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ECOLOGICAL ECONOMICS ELSEVIER

Ecological Economics 11 ( 1994) 9- 19

Niche diversification in environmental/ecological


Nirmal Chandra Sahu *, Bibhudatta Nayak

economics

Deparrment of Economics, Berhampur Unicersiry, Bhanja Bihar, Berhampur 760 007, Orissa, India Received 5 February 1993; accepted 18 September 1993

Abstract
paper is devoted to the identification and comparison of the niches of neoclassical environmental economics and ecological economics (ECO). It is presented in four sections. Section 1 argues that the existing literature does not make the differences and relations between the sister disciplines neatly transparent. Section 2 critically examines the antecedents of the subjects with reference to three structural dimensions, such as scarcity perception, problem-solving orientation and range of integration. Section 3 collates the elements and reformulates the definitions, Section 4 is a coda on the essay. The divide between the paradigms which came to the surface during the 1960s became prominent through the growth controversy of the subsequent decade. The controversy over the need for change of economic theory to cope with the growing intensity of environmental uncertainty makes the disciplines sore about each other. The neoclassical paradigm comprising of elements like relative scarcity, allocative approach, market correction and technological optimism characterises NEE. The distinguishing characteristics of EC0 include thermodynamic irreversibility, absolute scarcity, economy-ecosystem symbiosis, biophysical approach, ecological stewardship and prudent pessimism. The niches are competitive and complementary in some respects, and thus provide a unique example of fruitful niche diversification within environmental/ecological economics. We have a feeling that the economics profession can trace out the interface of the disciplines in some policy areas and raise the effectiveness of prescriptions so that this academic species diversity can serve humankind to its full potential.
This Keywords:

(NEE)

Allocative Scarcity perception

approach;

Biophysical

paradigm;

Ecological

economics;

Neoclassical

environmental

economics;

1. introduction
The deterioration in the quality of natural environment is a problem of great fascination and controversy in the economics profession of the contemporary world. Arising partly out of disagreement in scientific views, the controversy is

* Corresponding

author. Science

mainly due to the difference in the paradigms. Neoclassical environmental economics (NEE) and ecological economics (ECO) share a common concern for the human habitat and cover overlapping grounds, but now operate almost like two different branches of economics and environmental science. Claims and counterclaims on the validity and significance of the two cognitive structures create confusion on the niches as the sister disciplines descend down to the class rooms, conferences and decision-making levels. This paper

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surveys and reviews the literature to facilitate the process of identification of their niches and indicate the range and complexity of possible interdependence between them.

The need for niche identification NEE looks at the approach of EC0 as the voice of dissent from the orthodoxy (Common, 1988a, p. 20). On the other hand, Proops (1989, p. 601 views NEE as a limited subset of ECO. In some NEE quarters, the very existence of EC0 is not accepted (Common, 1988b). In the EC0 camp, economists are fervently urged to take up the challenge to counter the NEE conclusions with alternative approaches (Viederman, 1992). In addition to these, an inquisitive sophomore has three types of confusions. First, since ecology is a branch of environmental science, why should NEE be a subset of ECO? Some books on NEE (Nijkamp, 1976a,b) cover economic-ecologic aspects. Further, academic courses on NEE include study of the ecosystems and their economics (CReNIEO, 1988, MKU. 1988). Another source of confusion relates to the definitions and their immediate implications. Environment defined as the totality of natural external conditions and influences that affect the way things live and develop (Freeman et al.. 1973, p. 19) is a resource. Ecosystem defined as a system of give-and-take among plants. animals and their surroundings (Schultz. 1981. p. 486) can refer to a unit as small as a pond or as big as the biosphere which has been treated by Homo sapiens as a resource (Bates, 1968). Viewed as environment it is non-reproducible. and as biosphere, its balance is irreversible if (mislused beyond the assimilative capacity. Since NEE is the study of the economy-environment relationships (Common, 1988aI and EC0 that of the economy-ecosystem interrelation (Proops, 1989). why the niches are different is not neatly transparent. Thirdly, NEE is a little more than a quarter century old recognised discipline (Proops, 1989, p. 601. Some universities introduced it about two decades ago (Seneca and Taussig, 19741. In a

developing country like India, as many as 40 universities/ institutions offered the course at the graduate and higher levels in 1989 (MKU, 1989). Compared to this, EC0 is recently explored as a new academic discipline. It is the product of the natural urge of a number of practitioners in the field (Proops, 1989), the foundation of which was laid in the Wallenberg Symposium at Stockholm in 1982 (Costanza, 1989). Now EC0 has also been introduced in some of the universities (May, 1992; Soderbaum, 19921. The question that crops up here is what is the necessity of a new branch of inquiry when an already settled subject is addressing its issues? Is EC0 a new name or does it incorporate new substance?

