Interdisciplinary Debate: Ecology and Economics: Neglect or Common Ground?

1. Aid - Agora for Interdisciplinary Debate 14 October 2013, University of Helsinki, Finnish Center of Excellence in the Philosophy of the Social Sciences Economics and ecology are almost alike, but do they neglect one another? Olli Tahvonen,Department of Forest Sciences, University of Helsinki Economics point of view 1 Some similarities between ecology and economics 2 Toward interdisciplinary setup in research on natural resources 3 Problems in interdisciplinary research Forest sciences Begon et al. and "basic lack of trust"

2. Scientific imperialism –troll Terrible!

3. Neoclassical economics –troll Horrible!

4. Sociobiology –troll Disgusting!

5. On similarities Economics Ecology Thomas Malthus (1766-1834) Charles Darwin (1809-1882) Malthus borrowed from nature "the laws of natural increase in the animal vegetable kingdom" and forecasted a dismal economic future to mankind Darwin read Malthus’ essay and received some useful ideas for developing the theory of natural selection In ecology the exponential and density dependent growth models originate from Malthus A Marshall (1842-1924) ‘In economics biological analogies will displace mechanical analogies’ JM. Keynes (1883-1946) ‘Darwinian theory is a vast generalization of Ricardian economies’

6. On similarities Ecology Economics Optimal foraging behaviour of animals, fitness maximization Theory of rational choice, consumer utility maximization Model for production and profit maximizing firm Resource allocation and optimization models for plants Models for optimal life history strategies, reproduction value, discounting, dynamic optimization, trade offs Optimal investments, optimal growth, interest rate, discounting, dynamic optimization, trade offs Game theory and interaction of strategically behaving actors; individuals, firms, nations,.. Evolutionary game theory animals, trees, genes,...

7. On similarities Ecology Economics "Tragedy of the commons" non-humans "Tragedy of the commons" humans Concepts: n-person prisoner's dilemma, cheating, punishment, collapsing tragedy, component tragedy, social goods,... Concepts: n-person prisoner's dilemma , cheating, punishment, externalities, common property resources, public goods, free riding,... Examples: - resource competition - parent-offspring conflicts - sexual conflicts - tall plant populations - virulence of parasites Examples: - enclosure (UK 1500-1900) - all environmental problems -congestion,... Solutions: - taxes, market for permits, quotas - social pressure, punishment - privatization -individual morality Solutions: - kin (group) selection - punishment - "parliament of the genes" - diminishing returns

8. Economics Ecology Production activities overexploiting atmosphere Virus phages overexploiting a host bacteria

9. On similarities Ecology Economics "Tragedy of the commons" non-humans "Tragedy of the commons" humans Concepts: n-person prisoner's dilemma, cheating, punishment, collapsing tragedy, component tragedy, social goods,... Concepts: n-person prisoner's dilemma , cheating, punishment, externalities, common property resources, public goods, free riding,... Examples: - resource competition - parent-offspring conflicts - sexual conflicts - tall plant populations - virulence of parasites Examples: - enclosure (UK 1500-1900) - all environmental problems -congestion,... Solutions: - taxes, market for permits, quotas - social pressure, punishment - privatization -individual morality Solutions: - kin (group) selection - punishment - "parliament of the genes" - diminishing returns

10. On similarities Ecology Resource economics Predator-prey dynamics Fisherman-fish open-access dynamics

11. Similarities between ecology and economics

12. Harvesting of biological renewable resources Ecology: dynamic pool fishery model Environmental variables and energy resources Biological population Recruitment Growth of Individuals Aging Mortality Other populations, spatial structure Mortality by predators explained e.g. by optimal foraging theory Mortality by humans (another predator) specified by Maximum Sustainable Yield objective (or a variant)

13. Harvesting of biological renewable resources Economics of fisheries Ecology: dynamic pool fishery model Environmental variables and energy resources Market structure, demand, other investment possibilities Biological population Recruitment Growth of Individuals Aging Mortality Fisherman or fishing firm Objective: max the present value of profit Other populations, spatial structure Factors of production, labour, man made capital,... Mortality by predators explained e.g. by optimal foraging theory Natural resource (capital stock) described by a dynamic biomass model Mortality by humans (another predator) explained by Maximum Sustainable Yield objective (or a variant) Other harvesters, Institutional setup: open access, sole owner, common property, government control

14. Harvesting of biological renewable resources Economics of fisheries Interdisciplinary setup Ecology: dynamic pool model Other harvesters, Institutions: open access, sole owner, common property, government control Environmental variables and energy resources Market structure, demand, other investment possibilities Biological population Recruitment Growth of Individuals Aging Mortality Fisherman or fishing firm Objective: max the present value of profit Other populations, spatial structure Factors of production, labour, man made capital,... Mortality by predators explained e.g. by optimal foraging theory Natural resource (capital stock) described by a dynamic biomass model Mortality by humans (another predator) explained by Maximum Sustainable Yield objective (or a variant) Other harvesters, Institutional setup: open access, sole owner, common property, government control

15. Interdisciplinary setup Pros 1 Gives reasonable picture on resource use 2 Similar theoretical structure and math methods can be used for various resources (fish, trees,...) 3 Enables to use existing ecological data 4 Economic optimization may reveal inconsistencies in ecological models 5 Economic results become more understandable and practically relevant Cons 1 Models become more complex 2 Economists: "This is not anymore economics", "This does not change anything that is economically essential" 3 Ecologists: "Is it sure that fisherman optimize something?"

