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Can Economics and Ecology be Reconciled?

  • Laura Huggins
  • The connection between the fields of economics and ecology is as old as the disciplines themselves. When Charles Darwin sought to understand the spontaneous order that emerged through the interaction of species, he read Adam Smith. Both of these intellectual pioneers focused on feedback mechanisms and the dynamic processes of nature and markets.

    Despite their close ancestral connection, the two fields are far apart today. What can we learn from reconciling economics and ecology? To address this question, PERC hosted 24 leading authorities spanning a variety of disciplines. The participant list was impressive: acclaimed authors Charles Mann (1491), Matt Ridley (The Rational Optimist), and Emma Marris (Rambunctious Garden); noted ecologist Daniel Botkin (Discordant Harmonies); prominent archaeologists Carl Lipo and Terry Hunt (The Statues That Walked); among others.

    The idea behind this merger was to reunite the two fields to explore a better approach to deal with today’s environmental challenges. This edition of PERC Reports further investigates this topic. Former EPA administrator TRACY MEHAN gets to the heart of the issue by asking, “What is the nature of nature?” The debate over the relationship between human beings and nature is nothing new. What has changed is the idea that human beings are now the necessary agents of environmental stewardship.

    Science writer RONALD BAILEY elaborates and asks an additional question: “What institutions are best for balancing our conflicting desires and goals when it comes to the various realities we each may crave?” Although ecology and scientific insights will help us better manage ecosystems, in the end all landscapes will be shaped by human preferences.

    PERC’s TERRY ANDERSON asks a few additional questions, which summarize the central dilemma of the conference: “Do humans impose costs on nature or just on other humans? Can we think of nature in any other way than imposing costs on other people?”

    DANIEL B. BOTKIN begins to answer some of these questions by explaining how economists and ecologists can work together to solve environmental problems—“if only ideology and politics could get out of the way.” And MATT RIDLEY reminds us that the union of economics and ecology works because evolution works, noting that both markets and nature are “spontaneously self-ordered through the actions of individuals.”

    In biology the evolutionary process is driven by variation and selection. This process is also at work in a market economy. New ideas are created, bad ideas are culled, and the good ideas spread. As Tim Harford writes in Adapt, which is reviewed by ROGER MEINERS in this issue, “with these elements of variation and selection in place, the stage is set for an evolutionary process; or, to put it more crudely, solving problems through trial and error.”

    Download or view the pdf here.

    Written By
    • Laura Huggins
      • Research Fellow

      Laura Huggins is CEO of Montana Prairie Holdings, manager of economic initiatives at American Prairie Reserve, and a PERC research fellow.

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