Frontier Issues in Ecological Economics
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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.
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Chapter 5: Natural Resource Prices and Natural Resource Scarcity

Philip Lawn


INTRODUCTION Over the last 30 years there has been considerable debate as to what constitutes the most appropriate indicator of natural resource scarcity. The debate is not only the consequence of incomplete and imperfect data (Brown and Field, 1979; Cleveland and Stern, 2001), it is the upshot of a continuing disagreement about what is meant by resource scarcity and what its potential implications are for human well-being (Barnett, 1979; Smith and Krutilla, 1979; Smith, 1980; Slade, 1982; Hall and Hall, 1984; Mueller and Gorin, 1985; Cairns, 1990; Cleveland, 1991; Farzin, 1995; Ruth, 1995b). Ecological economists believe that much of the debate has been complicated by the lack of understanding of a number of key aspects. These include: (a) the physical properties of natural resources; (b) the role played by natural resources in the economic process; and (c) the difference between the efficient allocation of natural resources and the sustainable rate of natural resource use. While the debates surrounding the first two aspects are well known to most economists, although not always properly understood, the debate surrounding the latter is not. The reason for this stems from the general belief that the sustainability problem can be adequately resolved by dealing with the allocation problem alone. ‘Get the prices right’, most economists say, and a sustainable rate of resource use is achieved along with allocative efficiency. Ecological economists strongly refute this in the same way most economists refute the suggestion that allocative efficiency ensures distributional equity (Howarth and...

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