by Jurgen Brauer, April 2003
Copyright: J. Brauer. No reproduction without permission.

A colleague of mine came up with a nice moniker. He calls me an economecologist. Like a crocophant – a mixture between crocodile and elephant – an economecologist is a mixed-breed between an economist and an ecologist. You may think this makes me an ugly creature. The public perception at least is that tree-hugging environmentalists, employing ecologist cheerleaders, and rapacious, money-hungry business interests, employing their men-at-arms, the economists, are incompatible mating partners. This view is wrong. In fact, there are nice intellectual parallels between economics and ecology, and the fields also usefully challenge each other.

These concepts are entirely transferable to nature. For example, a forest is an asset – a piece of nature's capital – that yields a flow of benefits ("income"). These are known as ecosystem services, such as prevention of soil erosion, water filtering and purification, provision of shelter and food for various animals, and carbon sink services. To head off the effects of depreciation forest capital needs to be maintained and replenished. Ordinarily, nature does this work herself by means of an extraordinarily beautiful and complex set of interactions among its participants, the multitudes of microorganisms in the soil, the water flows in and through the forests, the varieties of plants and animals, and the vagaries of the climate and seasons.

These benefits are very tangible – even for humans. Without soil, no food. Without forest water filtration, we have to build more expensive industrial water treatment plants ourselves. And so on. We thus now accept that some degree of preservation is necessary, that we have to play our constructive part in the maintenance and replenishment of the forest and other natural assets. Hence, species and habitat conservation is considered an investment.

To view nature as an asset that yields benefit flows in the same way a retirement portfolio yields a monthly income stream is thus a very seductive point of view. Cut into the nest egg and you may find yourself short of change. But there is a potential downside. It is that capital assets need to earn their keep. Consider three examples. First, if my bond portfolio underperforms, I shift assets from bonds to other assets. This implies, for nature, to sacrifice some habitat for building up other habitat depending on how each part of my nature portfolio happens to perform. Second, if my objective is to generate an income stream of $100,000 a year then, assuming a six percent interest rate, my stock of assets needs to be about $1.7 million (since six percent on $1.7 million yields just over $100,000). It follows that if my current assets are $2 million, I can "blow" $300,000. Indeed, I should blow $300,000, decrease my asset base, and increase current consumption. Similarly, we have to admit that if economic analysis tells us that we have "too many" forests, we should cut a few more of them. And third, toward the end of my life, safe for a bequest motive, I should use up my asset base altogether since after my death continued income flows will not benefit me. Likewise, if human populations should ever decline, as they now do in western Europe, we should decrease the stock of natural capital as well.

To buy wholeheartedly into the asset, investment, and income metaphors – as ecologists are increasingly prone to do – implies to accept that not all of nature's many assets "deserve" equal protection, that reallocation within the asset portfolio may be warranted, and that further depletion – rather than conservation, let alone natural asset increases – may make eco-economic sense. Seen this way, "economics is the ultimate exercise in anthropocentic analysis," as one scientist puts it.

If one is not willing to take the risk of unfavorable outcomes that economic analysis may entail, one reveals a preference for a biocentric approach. Pushed to its logical end, this approach would argue for the elimination of humans so that nature might be "conserved." Few would go that far. In reality, the question is not whether or not to conserve nature, but how much of it to conserve. What is the threshold of natural assets we need to maintain? The answer depends, in part, on the sheer numbers of humans as well as on the well-being we envision for each one. Humans can survive in desolate states and places, but they do not necessarily survive well.

The disadvantage of the biocentric approach is that while it wants to preserve nature, it cannot tell us how much. This is the advantage of the anthropocentric economic approach. It can tell us how much nature to conserve by comparing rates of return that various alternative portfolios of natural assets throw off. But that does not make the economic approach "right" in any ultimate sense. As I said, ecology and economics share intellectual parallels, even as they challenge each other.