16. Interdisciplinary setup The interdisciplinary setup => "Dynamics and control of structured populations“ Common field in economics, demography, mathematical biology, epidemiology, applied mathematics and medicine Vintage capital models, optimal harvesting of size-structured populations, fishery induced evolution, optimal control and HIV/AIDS, optimal control in cancer chemotherapy,...

17. Problems in interdisciplinarity 1: Economics & production ecology in forest sciences Why ecologists may include social science aspects in their studies? Purely instrumental motives vs. non-instrumental motives How ecologists can include social dimensions in their studies? 1 Work closely with stakeholders and end-users 2 Extend ecological concepts to cover social dimensions 3 Work closely with social scientists Forest scientists have traditionally applied 1 & 2

18. The outcome: 1 Many features in forest sciences (and policy) represent strange economics 2 Forest sciences (and policy) have been devoted to the MSY –idea -forest managementbecomes an objective "ecological-technical fact" - this happens(?) to favor the strongest interest group (industry) and the forestry profession itself =>moral hazard problem 3 Many interesting questions are difficult to study due to the narrow orientation of the production ecology research in forestry 4 Some production ecologists have found it inconvenient that economists may use their models in interdisciplinary context and then argue against their MSY -type of results

19. Problems in interdisciplinarity 2: The case of Begon et al. (1986, 1990, 1996, 2006, 737 pages) Perhaps the leading ecology textbook in the globe Contains a section on "Harvest management" The authors first introduce MSY, its popularity and some biological overexploitation risks The authors then admit that social and economic aspects cannot be neglected in this context

20. Begon et al introduce the economic model by Gordon (1954) but refer to two ecologists Comment: the main economic message of the model is neglected (the open access case) and the "ecologically favourable" result remains unclear Next they introduce discounting and explain that if the discount rate is 10% p.a. "90 fish now are as valuable as 100 fish in one year's time" Comment:

21. They continue: commonly used discount rate is 10%, although after inflation it should be only 2-5% and explain that economists´ justification for this is to incorporate "risk" i.e. for economists "a bird in the hand is worth two in the bush" Comments: - risk does not, as a general rule, work similarly as increased discount rate - the overall explanation of risk in fishery economic models by the above phrase "a bird..." does not make sense

22. Next Begon et al . write that economic reasoning more or less neglects the facts that fish in the water can grow and reproduce. Thus economics =>wrong investment decisions Comment: the growth of fish and population reproduction is (of course) included in fishery economic models Finally Begon et al. write that if the discount rate is high compared to population productivity, it makes economic sense to "liquidate" the whole biological population Begon et al. conclusion: - this is ecologically disdainful way of treating the hungry mouths of the future - "new economics" must be forged that takes into account jobs lost, that alternative sources of food must be found and that there are values assigned not only to things that can be bought and sold

23. Comments: - the "stock liquidation" was discovered by a mathematician/economist/biologist C. Clark (1973, Science) - it was presented as a descriptive idea and Clark concludes his paper: "In view of the likelihood of private firms adopting high rates of discount, the conservation of renewable resources would appear to require continual public surveillance and control of the physical yield and the condition of the stocks." Message: privatization of biological or renewable resources may not save them from extinction Please, do not kill the messenger! - as a normative idea "stock liquidation" makes economic sense only if the given population does not have any other values besides raw material - as such the stock liquidation idea does not necessarily represent shortsightedness

24. Is this section in Begon et al. harmless? - not an exception; it crystallizes a quite common view* ( Lummaa et al., 2012, Jennings et al. 2001) - students may become quite suspicious =>better to keep "distance" with economics and concepts like "profits" and "discounting“, and use ecological concepts instead - Stevens et al. (2007): the process to bring different disciplines together is still slow; one reason is the basic lack of "trust" => around the globe the section may have significant influence on students’ "basic lack of trust" and willingness to collaborate with economists *" Economists are not able to see far, a serious problem in environmental protection " J. Hiedanpää, Economics.In Interdisciplinary environmental research (in Finnish), Lummaa et al. (Eds.), Gaudeamus, 2012. Comment: when economists study natural resources they apply infinitly () long time horizon.

25. Conclusions Problem 1: In economics, values are based on human preferences and this typically leads to trade-offs and substitutability although the approach allows something to have an infinite value and no substitution possibilities Ecologists sometimes take different ethical approach =>one explanation behind the "basic lack of trust"? Should be noted that in the practical policy context the difference between the approaches may remain small

26. Problem 2: How scientists in different disciplines motivate their students (and themselves)? Business as usual strategy (in economics, ecology, physics, ...): 1. Make students (and yourself) believe that the discipline they (and you) have chosen is absolutely superior compared to neighboring disciplines 2. Apply straw man arguments to eliminate neighboring sciences (cf. Begon et al.) Alternative strategy: Yet to be discovered – suggestions? To some extent this is "The tragedy of the commons" or prisoner's dilemma -problem The scientists in ecology and economics should know well how to proceed in solving such problems

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