Handbook of Environmental and Resource Economics
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Handbook of Environmental and Resource Economics

Edited by Jeroen C.J.M. van den Bergh

This major reference book comprises specially commissioned surveys in environmental and resource economics written by an international team of experts. Authoritative yet accessible, each entry provides a state-of-the-art summary of key areas that will be invaluable to researchers, practitioners and advanced students.
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Chapter 44: Steady-state Economics: Avoiding Uneconomic Growth

H.E. Daly


Herman E. Daly ‘That which seems to be wealth may in verity be only the gilded index of far-reaching ruin . . .’ John Ruskin, Unto this Last, 1862 How is the economy related to its environment, the ecosystem? The economy, in its physical dimensions, is a subsystem of the earth’s ecosystem. The ecosystem is finite, non-growing and materially closed. In the earth’s ecosystem solar energy enters and exits and it is this throughput of energy (itself finite and non-growing) that powers the material biogeochemical cycles on which life depends. Within the earth’s ecosystem the economy exists as an open subsystem. That means that both matter and energy enter from the larger system, and that both matter and energy exit back to the larger system. All physical processes of life and production are maintained by this metabolic flow-through (throughput) of matter+nergy from and back to the environment. The economy lives off the environment in the same way that an animal does - by taking in useful (low-entropy) raw material and energy, and giving back waste (high-entropy) material and energy. The rest of the ecosystem, the part that is not within the economic subsystem (that is, natural capital), absorbs the emitted wastes, and through biogeochemical cycles powered by the sun, reconstitutes much of the waste into reusable raw materials (Figure 44.1). As the economic subsystem expands in its physical dimensions, it assimilates into itself a larger and larger proportion of the total matter-energy of the earth’s ecosystem. More and more of total life...

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