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News from ICTP 101 - Features - Ecological Economics
A new programme, hosted by ICTP, seeks to use mathematical principles and statistical tools to better understand the forces driving the intricate relationship between economics and ecology.
Valuing Nature Through Science
"It is no accident that
the words 'economy' and 'ecology' share the same
linguistic roots. In Greek, oikos means home, suggesting
that both disciplines have more in common than we think."
This insightful, yet simple, observation, recently made by Nobel
Laureate Kenneth Arrow, professor emeritus at Stanford University
(USA), serves as the guiding principle behind ICTP's newest hosted
activity.
The subject is ecological economics. The programme, which was
launched this spring, will continue until 2003. By then, those
behind the project, including former ICTP director Miguel Virasoro,
hope to find outside funding and a permanent home, perhaps in
Trieste. If successful, they envision the creation of an International
Institute of Ecology and Economics for Scholars from Developing
Countries.
Ecological economics is not a new subject. In fact, its roots
date back to the late 1960s and early 1970s when the environmental
movement in the United States reached new levels of public support
culminating with the celebration of the first Earth Day on 22
April 1970.
At the time, environmentalists were searching for more effective
ways to protect the world's treasure trove of natural resources,
which seemed to be under constant threat due to incessant population
growth, higher consumption levels and never-ending industrial
and commercial development.
Economists, meanwhile, were continuing their search for methodologies
that would enable what they call 'externalities'--the hidden cost
of maintaining clean air, water, and other common goods and services
that we all depend on for our economic and social well-being--to
be integrated into a nation's general accounting system.
The ultimate goals of this unusual marriage between ecology and
economics was, first, to obtain a true assessment of the cost
of development over the long term and, second, to devise policy
strategies that would take advantage of market forces to protect
the environment.
"We've learned a lot over the past several decades,"
says Partha Dasgupta, Frank Ramsey professor of economics at Cambridge
University, UK, "particularly as we've become increasingly
sophisticated in the use of mathematics and statistical modelling
in our efforts to decipher the driving forces behind human behaviour
when it comes to the use and conservation of our natural resource
base."
Partha Dasgupta
The problem is that much of the work originated and has continued
to be done in the United States and Europe. Consequently, researchers
have concentrated on resource issues of particular concern to
rich countries. In fact, this multidisciplinary effort has too
often focussed on what Dasgupta calls 'amenities'--for example,
the economic value that may be derived from putting land aside
for recreational parks or preserving farmland to enhance such
lifestyle concerns as the desire for open space, pleasant vistas
and even tranquillity in our noisy, frenetic world.
One persistent challenge has been how to determine the economic
value of such concerns and then how to integrate that value into
existing systems of national accounting. Another challenge has
been to transfer or modify these research efforts to meaningfully
address critical issues in the developing world.
Progress has taken place on both fronts. For example, Dasgupta
notes that "the World Bank has recently published statistics
on 'genuine investment' for almost all countries of the world
in a volume entitled World Development Indicators 2000.
Such efforts," he says, "have tried to incorporate assessments
of economic growth with assessments of resource depletion to come
up with a true accounting of a nation's economic well-being."
Dasgupta admits that "these new accounting methodologies
remain crude but it's important to remember that traditional methods
of accounting also have had their shortcomings," not the
least of which has been their failure to recognise the depletion
of the natural resource base as a threat to long-term economic
development.
"A person's spendable income can continue to rise,"
he notes, "even as he or she depletes his or her bank account.
That, in effect, could be what is happening in many parts of the
world when it comes to our natural capital." The hope is
that increased applications of mathematics, statistics and game
theory will help refine these efforts at 'eco-calculations' and
make them even more valuable in the future.
"The developing world, at least until very recently, has
been largely excluded from such studies," adds Karl-Göran
Mäler, director, Beijer International Institute of Ecological
Economics of the Royal Swedish Academy in Stockholm, Sweden. "That's
a void we hope to help fill through our partnership with ICTP."
Dasgupta and Mäler will guide the development of this activity
over the next two years.
As part of the partnership, ICTP agreed to sponsor two workshops
this spring: a Research Seminar on Property Rights Structures
and Environmental Resource Management, held in South Africa, in
late May 2002, and a Workshop on the Economics of Complex Spatial
Models of Ecosystems, held in Namibia, in early June. Both activities
were organised by the Beijer Institute. Each attracted a dozen
or so researchers from the region in which it was held.
"Property rights," notes Mäler in describing his
long-range expectations for the seminar in Durban, "provide
important underpinnings for assessing the value of land. Yet,
these rights differ from one country to the next. In Durban, we
discussed the nature of property rights among the region's tribal
chiefs to try to determine the impact such rights have on the
value--and thus use--of both individually owned and communal land."
"The workshop in Namibia," observes Dasgupta, "had
a different focus. Its intent was to lay the groundwork for eventually
making economic valuations of such locally important ecosystems
as range- and wet-lands. The inherent monetary value of such ecosystems,
despite their importance to the economy, has been ignored when
assessing the region's economic and social well-being--especially
its long-term economic and social well-being."
"Our ultimate goal is to help local researchers acquire the
tools that they need to make such assessments. These efforts not
only present an academic challenge but could also have an important
impact on economic and environmental policies throughout the region."
In describing how this new initiative fits into ICTP's mandate,
Dasgupta notes that "for the developing world, ecological
economics is a relatively new field of scholarly inquiry. It's
a field that not only relies increasingly on mathematical and
statistical tools that ICTP is well-versed in, but also promises
to open new employment opportunities for those gifted in such
areas."
Former ICTP director Virasoro sees the initiative even more broadly.
"This effort," he declared in a ceremony marking the
launching of the ecological economics initiative, held at the
University of Trieste in May, "marks a natural progression
of the Centre's efforts to build scientific capacity in the developing
world."
Launching of the ecological economics initiative at the University of Trieste
"ICTP, created in 1964, remains the centerpiece of what has
come to be called the Trieste System," Virasoro continued.
That system now boasts a wide-range of international science institutions
dedicated to the promotion of science in the South, including
the Third World Academy of Sciences (TWAS), the International
Centre for Genetic Engineering and Biotechnology (ICGEB), the
International Centre for Science and High Technology (ICS) and,
most recently, the InterAcademy Panel on International Issues
(IAP). "Each of these institutions," he noted, "steered
Trieste's broad science initiative in new directions and each
brought applications of science to a broader audience."
"And that is the path we hope to continue on through this
new initiative in ecological economics. If we are successful over
the next several years, I envision a new institute that will play
an important role in strengthening a system that has become synonymous
with high-quality research and training for scientists from the
developing world."
For additional information about the Ecology-Economics initiative,
please contact Karl-Göran Mäler, Beijer International
Institute of Ecological Economics, Royal Swedish Academy, PO Box
50005, SE-104 05 Stockholm, Sweden, phone: +46 8 673 95 00; fax:
+46 8 15 24 64; email: beijer@beijer.kva.se.
The local contact is: eee@ictp.trieste.it.