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TABLE OF CONTENTSSTAGE SET FOR ACTION ON CLIMATE CHANGE, MARCHI, WIRTH TELL CGCP SYMPOSIUM THE CONVENTION ON BIOLOGICAL DIVERSITY LAND-USE AND LAND-COVER CHANGES: AN OPPORTUNITY FOR CANADA SCIENTIFIC COMMITTEE ON PROBLEMS OF THE ENVIRONMENT: A RENEWED CANADIAN PRESENCE GLOBAL ENVIRONMENTAL CHANGE AND HUMAN SECURITY PROJECT STARTS UP MONTREAL — GREENHOUSE GAS MANAGEMENT STRATEGIES UNDER DEVELOPMENT
IMAGES OF A TIGER*: HELP FOR THE ACRONYMICALLY- CCP INFO
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Readers WriteIn Defence of Economic TheoryEvery genre has its hallmarks and the environmentalist is no different. Even Dr. McLaren's column (DELTA, Vol. 7, No. 1-2) is not too short to display one of the central features of the environmentalist genre: the passing attack on "standard economic theory", here accused of depending on "a closed system... to which the environment and resources are externalities". The reason, I suspect, that this is one of the more common allegations made by environmental critics of economics is no more than that this is one of the more common allegations. Familiarity with economic theory would dispel belief in this description: growing economies cannot be closed systems, and economic growth is certainly a phenomenon noted by economic theory (Aha, into the Charybdis of another common allegation, the unsustainable obsession with growth? No, economic growth — growth in value added — need not imply physical growth; in fact doing more with less has been one of the main sources of economic growth). To further claim that, in standard economic theory, "no heed is paid to uncosted materials such as water, air, soils, forests, animals and plants" is to reveal one's own ignorance more than any failing in economics. Certainly since the beginning of the century, when Harold Hotelling scribbled an idea for valuing uncosted U.S. national parks onto a serviette, economists have paid heed to uncosted biota. Much of welfare economics is dedicated precisely to the valuation of uncosted goods, those not appearing in markets. What economics can do beyond "paying heed" is less clear. Without resorting to ideological conviction there is as yet no satisfactory way to attach a price tag to a forest. Britain's statisticians, in introducing their new green national accounts, have not included them in the main body of the national accounts for exactly this reason: any implied commensurability would be derived from a political and not an economic decision. This is perhaps what Dr. McLaren has in mind when he claims that "plants and animals are in fact in different dimensions of reality". A proper presentation of the role of economic theory neither can be presented here nor would be warranted by Dr. McLaren's passing remarks. Suffice it to note that such remarks are both frequent and frequently ill-informed within environmental circles. Their effect is to encourage a view of economics that is not only embarrassingly naïve but possibly dangerous.
Colin Rowat Reply I welcome Colin Rowat's comments on my review of the Symposium on "Biodiversity — Why Should We Care?" in DELTA (Vol. 7, No. 1-2). It gives me a chance to clear up some misconceptions that have arisen, probably due to the need to be brief. Firstly, the term "environmentalist" is wide and vague and, if I am to be categorized, I would prefer "empiricist", as one whose knowledge of the world is based on observation and experiment. I criticize certain aspects of economic theory because they are derived deductively from axioms that cannot be justified by observation in the real world. I want to comment on Colin Rowat's remarks on costing of natural resources in economic theory. Life has existed on the planet for three and a half billion years, in ever changing balance with its environment which includes the atmosphere, the waters, and the lands. This highly complex and dynamic system we call the ecosystem, which exists within the ecosphere. Humans are part of this system, which supports life on earth, and which we do not understand and cannot control. Man has always used plants and other animals for his needs, and has remained in ecological balance. But over the last two hundred years, with an accelerating use of energy, he has far exceeded that balance and has brought about rapid increase in massive environmental destruction, leading to the extinction of plants and animals at about 1,000 times the normal rate. How then may we cost this system? It might be legitimate to put a value on trees or insects in a tropical forest for the pharmaceuticals they might contain, or on water used for irrigation, or genetic materials for new hybrids, but only if such cropping allows for real sustainability. The values assessed by man cease when the need ends, or a substitute is discovered. Our life support system, the ecosphere, cannot be costed. It is invaluable. The two answers are examples of different dimensions of reality, and they must not be confused in simplistic attempts at economic modelling. Fortunately not all economists fall into this error. I shall end this note with a quote from Kenneth Arrow, Nobel laureate economist, and ten other authors from many disciplines: Above all, given the fundamental uncertainties about the nature of ecosystem dynamics and the dramatic consequences we would face if we were to guess wrong, it is necessary that we act in a precautionary way so as to retain the diversity and resilience of ecosystems. (From Economic Growth, Carrying Capacity, and the Environment. Science, 268, 520-1. 1995.)
Digby J. McLaren |