3 Ecological economics
In this chapter, I present ecological economics and the potential implications that it presents for the IPP. Although ecological economics is not explicitly interested in products, it provides a general and comprehensive framework for studying economy-environment interactions. As such, it can deliver valuable insights into any kind of environmental policy. These might be particularly helpful in the case of the IPP, as during its development, as seen in the preceding chapter, this general background seems to have been neglected. This chapter also sets the general background for the remainder of this volume. In the following chapters, I refer to more specific issues, such as industrial ecology, which is more focused on industry and products (Chapter 4), and life-cycle assessment and eco-design, both of which explicitly deal with products (Chapter 5).
In the following section (3.2), I confront the area of ecological economics with that of environmental economics and, on this ground, I present its main features. The principal observation in ecological economics is that the economy is only a subsystem of a larger natural system. Thus, the scale of economic activity is bounded by the ecosystem’s carrying capacity. In consequence, physical and other natural science considerations are essential to any economic analysis. They form a basis on which secondary, typically economic considerations can be analysed. These stem mainly from environmental and institutional economics, both of which have substantial experience in analysing economy-environment interactions. Linking primary and secondary considerations requires additional tools and principles, such as systems thinking and the precautionary principle that emerge as tertiary considerations and crown the structure which is called ecological economics. I discuss these three types of considerations in sections 3.3 to 3.5, and end this chapter with a summary and conclusions (featuring a review of the implications for the IPP), in section 3.6.