Reconciling Ecosystem Services with Neoclassical Economics

This is a draft working paper (August 2018) by Thomas Tunstall, University of Texas at San Antonio.

While economists [from about 1880 to 1970] ignored nature, ecologists pretended humankind did not exist. Rather than sully their science with the uncertainty of human affairs, they sought out pristine patches in which to monitor energy flows and population dynamics. Consequently, they had no political, economic – or ecological – impact.

J. R. McNeill 2000: 336 An Environmental History of the Twentieth-Century World

Abstract

Neoclassical economic theory, which has come to dominate much of the policymaking world, reduces the factors of production to labor and capital. Yet, the classical economists as far back as Adam Smith considered land to be perhaps the most important factor of production. The link between land – or more generally natural capital and ecosystem services – with the economy has effectively been severed by neoclassical economic thought. In that aftermath, both policymakers and academics understandably struggle to synthesize economic theory and the environmental sink in a systematic fashion. This paper is intended to serve as a policy guide that attempts to link economic theory with other issues that are either ignored or not yet synthesized into mainstream economic thought. (JEL A12, B10, E02, N10)

You may find this complete paper included as a PDF in this library post.

Also from Tom Tunstall…

Shale Oil Production in South Texas