The approach We make an attempt in this paper to provide answers to the questions raised above by rearranging and analysing the materials found in the literature. The elements have been found from the antecedents of the two subjects which have been examined with reference to three structural dimensions, such as scarcity perception, problem-solving orientation and range of integration. Under each dimension, the two approaches are discussed followed by a brief commentary. Then the elements are collated to reformulate the definitions. The paper is eclipsed by three main limitations. First, since it does not necessarily aim at describing the sister disciplines in their historical perspectives. repetitions, here and there, have become unavoidable. Second, the paper does not intend to be exhaustive in the survey of literature. Nor is there an attempt made to go for an in-depth study or critical appreciation of any specific problem or work of any economist. The relevant representative references are brought together to bring out the main trends in economic thinking as they divide into two streams and make an unbiased measurement of the gap that lies between them. Third, as the two structures overlap in some areas, it is not possible to draw a boundary line between them. There is, therefore, some degree of oversimplification involved in the derivation and classification of the elements.

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2. Structural dimensions 2.1. Scarcity perception Malthusian scarcity (17981, Ricardian scarcity (18171, Mills stationary state (1857) and Jevons coal question (1865) represent some of the early economists concern with natural resource scarcity (Cracker and Rogers, 1971; Common, 1988a). However, from around 1870, the scarcity issue was relegated under the shadow of the profound faith of neoclassical economics on market mechanism, substitution possibilities and technological progress. As a result, examples of free goods are still given only from natural environment. After about one century, keeping pace with the growing awareness about the environmental crisis, Allen V. Kneese and his colleagues of Resources For the Future, influenced by the perspective of K.W. Kapps The Social Costs of Public Enterprise of 1950 (Ayres and Kneese, 1969), led a resurgence of interest among economists (Victor, 1991, p. 193) to integrate the market failure concept with the emerging scarcity of clean air, water and soil. The origin of modern NEE lies here. In its initial years, the subject was better referred to as pollution control and aesthetic uplift from the viewpoint of the upper middle classes (Mason Gaffney, 1966, p. 101). Notwithstanding the neoclassical optimism, there appeared several apprehensions about the feasibility of economic growth built upon the finitude of the resource dowry of humankind. Rosa Luxemburg in The Accumulation of Capital (1913) had visualised a catastrophic objective limit of global capitalist system (Rousseas. 1979). Bertrand Russell in his The Limits of Human Power (1951) cautioned that the consequences of economic growth are irreversible as entropy always increases. But in the economics profession, Kenneth E. Bouldings argument in 1966 that the economics of coming spaceship earth should be different from that of the open earth of the past was a landmark in creating the divide. Further, E.J. Mishan and E.F. Schumacher constantly questioned the desirability of material prosperity. Then the Club of Rome world model analysed the predicament of humankind in 1972,

and sparked the growth controversy through which the gulf between NEE and EC0 became prominent.
NEE

The economists of this camp sought and found their counters to the problems of the 1970s within the mainstream. No fundamental modification was felt necessary in the relative scarcity perception of the conventional economic analysis to handle environmental problems (Common, 1988a). On the currently debated sustainability question also, the faith of the neoclassical school on substitution and technological progress continues (Victor, 1991).
EC0

