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Frontier Issues in Ecological Economics

Frontier Issues in Ecological Economics

Philip Lawn

Ecological economics formally emerged in the late 1980s in response to the failure of mainstream economic paradigms to deal adequately with the interdependence of social, economic and ecological systems. Frontier Issues in Ecological Economics focuses on a range of cutting-edge issues in the field of ecological economics and outlines plausible measures to achieve a more sustainable, just, and efficient world for all.

Chapter 9: Eco-Efficiency Indicators: Theory and Practice

Philip Lawn

Subjects: development studies, development economics, economics and finance, development economics, environment, ecological economics


9. Eco-efficiency indicators: theory and practice INTRODUCTION Broadly speaking, eco-efficiency is measure of the efficiency or effectiveness with which natural capital is transformed into human-made capital. As explained in Chapter 6, the need for eco-efficiency indicators arises because, in the event that the ISEW, GPI or SNBI is falling, it is difficult to know if the fundamental cause is declining efficiency or, if the opposite is the case, whether the rate of increase in resource use efficiency is less than the rate of macroeconomic expansion (i.e., the Jevons’ Paradox). This dilemma was borne out to some degree in the previous chapter – that is, Australia’s Fisherian income merely suggested that the Australian macroeconomy as at 1974 was preferable in physical scale to that of 1997. But it did not provide a definitive answer. To obtain something much closer to that, a measure of eco-efficiency is required. Given the conclusions drawn from the coevolutionary paradigm in Chapter 2, it is clear that eco-efficiency indicators must be developed on the basis of various understandings. While many such understandings exist, the number can be reduced to the following shortlist: (a) natural capital and human-made capital are complements, not substitutes; (b) humankind cannot overcome its dependence on the natural environment by ‘dematerialising’ economic activity; and (c) since humankind cannot control the evolutionary pathway of the global system, eco-efficiency solutions must be in keeping with a coevolutionary worldview. It will be argued in this...

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