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Re: Economists on ecology (Re: GOODBY MIKE!)
auld@qed.econ.queensu.ca wrote:
>
....
>
> Jay, the activities humans choose to undertake depend critically on the
> incentives they face. The incentives they face in many cases -- and in
> particular in the case of resource extraction -- depend on prevailing and
> expected prices. Hence, the impact humans have on the environment _does_
> depend on the behavior of markets. I don't see how any reasonable
> observer can deny this fact.
I note:
This is true to a great extent.
You continue:
>
> Since resource extraction is a human activity and human activity is the
> realm of social science, it would certainly appear that both natural _and_
> social science are relavant to understanding human impact on the
> environment. This does not imply, as you continually assert, that
> economists fail to consider the fact that human life depends on (and
> indeed, is part of) the environment.
I note:
But it is ignoring the point that the viability of any system or
resource is dependent on parameters in a manner that is independent of
any market forces. Should these parameters be exceeded, the system
will enter into decline and should the problem not be corrected they
will cease to exist. Once they cease to exist, no market forces
whatsoever will bring them back. Whether the market will react in
such a way or in time so as to prevent the elimination of such
resources or systems is by no means a given.
You continue:
>
> Consider an analogy. Mathematical epidemiology generally takes rates of
> contact as given when modeling the spread of a disease. Economists point
> out that that assumption is wrong in the case of many diseases (for
> instance, AIDS): as the probability of becoming infected rises, people
> will respond to the change in incentives by changing their behaviour,
> thereby affecting the course of the disease. Thus, a model which failed
> to account for behavioral change would give misleading predictions.
I note:
Models which account incorrectly for behavioral change will also give
misleading predictions.
You continue:
>
> Similarly, an ecological model which fails to account for the fact that
> people will change their behaviour as prices change will be misleading.
> Of course, we still need ecological knowledge to understand the system,
> but if we ignore economic knowledge we will get things systematically
> wrong. Continuing the analogy: if we based a forecast of long-run disease
> prevalence on _given_ behavior we would almost surely overpredict, much
> like basing an estimate of "carrying capacity" on _given_ behavior will
> be wrong (as others have pointed out, it isn't at all clear that "carrying
> capacity" even has any relevance to human populations since, essentially,
> technology and its use is endogenous). In both cases, the prediction
> based on _given_ behavior is wrong because it fails to take into account
> the interaction between human action and the results of those actions.
I note:
Your argument is incorrect in a very fundamental way. There is no way
to reliably predict behavior that is not based on information already
available, and you argue for eliminating an essential portion of that
information. Historical behavioral characteristics can be
incorporated in a calculation of carrying capacity. Carrying capacity
is as relevant to human behavior as to any other species, and if all
available pertinent information is included will give the best and
most meaningful estimate that can be obtained of what the environment
can support.
The most evident flaw in your argument is that 'given behavior'
actually includes the response of humanity to various incentives, the
rate of technological development and dispersion, as well of more
obvious paramenters - not just some 'we're doing it now, we'll be
doing it tomorrow' assumption.
It is very useful to know long-term disease prevalence, and when human
behavior is taken into account a better prediction can be made than
when it is not. Why do you feel human behavior cannot be taken into
account when determining carrying capacity? Such behavior must
include the tendency for demand to rise as supply decreases, for
example, pressuring suppliers to eliminate the last of a resource. If
an alternative for the resources major use is available, owners of
alternative resources may often hold back on release of the
alternatives, allow prices to rise, and maximize the price obtained by
allowing the resource to go to extinction. By owning an alternative
for a particular use, CBA would seem to indicate that this is the
appropriate behavior. Increasing scarcity makes some commodities
simply that much more attractive, and although in some cases it may
spur conservation, it may spur elimination of the resource.
To allow the market to determine the fate of resources whose place in
a broader ecosystem is at best only partially understood is playing
Russian Roulette using a gun with all six chambers filled, some with
bullets, some with poison.
You continue:
>
> Simple epidemiological models predict that 100% of the population will
> eventually become infected, whereas such a model augmented with an
> economic model of behavior would predict less than 100% steady-state
> prevalence. I leave it to you to deduce the direct analogy to resource
> extraction (evaluate, for example, "We will run out of coal in 2012.")
I note:
A simple enough economic model will also be in error. You may note
that trible shamans, who think disease is caused by evil spirits,
would also predict less than 100% infection. Is an epidemiological
model based on the true cause of disease and its manner of spreading
better or worse than relying on a shaman? Well, the shaman will never
understand the nature of disease and may tell the tribe that no
behavioral change is necessary - leading to 100% infection if they
listen to him. The simple epidemiological model provides a basis for
correctly understanding the spread of the disease once the necessary
information is incorporated. Economics as you present it seems much
more like shamanism than science, and estimating carrying capacity
much more like science than shamanism.
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