The second group of economists, some of whom are associated with the zero-growth school (Lecomber, 1975, p. 61) and the thermodynamic school (Victor, 1991, p. 206), is responsible for the architecture and authorship of ECO. This school raises several objections to the NEE approach of handling the natural environment within the straitjacket of neoclassical economics; five important issues of which are listed below: i. Given the implications of the laws of thermodynamics, the economics of environment and natural resources has to operate with the absolute scarcity constraint. Georgescu-Roegen (1973, p. 42) very clearly states that environmental low entropy is scarce in a different sense than Ricardian land. ii. Nature is the ontological and ubiquitous element in all production. Calculation of independent productivity of any factor is erroneous and ill-suited to the basic biophysical principles (Christensen, 1989). .. . 111 The balance of the competitive sink, resource and amenity functions make environment the life-sustaining system of the biosphere. In the absence of private property rights, the tradeoff among the services made through shadow prices does not help to attain the requisite equilibrium. iv. Since natural environment as a stock is a measure of human welfare, growth of flow or throughput (GNP) is undesirable and unsustainable (Boulding, 1966).

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v.

The issues of inter- and intra-generational, and inter-species choice and equity in relation to the natural environment warrant a delicate moral value system. The origin of EC0 lies in the paradigm shift (Daly, 1973a, p. 11, which emerged in the early 1970s even though its old traditions are traced in the mid-nineteenth century (Martinez-Alier, 1987). It contends that there exists mutualistic symbiosis between ecosystem and economy. It seeks major change in the economic organisation on the basis of a biophysical approach to production. The subject mainly anchors on GeorgescuRoegen (1971). The International Society for Ecological Economics has provided it the necesacademic niche (Martisary institutionalised nez-Alier, 1987, Preface), and renewed the significance of thermodynamic irreversibility and assimilative constraints of ecosystem drawing from the discoveries in the biophysical sciences.
Commentary

Both the subjects have their roots in early economic thinking. Growth controversy has stimulated the disciplines. NEE handles the economy-environment nexus (Varshney. 1987) within the neoclassical paradigm. EC0 operates with a revolutionary gestalt psychology in response to the opening of world views (Proops. 1989, p. 64) on absolute resource constraints. It considers the economy as an open subsystem of a finite and closed total system (Daly, 1991, p. 187). In stark contrast to the NEE view that the economy contains the ecosystem, EC0 holds that the ecosystem contains the economy (Daly. 1992, p, 187). 2.2. Problem-soiling
orientation

mended the tax-subsidy approach. Some of the well-known economists who set the tone and tenor for works in this field include R.H. Coase, J.M. Buchanan, T. Scitovsky, E.J. Mishan and A.V. Kneese. By the early 1970s the problems of environmental pollution were no more regarded as freakish anomalies. In fact, NEE was defined as the study of the unintended consequences of choice (Barkiey and Seckler, 1972, p. 4), making it one of the most sophisticated fields of applied welfare economics Kneese, 1966, p. 70). Now the literature in this part of the subject is rich, vast and diversified in terms of concepts, theories and applications. The areas which have been most frequently combed include microand macro-economics of pollution, public goods and mixed good, property rights and common property resources, partial and general equilibrium approaches, uncertainty and discount rate, and measurement of costs and benefits (Victor, 1972; Lecomber, 1975; Perrings, 1987; Common, 1988a: Pearce et al., 1990). In sum the literature yields us a problem-solving orientation like this: Market failure is the pathogeny of the serious, substantive and pervasive environmental problems. The remedy lies in the market, the functioning of which can be redressed and/or its job can be done in some other way through institutional innovations (Common, 1988a). The prescriptions include market-based incentives such as bargains, tradeable permits and environmental taxes, command and control approaches specifying norms and standards for management of common property resources, and cost-benefit analysis (CBA) to guide investments and policies. EC0 The thermodynamic laws and steady-state economy constitute, respectively, the main bases of diagnosis and therapeutics in ECO. The first law explains why non-thermal and thermal pollutions are the natural consequences of matter-energy resource depletion. The entropic nature of economic activity is responsible for the continuous increase of thermal pollution. It is argued that nature has left humankind with very limited choice. Only three interrelated trade-offs are pos-

Being applied branches, the practical worth of the two disciplines depends upon their approaches to deal with the strains of the sick planet. NEE Pollution is a classic externality. Its existence was first noted by Alfred Marshall in 1890. In 1920, A.C. Pigou discussed the divergence between social cost and private cost and recom-

