Tuesday, August 11, 2009

Biophysical Economics

The Biophysical Economics Workgroup is composed of academic and industry leaders from different parts of the world, all hailing from various fields of both the natural and social sciences. The workgroup seeks to advance a new paradigm in understanding the properties, structures and processes of economic systems and to offer an alternative to the neoclassical economics model our global system is currently dependent on.

The workgroup is currently coordinated by Dr. Charles Hall of the State University of New York College of Environmental Science and Forestry.

Biophysical economics is a system of economic analysis that is based on the biological and physical (as opposed to social) properties, structures and processes of real economic systems as its conceptual base and fundamental model. It acknowledges that the basis for nearly all wealth is nature, and views most human economic activity as a means to increase (directly or indirectly) the exploitation of nature to generate more wealth. As such, it focuses on the structure and function of real economies from an energy and material perspective, although it often considers the relation of this structure and function to human welfare and to the money (i.e. dollar) flows that tend to go in the opposite direction to energy.

Biophysical economics deals with
  • the energy sources (principally, the Sun) that are essential for any economy;
  • the material that circulates upon the earth’s surface through natural and semi-natural ecosystems;
  • the human-dominated steps of exploitation, processing, manufacturing and consumption.
According to this Deep Green post at Greenpeace:

This year, 2009, will signal the birth of a genuinely innovative economics that will eventually displace the patchwork rationalisations for greed. The new ecological accounting is variously called 'dynamic equilibrium', 'steady-state' or 'biophysical' economics.

In the 21st century, human enterprise has reached the scale of the planet. We have to account for ourselves on nature's balance sheet. This is biophysical economics. It appears inevitable. Biophysical culture is what we will make of it.

The Question Everything blog has a whole category dedicated to Biophysical economics:

Neo-classical economics is a theory looking for support and it is basically a bad one. It doesn't take physical reality into account, like when you used up finite resources (its theory of substitutability says so what!) there will always be a substitute. But this is proving to be wrong. Ecological economics does a better job. It embeds the human economy within the ecological systems of Earth. You have to pay nature a price for its services like raw energy supply and absorbing our wastes. Then the market will play its role in allocating resources appropriately.

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