Ecological Economics is Economics as if Ecology really matters

Ecological Economics is concerned with extending and integrating the study and management of 'nature's household' (ecology) and 'human's household' (economics). This integration is necessary because the conceptual and professional isolation of these two disciplines has led to environmental and economic policies that are in the long term mutually destructive, rather than reinforcing.

There are three main ways in which ecological economics distinguishes itself from other branches of economics. Firstly, ecological economists see the human economic system as a subset within the sustaining global ecosystem. The economy is characterised as extracting raw materials from the ecosystem, which are then returned as waste. These functions risk degrading the life-supporting services of the global ecosystem on which the future economy depends.  Ecological economists assume a moral obligation to future generations and other species, in ensuring the physical size of the economy doesn’t exceed the ecosystem’s capacity to sustain it. If we as humanity want to eat more fish, the scarce factor of production is fish, rather than fishing boats! Though the dominant economic paradigm encourages infinite growth, this is impossible on a finite planet, and growing evidence suggests that beyond a certain point, more material consumption does not make us better off. Associated with this understanding is an appeal to a more equitable allocation of resources to existing generations.

Secondly, ecological economics views the world as being made up of constantly evolving and unpredictable complex systems, of which humans are largely ignorant. In the face of this uncertainty, we must evolve the economy to keep in sync with the problems that emerge. Many of these problems have come about because our technological capacity to interfere in an ecosystem has exceeded our capacity to understand its side-effects. Therefore, ecological economics advocates strategies to proceed with precaution.

Thirdly, ecological economics is transdisciplinary in spirit and methodologically open. Economics is the allocation of scarce resources across alternative desirable ends. Defining these ends, understanding the nature of the resources within the complex ecosystem context, and allocating the resources requires input from many different disciplines across the natural and social sciences. To work within disciplinary islands is to ignore the interconnectedness of the systems we are dealing with, and the ties of society and the economy to the ecosystem.  For ecological economists, the one sensible approach is to communicate across disciplines, and use their collective knowledge.

The endeavour of ecological economics is supported by the International Society for Ecological Economics (ISEE), which is a non-profit organisation established in 1988. It now has over 1200 members in 60 countries, and publishes the highly rated research journal 'Ecological Economics'. The goal of ISEE is to promote understanding between economists and ecologists in the development of a sustainable world.

Ecological economics has a number of different analytical approaches and paradigms. These range from biophysical analyses (industrial metabolism, energy and material flow analysis) to neoclassical analysis (cost-benefit analysis, non-market valuation) to social and institutional analysis (social trap analysis, discourse analysis).