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sible between, first, size of total stock (wealth and people) seen as benefit and size of the flow of throughput seen as cost, second, wealth and people (composition of total stock), and third, thermal and non-thermal pollution. While there is a direct relationship between benefit and cost in the first, the latter two involve inverse relationships-between two benefits in the second and two costs in the third (Daly, 1973a). Neither the benefits nor the costs are measurable, which is a fundamental basis of division between the two orientations. Further, the tradeoffs do not have scope for neither/nor or either/or types of choice, and thus bring in Bates (1968, p. 111) uncomfortable question of how much of nature humankind can destroy without destroying itself. The solution lies in the steady-state dynamics, biophysical equilibrium, laws of nature and moral growth (Daly, 1973b). Attempts have been made to translate the steady-state configuration into operational principles for sustainable development (Daly, 1991). Here too, the literature flowing initially from Kapp and Boulding is rich and vast in terms of weight and variety if one views the entire range of problem areas of ECO, the dimensions of which are found in the works of Georgescu-Roegen, Daly, Martinez-Alier, Proops, Christensen, Soderbaum and Costanza referred to in this paper. Environmental problems are seen as the tragedy of open-access resources. Carrying capacity is the basic concept of policy foundation (Daly. 1990). Specific suggestions like a flexible ecological charging scheme and an environmental assurance bonding system have been proposed for escaping from social and other environmental traps by turning them into economic trade-offs (Maxwell and Costanza, 1989; Costanza and Perrings, 1990). Clear separation of three basic economic goals of efficient allocation, equitable distribution and sustainable scale as found in the tradeable permits idea has been advocated as the paradigm for practical policy for pollution and depletion (Daly, 1992). Commeniary There exists considerable difference between the two orientations. The element of complemen-

tarity, however, is not ruled out with respect to global problems. The tradeable permits concept is a meeting point of NEE and ECO, which can be applied at the regional, national and global levels to limit the greenhouse effect. The idea warrants change in economic theory to recognise scale as a fundamental independent part of economic problems (Daly, 1992). Another issue relates to the NEE ethics of a polluter pays principle which has made the global political climate commercial, competitive and suspicious so far as the earths clean-up bill is concerned. The EC0 perspective suggests that, like advanced technology, primitive technology along with population pressure may also cause resource depletion and pollution. For example, shifting cultivation, which is the predominant form of tribal agriculture in India, is ecologically damaging as it leads to denudation of forest, erosion of top soil and hydrological dislocations (Sahu, 1986). Preponderent use of dungcake and plant litter for domestic fuel in the agrobased Indian village ecosystems is ecologically unsound. Traditional kitchen stoves cause high wastage of biomass fuel (Nisanka et al., 1992). Such examples justify revision of scale and technology everywhere to reduce the impact. Reduction of poverty, as that of prosperity, is equivalent to reduction of pollution. If this EC0 scale-distributive moral is appreciated, we hope, the world political climate will change for a better application of the NEE principles. 2.3. Range of integration In the process of finding out new explanations for the complex reality, the study of economics accommodates new phenomena, responds to new problems and integrates new subjects of thought. NEE and EC0 represent two integrations which are critically appreciated here. NEE NEE blends the Keynesian-neoclassical synthesis with the environmental compulsions and the related socio-political, geographical and legal factors. It represents a kind of integration in terms of theory and practice, conceptions and motivations, and methods and institutions

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(Kneese, 1966). Mason Gaffney (1966, p. 881 observed that through economic studies of environmental quahty, Kneese (1966) sought to meld theory and practice in a new area, to the mutual gain of practice and theory. This statement is true for the economics of the greenhouse effect (Nordhaus, 1991) which is being studied widely now. NEE processes the scientific evidence through the positive and normative principles of economics and offers solutions to the problems. Since the very beginning the development of NEE has been accelerated by its practical and popular policy implications.
EC0

ronmental economics, resource economics and ecology. But a comprehensive economic theory reflecting Dalys totai problem or total domain has not yet emerged. Classical economic theory does not fully accommodate the gamut of biophysical interdependence between the ecological and economic systems. Nevertheless, it provides a possible starting point for developing a more ecologically (and socially) informed economic theory (Christensen, 1989, p_ 35). In the meanwhile, researchers/ practitioners have formulated and apphed alternative ecologic-economic approaches and models (Maxwell and Costanza. 1989).
Commentary

