The Brave New World of Carbon Trading

Human induced climate change has become a prominent political issue, at both national and international levels, leading to the search for regulatory ‘solutions’. Emission trading has risen in popularity to become the most broadly favoured government strategy. Carbon permits have then quickly been developed as a serious financial instrument in markets turning over billions of dollars a year. In this paper, I show how the reality of permit market operation is far removed from the assumptions of economic theory and the promise of saving resources by efficiently allocating emission reductions. The pervasiveness of Greenhouse Gas emissions, strong uncertainty and complexity combine to prevent economists from substantiating their theoretical claims of cost effectiveness. Corporate power is shown to be a major force affecting emissions market operation and design. The potential for manipulation to achieve financial gain, while showing little regard for environmental or social consequences, is evident as markets have extended internationally and via trading offsets. At the individual level, there is the potential for emissions trading to have undesirable ethical and psychological impacts and to crowd out voluntary actions. I conclude that the focus on such markets is creating a distraction from the need for changing human behaviour, institutions and infrastructure.Emissions trading; Climate change

The Contingent Valuation Method: Retrospect and Prospect

This paper explores the contingent valuation method for environmental valuation. Issues are raised over the validity of the approach as a method of assessing the underlying preferences of individuals. An alternative interpretation is given to the method as a means of exploring underlying motivation in a rich vein of social psychological research.stated preferences, environmental values, social psychology

Re-establishing an Ecological Discourse in the Debate over the Value of Ecosystems and Biodiversity

The approach of conceptualizing biodiversity and ecosystems as goods and services to be represented by monetary values in policy is being championed not just by economists, but also by ecologists and conservation biologists. This new environmental pragmatism is now being pushed forward internationally under the guise of hardwiring biodiversity and ecosystems services into finance. This conflicts with the realisation that biodiversity and ecosystems have multiple incommensurable values. The current trend is to narrowly define a set of instrumental aspects of ecosystems and biodiversity to be associated with ad hoc money numbers. We argue that ecosystem science has more to offer the policy debate than pseudo-economic numbers based on assumptions that do not reflect ecological or social complexity. Re-establishing the ecological discourse in biodiversity policy implies a crucial role for biophysical indicators as policy targets e.g., the Nature Index for Norway. Yet there is a recognisable need to go beyond the traditional ecological approach to create a social ecological economic discourse. This requires reviving and relating to a range of alternative ecologically informed discourses (e.g. intrinsic values, deep ecology, ecofeminism) in order to transform the increasingly dominant and destructive relationship of humans separated from and domineering over Nature. (author's abstract)Series: SRE - Discussion Paper

The Politics of Researching Carbon Trading in Australia

This paper explores the conflicts of interest present in science policy and how claims being made for evidence based science can be used to suppress critical social science research. The specific case presented concerns the attempts to ban and censor my work criticising the economics of carbon emissions trading while I was working for the Commonwealth Scientific Industrial Research Organisation (CSIRO) in Australia. The role of management and the Science Minister are documented through their own public statements. The case raises general issues about the role of epistemic communities in the production of knowledge, the potential for manipulation of information under the guise of quality control and the problems created by claiming a fact-value dichotomy in the science-policy interface. The implications go well beyond just climate change research and challenge how public policy is being formulated in modern industrial societies where scientific knowledge and corporate interests are closely intertwined. (author's abstract)Series: SRE - Discussion Paper

The Need for and Meaning of Social Ecological Economics

Ecological economics has arisen over a period of three decades with a strong emphasis on the essential need to recognise the embeddedness of the economy in the biophysical. However, that element of realism is not matched by an equally well informed social theory. Indeed the tendency has been to adopt mainstream economic concepts, theories and models formulated of the basis of a formal mathematical deductivist approach that pays little or no attention to social reality. Similarly mainstream economic methods are employed as pragmatic devices for communication. As a result ecological economics has failed to develop its own consistent and coherent theory and failed to make the link between the social and the economic. In order to reverse this situation the social and political economy must be put to the fore and that is the aim of social ecological economics. This paper provides a brief overview of the arguments for such a development. The prospect is of unifying a range of critical thought on the social and environmental crises with the aim of informing the necessary social ecological transformation of the economy.Series: SRE - Discussion Paper

