Aid - Agora for Interdisciplinary Debate
14 October 2013, University of Helsinki, Finnish Center of Excellence in the Philosophy of the Social Sciences
Economics and ecology are almost alike, but do they neglect one another?
Olli Tahvonen, Department of Forest Sciences, University of Helsinki
Economics point of view
1 Some similarities between ecology and economics
2 Toward interdisciplinary setup in research on natural resources
3 Problems in interdisciplinary research
Forest sciences
Begon et al. and "basic lack of trust"
Scientific imperialism –troll
Neoclassical economics –troll
Sociobiology –troll
On similarities
Economics
Ecology
Thomas
Malthus
(1766-1834)
Charles
Darwin
(1809-1882)
Malthus borrowed from nature
"the laws of natural increase in the
animal vegetable kingdom"
and forecasted a dismal economic
future to mankind
Darwin read Malthus’ essay and
received some useful ideas for
developing the theory of natural
selection
A Marshall (1842-1924)
‘In economics biological
analogies will displace
mechanical analogies’
In ecology the exponential
and density dependent growth models
originate from Malthus
250
200
150
100
Population size
JM. Keynes (1883-1946)
‘Darwinian theory is a
vast generalization of
Ricardian economies’
50
0
0
50
100
150
Time
200
250
On similarities
Economics
Ecology
Theory of rational choice,
consumer utility maximization
Optimal foraging behaviour of
animals, fitness maximization
Model for production and
profit maximizing firm
Resource allocation and optimization
models for plants
Optimal investments,
optimal growth, interest
rate, discounting, dynamic
optimization, trade offs
Models for optimal life history
strategies, reproduction value,
discounting, dynamic
optimization, trade offs
Game theory and interaction
of strategically behaving
actors; individuals, firms,
nations,..
Evolutionary game theory
animals, trees, genes,...
On similarities
Economics
"Tragedy of the commons"
humans
Concepts: n-person prisoner's dilemma ,
cheating, punishment, externalities,
common property resources,
public goods, free riding,...
Ecology
"Tragedy of the commons"
non-humans
Concepts: n-person prisoner's dilemma,
cheating, punishment, collapsing tragedy,
component tragedy, social goods,...
Examples:
- enclosure (UK 1500-1900)
- all environmental problems
-congestion,...
Examples:
- resource competition
- parent-offspring conflicts
- sexual conflicts
- tall plant populations
- virulence of parasites
Solutions:
- taxes, market for permits, quotas
- social pressure, punishment
- privatization
-individual morality
Solutions:
- kin (group) selection
- punishment
- "parliament of the genes"
- diminishing returns
Economics
Production activities overexploiting atmosphere
Ecology
Virus phages overexploiting
a host bacteria
On similarities
Economics
"Tragedy of the commons"
humans
Concepts: n-person prisoner's dilemma ,
cheating, punishment, externalities,
common property resources,
public goods, free riding,...
Ecology
"Tragedy of the commons"
non-humans
Concepts: n-person prisoner's dilemma,
cheating, punishment, collapsing tragedy,
component tragedy, social goods,...
Examples:
- enclosure (UK 1500-1900)
- all environmental problems
-congestion,...
Examples:
- resource competition
- parent-offspring conflicts
- sexual conflicts
- tall plant populations
- virulence of parasites
Solutions:
- taxes, market for permits, quotas
- social pressure, punishment
- privatization
-individual morality
Solutions:
- kin (group) selection
- punishment
- "parliament of the genes"
- diminishing returns
On similarities
Resource economics
Fisherman-fish open-access dynamics
Smith  Wilen 1968,1976 
dx
dE
 F  x   qEx,
 kE  pqx  c 
dt
dt
Ecology
Predator-prey dynamics
Lotka  Volterra 1910, 1920 
dx
dy
 x    y  ,
  y    x 
dt
dt
Similarities between ecology and economics
Harvesting of biological renewable resources
Ecology: dynamic pool fishery model
Environmental variables
and energy resources
Biological population
Recruitment
Growth of Individuals
Aging
Mortality
Other
populations,
spatial
structure
Mortality by predators
explained e.g. by
optimal foraging theory
Mortality by humans (another predator)
specified by
Maximum Sustainable Yield objective
(or a variant)
Harvesting of biological renewable resources
Economics of fisheries
Market structure, demand,
other investment possibilities
Fisherman or fishing firm
Objective: max the present value of
profit
Factors of production,
labour, man made capital,...