Ecology (natures household) and economics (humanitys household) not only share the same Greek root, but also adopt a system approach in the study of the structure and function of their components. Bates (1968, pp. 95-961 looked at ecology in terms of the economy of nature and felt that the separation of the two disciplines is an accident of history of scholarship. rather than a reflection of any profound cleavage of subject matter. Finding harsh interface between economics and environmental problems, Barkley and SeckIer (1972, Preface1 speculated that economic ecology may emerge in the next few years as a new field of endeavour. Van der Ploeg (1976) felt that synthesis can be effected by means of analogies and synthetic models. The holistic view (Costanza, 1989, p. 1). however. emerges in Georgescu-Roegens (1971) magnum opus which represents the new dialectical synthesis of the genetic materials of ccolog?i and economics through the entropic problem of humanity. Daly (1973a, p. 9) very aptly articulates this, stating that the total problem is of relating the five subproblems - theology, ethics, political economy, technology, physics. Proops (1989, p. 65) goes further and states that EC0 is a dialectical science dealing with the ever evolving interactions between humankind and nature. In an input-output matrix dividing the biosphere into human and non-human sectors, Daly (1991) pointed out that the domain of EC0 comprises all four cells representing economics, envi-

Three observations relating to the comparison of the ranges of integration within each discipline are given here. First, NEE represents what economists of the mainstream say and do about environmental issues. ECO, on the other hand, urges revolutionary changes in the mainstream. Using Colbys (1991) phrases about this difference-NEE economises ecology and EC0 ecologises economy. The second relates to the distinction made by Boulding (1966, p. 14) between more practical and immediate problems, and larger scale and much harder probIems. Even now one feels that the difference is validNEE addresses the former and EC0 the latter. Thirdly, the degree of disagreement with respect to the paradigms is high now in comparison to the situation in 1960s. In environmental/ ecologica economics, the neoclassical camp and the institutional school subscribe to mechanistin-reductionist and evolutional-holistic world views, respectively. While the former mainly pursues positivism and value-free analysis, the latter emphasises subjectivism and the role of values and ideology (Soderbaum, 1989). As a result, NEE is characterised by self-sufficiency and unidisciplinarity, and EC0 by methodological openness and multi-disciplinarity. 3. The elements
and definitions

The elements which lie scattered in the previous section are collected and collated in this

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Table 1 Comparison of the elements in the cognitive structures of the sister disciplines SI. No. Dimension/component/ aspect
Paradigm

Element Neoclassical environmental economics neoclassical plus market mechanism, technological change and substitution economic theory of the mainstream Ecologica economics biophysical ecological balance, natural laws, entropic nature of economic activity Physiocratic and classical theory, Mills steady-state economy resurrected by Daly first and second (mainly latter) scale, distribution and allocation evolutional-holistic subjectivism reflecting values and ideology methodological openness multidisciplina~ operation in the area of intersection between biophysical sciences, and economics and other social sciences ecosystem-economy humans in nature symbiosis capital and resources: fundamentally complements with a very limited range of marginal substitutability absolute ecosystem contains economy universally true maintenance of throughput as per carrying capacity security Boulding optimum prudent pessimism based on laws of nature resource depletion (social trap) pollution prevention pays Much harder and larger scale problems, long-term perspective decoupling for welfare emphasis on uncertainty management, ecological cost assessment through energy flow analysis energy reductionism ecological engineering renewable energy recycling consideration of interspecies right

Main theo~/principle

ii t.1 111 iv v

Emphasis on thermodynamic law Approach World view Knowledge-acquisition process Character

first allocation mechanistic-reductionist positivism and value-free anatysis methodological self-sufficiency unidis~iplina~/monodiscipIina~ extension of neoclassical economics to env~ronmeotal system economy-environment humans and nature interdependence capital and resources: near perfect substitutes

vi

vii

Relationships

Scarcity perception

i ii
III

...