Growth, the Environment and Keynes: Reflections on Two Heterodox Schools of Thought

This paper explores the approach of Post Keynesian Economics (PKE) in comparison with ecological economics. While PKE, like all macroeconomics, has failed to address environmental problems it does have many aspects which make compatibility with ecological economics seem feasible. Ecological economics has no specific macroeconomic approach although it has strong implications for economic growth and how this should be controlled, directed and in materials terms limited. We highlight growth as the key area of difference and reflect upon how Keynes himself saw capital accumulation as a means to an end not an end in itself, regarded it as a temporary measure and also was well aware of some of its psychological and social drawbacks.environment, Keynes, post keynesian, ecological economics

Measuring “Awareness of Environmental Consequences”: Two Scales and Two Interpretations

Moderate or poor reliabilities, worrisome correlation patterns and ambiguous dimensionality raise questions about the awareness of consequences scale being a valid measure of egoistic, social-altruistic and biospheric value orientations. These results may, however, indicate something else. An exploratory analysis performed on three samples collected from the general public provides evidence for a reinterpretation of the scale. We believe the concepts of egoistic, social and biospheric value orientations remain important as a potential explanation of behaviour. However, our results imply that whether people cognitively organise their beliefs in this way when considering adverse environmental consequences requires a different approach from the current awareness of consequences scale. The evidence shows the current scale must be reinterpreted as a measure of concern over the positive and negative consequences of environmental action and inaction.environmental beliefs, value orientations, environmental scales, egoistic, altruistic, biospheric, value-belief-norm model

Substantive Economics and Avoiding False Dichotomies in Advancing Social Ecological Economics

The proposal has been put forward that ecological economics seek to become substantive economics (Gerber and Scheidel 2018). This raises important issues about the content and direction of ecological economics. The division of economics into either substantive or formal derives from the work of Karl Polanyi. In developing his ideas Polanyi employed a definition from Menger and combined this with Tönnies theory of historical evolution. In this paper I explore why the resulting substantive vs. formal dichotomy is problematic. In particular the article exposes the way in which trying to impose this dichotomy on history of economic thought and epistemology leads to further false dichotomies. Besides Polanyi, the positions of other important thinkers informing social ecological economics (SEE) are discussed including Neurath, Kapp and Georgescu-Roegen. The aim is to clarify the future direction of ecological economics and the role, in that future, of ideas raised under the topic of substantive economics.Series: SRE - Discussion Paper

Cost-Benefit Analysis of Climate Change: Stern Revisited

This paper explores the challenges facing orthodox economic approaches to assessing climate control as if it were appraisal of an investment project. Serious flaws are noted in the work of economists with especial attention to the UK Government report by Stern and colleagues. The opinions expressed in this paper are those of the authors and may not be taken to reflect the views CSIRO or the Australian Government.enhanced greenhouse effect, global CBA, Stern Report

Making Pollution into a Market Failure Rather Than a Cost-Shifting Success: The Suppression of Revolutionary Change in Economics

This paper explores core failures of environmental economics as a scientific attempt to understand the ecological crises. The case of environmental pollution is used to show how neoclassical externality theory evolved to establish commitment to, and dogmatic support for, an elitist ethics and liberal market ideology. The public policy response to pollution then recommended is to internalise externalities by correcting market prices based on monetary valuation of the social costs (i.e., damages). Pollution as a market failure is deemed a correctible error of the price system. This is contrast with an alternative theory of pollution based on a classic institutional economic theory of cost-shifting that instead requires a public policy response involving regulation and planning. Reflection on the history of thought related to these two theories of pollution reveals how environmental economics became a marginalised field supporting the neoclassical economic orthodoxy with full commitment to its core paradigms. Why the critical and realist institutional approach had to be suppressed is explained as denying the potential for a revolutionary paradigm shift in economic price theory.Series: SRE - Discussion Paper