Joe Roman


On ecological economics

Cover Interview of November 01, 2011

When the Endangered Species Act was passed, in 1973, traditional economics, which looked to self-interest and endless growth as the predominant drivers of the economy, was pretty much the only game in town.

But several developments in economics and epidemiology show just how dependent we are on biodiversity for our well-being. Such studies are part of a new economic paradigm.

There are now alternative measures of economic health and well-being that incorporate nature into the economy. Wetlands and reefs protect communities from storms. Wild habitats, including those set aside for rare and endangered species, provide clean air and fresh water and regulate the climate—all for free.

Whereas many seventeenth and eighteenth century thinkers, from Linnaeus to Adam Smith, saw economic relationships as a reflection of the natural world, to the Victorians of the nineteenth century and to neoclassical economists of the twentieth century, the economy became a product and symbol of human deliberation, divorced from nature, denaturalized.  Ecology sat on the bench for more than a century, while economists battled on the playing field.

A few rogue economists, including Nicholas Georgescu-Roegen and Herman Daly, emerged in the 1970s and ’80s.  They pointed to the limits of economic growth.  The economy couldn’t expand beyond the laws of thermodynamics or the ecological carrying capacity of the earth.

When he was an economist at the World Bank, Herman Daly drew a big circle around the economy and labeled it ecosystem to make it clear that the inputs taken from the natural world became the outputs returned to it as pollution.

Daly called this early attempt to get beyond the idea of endless economic growth “steady state.” In short: don’t use resources faster than they can be replenished; don’t emit waste faster than it can be absorbed.