Perspective Perception of things getting worse Economic growth Sustainability Desired equilibrium View of future
Prchlem-soL:ing ~rjen~ff~jon

relative economy contains ecosystem not universally true clean/green growth c(~nstraint for economic growth Pareto optimum technological optimism based on market system externality (market failure) polluter/victim pays More practical and immediate problems. short-term perspective decoupling for growth emphasis on risk management. impact assessment in money terms monetary reductionism business as usual with treatment plant energy efficiency and waste recycling protection of endangered species

iv vi 3

ii 111 iv

Pollution Therapeutic principle Focus Strategy

16 Table 1 (continued) Sl. No. Dimension/component/ aspect

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Element Neoclassical environmental economics willingness to pay WTP) and willing to accept WTA) in costbenefit analysis (CBA), and total economic value (TEV) comprising of direct and indirect use values, option value and existence value Ecological economics

Methods of (c)valuation

4 i

Range

ofintegration

Basic problem of study

highly aggregated and ethically closed approach economise and legalise ecology relating technology, political economy and ethics

ii

Dominant theme

environmental impact statements, impact profiles, effects of perturbation on interspecies dependencies. ecologic-economic models, positional analysis, system analysis, social trap analysis, contributory value analysis and carrying capacity assessment highly disaggregated and ethically open-ended approach ecologise economy relating physics, technology, political economy, ethics and theology anthropocentric with attempts to open up for biocentric and ecocentric considerations

Note: The list of elements is not exhaustive. Only the basic elements are classified to portray the difference in the nature of the subjects. Sources: Boulding (1961% Daly (1973a.b. 1991. 19971. Locht (1976). Varshney (19871, common t1988al. Costanza (1989). Maxwell and Costanza (1989), Proops (1989). Soderbaum (1989). Colby (1991). Pearce (1991) and Victor (1991).

section under similarities and differences, and then consolidated to formulate definitions. The elements here refer to the attributes, features, concepts, motives and conditions which characterise the fundamental niches of the two sister disciplines.

viii) Need for regulation and stewardship ix> Need for pollution abatement x> Need for population stabilisation, conservation and biodiversity.

Differences Similarities

We have identified the following major common elements of NEE and EC0 on the basis of the study of literature carried out. i) Environmental problems ii) GlobaI perspective iii) Applied character iv) Inadequacy of institutions v) Uncertainty and irreversibility vi) Problem of commensurability: unmeasured and unmeasurabie impacts vii) Sustainable development, inter- and intragenerational equity

Table 1 portrays the differences in the elements of the subjects. Accepting the materiaIs balance principle, NEE recognises pollution as a pervasive problem of a free market economy. Its cognitive structure thus contains the Keynesianneoclassical synthesis plus the first law of thermodynamics. EC0 is characterised by the non-neoclassical paradigm based on the biophysical constraints to economic growth and the thermodynamic laws with particular emphasis on the second law. In comparison to the paradigm of NEE, EC0 is less established and Iargely an open academic niche for dialogue among economists and ecologists of a wide spectrum of views. Table 1

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shows that the perceptions, strategies and policies of the two streams are different depending upon the paradigms. NEE strategy is influenced by the market-technofogy optimism, whereas EC0 prefers the path of prudent pessimism (Costanza, 1989, p. 5). Both the subjects are anthropocentric. However, so far as the interspecies perspective is concerned, EC0 intends to consider the rights of species other than humans on earth and open up for biocentric and ecocentric considerations, whereas NEE recognises only the need for conservation of endangered species. The definitions Definition, like the niche of species in community ecology, constitutes the totality of sets of conditions that are compatible with its persistence and success (Pielou, 1974, p. 317). It is for working out the totality of elements, the existing definitions of the subjects are modified and expanded here so that the process of comparison comes to its logical end. Further, we feel, no~ithstanding the similarities, the sum of similar and dissimilar attributes represents the distinguishing character of the subjects as is revealed from the following definitions. NEE refers to the study of the economy-environment relationship with particular emphasis on regulation and control under allocational grounds to ensure sustainable development . EC0 is the study of the symbiotic relationship between eco~stem and economy with particLi~ar emphasis on stewardship to ensure sustainable development within the biophysical constraints. The three basic conditions of NEE are economy-environment relationships, allocative approach, and regulation and control. The niche of EC0 includes symbiotic relationships, biophysical approach and stewardship for throughput maintenance. If the subjects are defined with any one or two of the features, the definitions fail to indicate the full scope and nature, and do not clearly show the true distinguishing characteristics of the subjects, as pointed out in Section 1.