Natural resource (capital stock)
described by a dynamic biomass model
Other harvesters, Institutional setup:
open access, sole owner,
common property, government control
Ecology: dynamic pool fishery model
Environmental variables
and energy resources
Biological population
Recruitment
Growth of Individuals
Aging
Mortality
Other
populations,
spatial
structure
Mortality by predators
explained e.g. by
optimal foraging theory
Mortality by humans (another predator)
explained by
Maximum Sustainable Yield objective
(or a variant)
Harvesting of biological renewable resources
Economics of fisheries
Interdisciplinary setup
Market structure, demand,
other investment possibilities
Ecology: dynamic pool model
Other harvesters, Institutions: open
access, sole owner, common
property, government control
Fisherman or fishing firm
Objective: max the present value of
profit
Factors of production,
labour, man made capital,...
Natural resource (capital stock)
described by a dynamic biomass model
Other harvesters, Institutional setup:
open access, sole owner,
common property, government control
Environmental variables
and energy resources
Biological population
Recruitment
Growth of Individuals
Aging
Mortality
Other
populations,
spatial
structure
Mortality by predators
explained e.g. by
optimal foraging theory
Mortality by humans (another predator)
explained by
Maximum Sustainable Yield objective
(or a variant)
Interdisciplinary setup
Market structure, demand,
other investment possibilities
Other harvesters, Institutions: open
access, sole owner, common
property, government control
Fisherman or fishing firm
Objective: max the present value of
profit
Factors of production,
labour, man made capital,...
Pros
1 Gives reasonable picture on resource use
2 Similar theoretical structure and math methods
can be used for various resources (fish, trees,...)
3 Enables to use existing ecological data
4 Economic optimization may reveal inconsistencies
in ecological models
5 Economic results become more understandable
and practically relevant
Environmental variables
and energy resources
Biological population
Recruitment
Growth of Individuals
Aging
Mortality
Other
populations,
spatial
structure
Mortality by predators
explained e.g. by
optimal foraging theory
Cons
1 Models become more complex
2 Economists: "This is not anymore
economics", "This does not change
anything that is economically essential"
3 Ecologists: "Is it sure that fisherman
optimize something?"
Interdisciplinary setup
Market structure, demand,
other investment possibilities
Other harvesters, Institutions: open
access, sole owner, common
property, government control
Fisherman or fishing firm
Objective: max the present value of
profit
Factors of production,
labour, man made capital,...
Environmental variables
and energy resources
Biological population
Recruitment
Growth of Individuals
Aging
Mortality
Other
populations,
spatial
structure
Mortality by predators
explained e.g. by
optimal foraging theory
The interdisciplinary setup => "Dynamics and control of structured populations“
Common field in economics, demography, mathematical biology, epidemiology,
applied mathematics and medicine
Vintage capital models, optimal harvesting of size-structured populations, fishery induced evolution,
optimal control and HIV/AIDS, optimal control in cancer chemotherapy,...
Problems in interdisciplinarity 1: Economics & production ecology in forest sciences
Why ecologists may include social science aspects in their studies?
Purely instrumental motives vs. non-instrumental motives
How ecologists can include social dimensions in their studies?
