such as the Ecuadoran Yasuni proposal<ref>{{usurped|1=[https://web.archive.org/web/20080621054850/http://www.sosyasuni.org/en/News/Ecuadors-Oil-Change-An-Exporters-Historic-Proposal.html]}}</ref><ref>[http://www.multinationalmonitor.org/mm2007/092007/koenig.html Multinational Monitor, 9/2007.] Accessed: December 23, 2012.</ref> or similar ones in the [[Republic of the Congo|Congo]].  US news outlets treated the stories as a "threat"<ref>{{cite news| url=http://www.cnn.com/2007/BUSINESS/12/10/ecuador.oil.ap/ |title=Ecuador threat to drill jungle oil|archive-url=https://web.archive.org/web/20081218035742/http://www.cnn.com/2007/BUSINESS/12/10/ecuador.oil.ap/|archive-date=December 18, 2008}}</ref> to "drill a park"<ref>{{cite web|url=https://abcnews.go.com/International/wireStory?id=3980994 |title=International News &#124; World News - ABC News |publisher=Abcnews.go.com |date=4 June 2012 |access-date=2012-12-23}}</ref> reflecting a previously dominant view that NGOs and governments had the primary responsibility to protect ecosystems.  However [[Peter Barnes (entrepreneur)|Peter Barnes]] and other commentators have recently argued that a guardianship/trustee/commons model is far more effective and takes the decisions out of the political realm.

Commodification of other ecological relations as in [[carbon credit]] and direct payments to farmers to preserve [[ecosystem services]] are likewise examples that enable private parties to play more direct roles protecting biodiversity, but is also controversial in ecological economics.<ref>{{cite journal | last1 = Spash | first1 = Clive L | year = 2010 | title = The brave new world of carbon trading | url = https://mpra.ub.uni-muenchen.de/19114/1/MPRA_paper_19114.pdf| journal = New Political Economy | volume = 15 | issue = 2| pages = 169–195 | doi = 10.1080/13563460903556049 | s2cid = 44071002 }}</ref>  The [[United Nations]] [[Food and Agriculture Organization]] achieved near-universal agreement in 2008<ref>{{cite web |url=http://www.panna.org/jt/agAssessment |title=Pesticide Action Network &#124; Reclaiming the future of food and farming |access-date=2008-06-21 |url-status=dead |archive-url=https://web.archive.org/web/20080621193253/http://www.panna.org/jt/AgAssessment |archive-date=2008-06-21 }}</ref> that such payments directly valuing ecosystem preservation and encouraging [[permaculture]] were the only practical way out of a food crisis.  The holdouts were all English-speaking countries that export [[GMO]]s and promote "[[free trade]]" agreements that facilitate their own control of the world transport network: The US, UK, Canada and Australia.<ref>{{cite news| url=https://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2008/04/17/do1702.xml | archive-url=https://web.archive.org/web/20080424230103/http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2008/04/17/do1702.xml | url-status=dead | archive-date=April 24, 2008 | location=London | work=The Daily Telegraph | title=GM crops can save us from food shortages | first1=Bill | last1=Emmott | date=April 17, 2008}}</ref>

=== Not 'externalities', but cost shifting ===

Ecological economics is founded upon the view that the [[neoclassical economics]] (NCE) assumption that environmental and community costs and benefits are mutually canceling "[[externalities]]" is not warranted. [[Joan Martinez Alier]],<ref>{{cite book|last1=Costanza|first1=Robert|title=Getting Down to Earth: Practical Applications of Ecological Economics|year=1996|publisher=Island Press|location=Washington, D.C.|isbn=978-1559635035|author2=Segura, Olman|author3=Olsen, Juan Martinez-Alier|url-access=registration|url=https://archive.org/details/gettingdowntoear0000unse}}</ref> for instance shows that the bulk of consumers are automatically excluded from having an impact upon the prices of commodities, as these consumers are future generations who have not been born yet.  The assumptions behind future discounting, which assume that future goods will be cheaper than present goods, has been criticized by [[David Pearce (economist)|David Pearce]]<ref>Pearce, David "Blueprint for a Green Economy"</ref> and by the recent [[Stern Report]] (although the Stern report itself does employ discounting and has been criticized for this and other reasons by ecological economists such as [[Clive Spash]]).<ref>{{cite journal |author=Spash, C. L. |date=2007 |url=http://www.clivespash.org/EE2007_SpashonStern.pdf |title=The economics of climate change impacts à la Stern: Novel and nuanced or rhetorically restricted |journal=Ecological Economics |volume=63|number= 4 |pages=706–713 |doi=10.1016/j.ecolecon.2007.05.017 |bibcode=2007EcoEc..63..706S |access-date=2012-12-23 |url-status=dead |archive-url=https://web.archive.org/web/20140202105133/http://www.clivespash.org/EE2007_SpashonStern.pdf |archive-date=2014-02-02 }}</ref>

Concerning these externalities, some like the eco-businessman [[Paul Hawken]] argue an orthodox economic line that the only reason why goods produced unsustainably are usually cheaper than goods produced sustainably is due to a hidden subsidy, paid by the non-monetized human environment, community or future generations.<ref>Hawken, Paul (1994) "The Ecology of Commerce" (Collins)</ref>  These arguments are developed further by Hawken, Amory and Hunter Lovins to promote their vision of an environmental capitalist utopia in ''[[Natural Capitalism: Creating the Next Industrial Revolution]]''.<ref>Hawken, Paul; Amory and Hunter Lovins (2000) "Natural Capitalism: Creating the Next Industrial Revolution" (Back Bay Books)</ref>

