These subjects share more than just letters; taken together, they hold the key to moving towards a low-carbon economy that supports both jobs and our environment.

(This is sneak preview of a feature article that will appear in A\J's upcoming EDUCATION 2016 issue. The author, Eric Miller, is also leading the Economic Literacy for a Green Economy learning series with the Sustainability Network)

 

Environmentalism requires thinking big and communicating widely, especially about the relationships between nature and our economy.  Economic literacy is a basic understanding of concepts, measures, and vocabulary that are used to describe “the economy” and to prescribe changes.  Here are fourreasons to consider enhancing your economic literacy as an environmentalist.

Environmental problems are economic problems.

Economies and ecosystems are integrated systems that cannot be understood independently.  All economic production involves the metabolism of material and energy from the environment.  When this metabolism happens within free markets, producers and consumers are perversely rewarded when they shift the burdens of depletion and pollution onto others.  This becomes a greater economic problem as the economic system grows in relation to the biosphere.

Economic literacy can help to anticipate when markets are more likely to work or fail specific goods and services from nature.  Literacy helps to understand the obligations of governments, theroles of non-governmental organizations, and the options of various forms of enterprise. Literacy involves understanding and communicating why prices tend to bepoor indicators of environmental scarcities.

Economics offers insights about solving environmental problems.

Solutions to environmental problems are effective when they provide ongoing rewards for environmental improvements that are measurable and noticeable by others.  Economic literacy helps to recognize opportunities for using fees and taxes, permitting systems, and liability instruments for environmental outcomes.  Literacy can help to define and operationalize concepts such as sustainability and its relationship to economic forms of capital including natural capital.

Sometimes solutions that seem good in theory end up disappointing in practice because of the ways that human behaviour may be perversely affected.  For example, consumers sometimes consume more eco-efficient goods and services when their use results in cost savings.  Economic literacy helps to anticipate these outcomes and to appreciate the benefits of coupling eco-efficient improvements with other solutions that hedge against rebound effects.

Public policy professionals are likely to be trained in conventional economics.

A green economy requires significant work in public policy.  This work is largely deployed by policy professionals within think-tanks, political parties, and public administration.  These professionals tend to have more formal training in economics than in environmental studies.  Their economic training tends to be very conventional, with a focus on idealized market theory and a marginalization of environmental considerations.

Economic literacy equips environmentalists with an understanding of the mindset of typical policy professionals and the economic language they use.  Literacy includes an understanding of decision-making frameworks, economic measures of performance, and techniques of comparing economic values over time.  With this understanding, environmentalists are more likely to succeed in marshalling policy professionals to advance new measures of societal progress that integrate nature rather eternalizing itsconsiderations.

Different brands of economics exist, so choose wisely.

There’s a brand of economics thatsuits just about every perspective on the relationships among humans and with nature.  Economists often add words like “environment” and “resource” in front of “economics” to signal if and how they consider the environment.  Economic literacy helps to evaluate competing brands, so that you can find one that speaks to your interests and values.

One notable brand is “ecological economics”.  This brand assesses the economy’s metabolism of the environment, with a goal of resolving issues that relate to economic efficiency and sustainability and distribution. Insights are used fromother social sciences, humanities, and the natural sciences.  Ecological economists recognize that humans are self- and other-regarding, with a tendency to reciprocate pro-social norms and to retaliate against anti-social behaviour.  Ecological economists aim to develop institutions that bring out the best features of humans.

***

All considered, a green economy requires economically-literate environmentalists and environmentally-literate economists.  Until more (conventional) economists take an interest in the environment, it’s up to environmentalists to take the lead in developing green economies in Canada and abroad.

Eric Miller is a consulting economist based in Hamilton, Ontario.  His projects include Economic Literacy for a Green Economy (featured separately in this issue).

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