1 Work closely with stakeholders and end-users
2 Extend ecological concepts to cover social dimensions
3 Work closely with social scientists
Forest scientists have traditionally applied 1 & 2
The outcome:
1 Many features in forest sciences (and policy) represent strange economics
2 Forest sciences (and policy) have been devoted to the MSY –idea
-forest management becomes an objective "ecological-technical fact"
- this happens(?) to favor the strongest interest group (industry) and the forestry
profession itself =>moral hazard problem
3 Many interesting questions are difficult to study due to the narrow orientation of the
production ecology research in forestry
4 Some production ecologists have found it inconvenient that economists may use
their models in interdisciplinary context and then argue against their MSY -type of
results
Problems in interdisciplinarity 2: The case of Begon et al. (1986, 1990, 1996, 2006, 737 pages)
Perhaps the leading ecology textbook in the globe
Contains a section on "Harvest management"
The authors first introduce MSY, its popularity and
some biological overexploitation risks
The authors then admit that social and economic
aspects cannot be neglected in this context
Begon et al introduce the economic model by Gordon (1954) but refer to two ecologists
Comment: the main economic message of the model is neglected (the open access case)
and the "ecologically favourable" result remains unclear
Next they introduce discounting and explain that if the discount rate is 10% p.a.
"90 fish now are as valuable as 100 fish in one year's time"
Comment: 90 fish  1  0.1  99 fish not 100 fish
They continue: commonly used discount rate is 10%, although after inflation it should be only 2-5%
and explain that economists´ justification for this is to incorporate "risk" i.e. for economists
"a bird in the hand is worth two in the bush"
Comments:
- risk does not, as a general rule, work similarly as increased discount rate
- the overall explanation of risk in fishery economic models by the above phrase
"a bird..." does not make sense
Next Begon et al . write that economic reasoning more or less neglects the facts that fish in the water
can grow and reproduce. Thus economics =>wrong investment decisions
Comment:
the growth of fish and population reproduction is (of course) included in fishery economic models
Finally Begon et al. write that if the discount rate is high compared to population productivity,
it makes economic sense to "liquidate" the whole biological population
Begon et al. conclusion:
- this is ecologically disdainful way of treating the hungry mouths of the future
- "new economics" must be forged that takes into account jobs lost, that alternative sources of
food must be found and that there are values assigned not only to things that can be bought and sold
Comments:
- the "stock liquidation" was discovered by a mathematician/economist/biologist C. Clark (1973, Science)
- it was presented as a descriptive idea and Clark concludes his paper:
"In view of the likelihood of private firms adopting high rates of discount, the
conservation of renewable resources would appear to require continual public
surveillance and control of the physical yield and the condition of the stocks."
Message: privatization of biological or renewable resources may not save them from extinction
Please, do not kill the messenger!
- as a normative idea "stock liquidation" makes economic sense only if the given
population does not have any other values besides raw material
- as such the stock liquidation idea does not necessarily represent shortsightedness
Is this section in Begon et al. harmless?
- not an exception; it crystallizes a quite common view* ( Lummaa et al., 2012, Jennings et al. 2001)
- students may become quite suspicious =>better to keep "distance" with economics and
concepts like "profits" and "discounting“, and use ecological concepts instead
- Stevens et al. (2007): the process to bring different disciplines together is still slow; one reason
is the basic lack of "trust"
=> around the globe the section may have significant influence on students’ "basic lack of trust"
and willingness to collaborate with economists
*" Economists are not able to see far, a serious problem in environmental protection "
J. Hiedanpää, Economics.In Interdisciplinary environmental research (in Finnish), Lummaa et al. (Eds.), Gaudeamus, 2012.
Comment: when economists study natural resources they apply infinitly () long time horizon.
Conclusions
Problem 1: In economics, values are based on human preferences and this typically leads
to trade-offs and substitutability although the approach allows something to have an
infinite value and no substitution possibilities
Ecologists sometimes take different ethical approach =>one explanation behind the "basic
lack of trust"?
Should be noted that in the practical policy context the difference between the approaches
may remain small
Problem 2: How scientists in different disciplines motivate their students (and themselves)?
Business as usual strategy (in economics, ecology, physics, ...):
1. Make students (and yourself) believe that the discipline they (and you) have chosen
is absolutely superior compared to neighboring disciplines
2. Apply straw man arguments to eliminate neighboring sciences (cf. Begon et al.)
Alternative strategy: Yet to be discovered – suggestions?
To some extent this is "The tragedy of the commons" or prisoner's dilemma problem
The scientists in ecology and economics should know well how to proceed in
solving such problems
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