In contrast, ecological economists, like Joan Martinez-Alier, appeal to a different line of reasoning.<ref>Martinez-Alier, Joan (2002) The Environmentalism of the Poor: A Study of Ecological Conflicts and Valuation. Cheltenham, Edward Elgar</ref>  Rather than assuming some (new) form of capitalism is the best way forward, an older ecological economic critique questions the very idea of internalizing externalities as providing some corrective to the current system. The work by [[Karl William Kapp]] explains why the concept of "externality" is a misnomer.<ref>Kapp, Karl William (1963) The Social Costs of Business Enterprise. Bombay/London, Asia Publishing House.</ref> In fact the modern business enterprise operates on the basis of shifting costs onto others as normal practice to make [[profit (economics)|profit]]s.<ref>Kapp, Karl William (1971) Social costs, neo-classical economics and environmental planning. The Social Costs of Business Enterprise, 3rd edition. K. W. Kapp. Nottingham, Spokesman: 305-318</ref> [[Charles Eisenstein]] has argued that this method of [[Privatizing profits and socializing losses|privatising profits while socialising the costs]] through externalities, passing the costs to the community, to the natural environment or to future generations is inherently destructive.<ref>Eisenstein, Charles (2011), "Sacred Economics: Money, Gift and Society in an Age in Transition" (Evolver Editions)</ref> As social ecological economist [[Clive Spash]] has noted, externality theory fallaciously assumes environmental and social problems are minor aberrations in an otherwise perfectly functioning efficient economic system.<ref>{{cite journal |author= Spash, Clive L. |date= 16 July 2010 |title= The brave new world of carbon trading |journal= New Political Economy |volume= 15 |pages=169–195 |issue= 2 |doi= 10.1080/13563460903556049 |s2cid= 44071002 |url=http://www.clivespash.org/2010_Spash_Brave_New_World_NPE.pdf |archive-url=https://web.archive.org/web/20130510185658/http://clivespash.org/2010_Spash_Brave_New_World_NPE.pdf |archive-date=2013-05-10}}</ref>  Internalizing the odd externality does nothing to address the structural systemic problem and fails to recognize the all pervasive nature of these supposed 'externalities'.

=== Ecological-economic modeling ===

[[Mathematical model]]ing is a powerful tool that is used in ecological economic analysis. Various approaches and techniques include:<ref>Proops, J., and Safonov, P. (eds.) (2004), [http://www.e-elgar.co.uk/bookentry_main.lasso?id=2951 Modelling in Ecological Economics] {{Webarchive|url=https://web.archive.org/web/20141227091734/http://www.e-elgar.co.uk/bookentry_main.lasso?id=2951 |date=2014-12-27 }}, Edward Elgar</ref><ref>Faucheux, S., Pearce, D., and Proops, J. (eds.) (1995), Models of Sustainable Development, Edward Elgar</ref> [[evolutionary]], [[input/output model|input-output]], neo-Austrian modeling, [[entropy]] and [[thermodynamic]] models,<ref>{{Cite book|title = The Unity of Science and Economics: A New Foundation of Economic Theory|last1 = Chen|first1 = Jing|publisher = Springer|year = 2015|url = https://www.springer.com/us/book/9781493934645}}</ref> [[multi-criteria decision analysis|multi-criteria]], and [[agent-based]] modeling, the environmental [[Kuznets curve]], and [[Stock-Flow consistent model]] frameworks. [[System dynamics]] and [[GIS]] are techniques applied, among other, to spatial dynamic landscape simulation modeling.<ref>Costanza, R., and Voinov, A. (eds.) (2004), Landscape Simulation Modeling.  A Spatially Explicit, Dynamic Approach, Springer-Verlag New-York, Inc.</ref><ref>{{cite book|last1=Voinov|first1=Alexey|title=Systems science and modeling for ecological economics|year=2008|publisher=Elsevier Academic Press|location=Amsterdam|isbn=978-0080886176|edition=1st}}</ref>  The Matrix accounting methods of Christian Felber provide a more sophisticated method for identifying "the common good"<ref>Felber, Christian (2012), "La economia del bien commun" (Duestro)</ref>

=== Monetary theory and policy ===
Ecological economics draws upon its work on resource allocation and strong sustainability to address monetary policy. Drawing upon a transdisciplinary literature, ecological economics roots its policy work in monetary theory and its goals of sustainable scale, just distribution, and efficient allocation.<ref>{{cite journal |last1=Ament |first1=Joe |title=Toward an Ecological Monetary Theory |journal=Sustainability |date=February 12, 2019 |volume=11 |issue=3 |page=923 |doi=10.3390/su11030923 |doi-access=free |bibcode=2019Sust...11..923A }}</ref> Ecological economics' work on monetary theory and policy can be traced to [[Frederick Soddy]]'s work on money. The field considers questions such as the [[growth imperative]] of interest-bearing debt, the nature of money, and alternative policy proposals such as alternative currencies and public banking.