Growth, regulatory, and ecological economics 57(Kremen and Ostfeld2005,Robertson2006). Except perhaps for protecting a
watersupply, ecosystem services and biodiversity do not appear to be correlated
(Peter Kareiva, personal communication). Not surprisingly, markets in ecosystem
services are emerging (Daily and Ellison2002,Robertson2006).
Formerly such values had a hard time fitting into economic models -- var-
iously referred to as non-market resources, externalities, market failure, the
absence of a market, the underfunctioning of a market, the importance of infor-
mal markets, or an ‘‘e” term for environment added at the end to an equation.
After protracted discussion among economists and others about steady-state eco-
nomics (Boulding1964,Daly and Cobb 1989, Daly1990,Rogerset al.2006), where
resource conservation and the second law of thermodynamics are important
foundations, natural resource economics and ecological economics (Costanza
1991 , Jones2002)haveevolvedandbegun to reach front stage. However, this
time the core community of economists has developed more robust models in
which natural-systems values increasingly appear in some form.
Indeed, as economic growth came to the forefront in the 1940s, thirty years
later Rachel Carson and big environmental challenges altered the public con-
sciousness and public policy (McNeill2000).Environmentalismhas been rapidly
maturing as one of history’s ‘‘big ideas”, and economic models are mutating to
keep up with or effectively address the developing paradigm.
Conservation of resources, illustrated by the water supply and natural vege-
tation example above, is particularly important in urban regions, where land-to-
people ratios are so limited. Traditional economic models have provided little
motivation for resource conservation, for instance, because a scarce resource can
be replaced by technological change or by changes in trade (Ray1998,Pearceand
Ulph1999,Jones2002). Still, societies that conserve their base retain a base to
sustain them.
Today oil-rich Norway apparently puts its income in the bank for future
generations, and spends the (growing) interest gained from this investment
(Karl1997,Listhaug2005). With a finite annual budget, the people lead no
Shangri-la life and have an incentive to conserve (Daviset al.2001). Their impor-
tant land and sea resources continue to look good, and even improve. Meanwhile
Norwegian children and grandchildren can look to a bright economic future
because their parents and grandparents invested in the future.
The environment
Environmental economicsis here paired with, and overlaps, resource eco-
nomics. Focusing on the by-products of production, wastes of consumption, and
human overuse of natural systems, this half of ecological economics is perhaps
more familiar as an approach poorly served by market forces (Costanza 1991 ,