4. Coda

As in community ecology, there are as many species, as there are niches (Pielou, 1974, p. 3191, so do we have here two sister disciplines based on their antecedents (evolution), elements (conditions) and definitions (niches). The two are apparently similar, yet they sufficiently differ providing a unique example of niche diversification (Pielou, 1974, p. 319) within environmental/ ecological economics. Pragmatism provides legitimacy to the specific NEE paradigm. EC0 fills in a vacant niche deriving strength from its total problem, but its structure is still fluid. The differences and dissensions are deep rooted between the paradigms. If the growth controversy had made the cleavage prominent, the present global concerns and sustainability imperative, far from narrowing it, have widened it. However, we strongly feel that humankind is richer, and perhaps better equipped, today with the paradigmatic species diversity within the economic point of view to interpret scientific evidence concerning the environmental system. The inter-paradigm competition is helpful to the extent it promotes intra-paradigm efficiency and progress. We feel that the economics profession can locate the interface between NEE and EC0 with respect to some near-term policy prescriptions. The element of complementarity appears to us in the tradeable permits system, flexible ecological cost charging scheme, and the determination of appropriate scales of resource use for the rich and poor. Keeping the dialogue on the need for paradigm shift open, it may be possible to identity a policy zone of least disagreement, where the fusion of the two approaches can raise the sensibility and suitability of the strategies to cope with the growing environmental uncertainty of humankind. ECO, being an open field also for cross-paradigm analysis, we hope, can distinguish and establish the relationship between scalechanging and efficiency-changing economic policies, so as to determine the equilibrium point of scale-efficiency optimum which may be acceptable as the second best solution in both the sister disciplines. And the dialogue may continue

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Economics II (1994) 9-19 Economic Order (CReNIEO). Haddows Road, Madras. India, 21 pp. Cracker. T.D. and Rogers III, A.J., 1971. Environmental Economics. The Dryden Press, Hinsdale. IL, 150 pp. Daly, H.E., 1973a. Introduction. In: H.E. Daly (Editor), Toward a Steady-State Economy. W.H. Freeman, San Francisco, CA, pp. l-29. Daly, H.E., 1973b. The steady-state economy: Toward a political economy of biophysical equilibrium and moral growth. In: H.E. Daly (Editor), Toward a Steady-State Economy. W.H. Freeman, San Francisco, CA, pp. 149-174. Daly. H.E., 1990. Carrying capacity as a tool of development policy: the Ecuadoran Amazon and the Paraguayan Chaco. Ecol. Econ., 2: 187-195. Daly, H.E., 1991. Ecological economics and sustainable development. In: C. Rossi and E. Tiezzi (Editors), Ecological Physical Chemistry. Proceedings of an International Workshop, 8-12 November 1990, Siena, Italy. Elsevier, Amsterdam, pp. 185-201. Daly, H.E., 1992. Allocation, distribution and scale: towards an economics that is efficient, just, and sustainable. Ecol. Econ.. 6: 185-193. Freeman III, A.M., Haveman, R.H. and Kneese. A.V., 1973. The Economics of Environmental Policy. John Wiley & Sons, New York, NY, 184 pp. Georgescu-Roegen, N., 1971. The Entropy Law and the Economic Process. Harvard University Press, Cambridge. MA, 457 pp. Georgescu-Roegen. N., 1973. The entropy law and the economic problem. In: H.E. Daly (Editor). Toward a SteadyState Economy. W.H. Freeman, San Francisco, CA, pp. 37-49. Kneese. A.V., 1966. Research goals and progress towards them. In: H. Jarrett (Editor), Environmental Quality in a Growing Economy. RFF, The Johns Hopkins Press. Baltimore, MD, pp. 69-87. Lecomber. R., 1975. Economic Growth Versus the Environment. Macmillan, London, 96 pp. Locht. L.J.. 1976. Economic and small-scale environmental effects: some case studies. In: P. Nijkamp (Editor), Environmental Economics. Vol. 2, Methods. Martinus Nijhoff, Leiden. pp. 151-163. Martinez-Alier, J. with Schlupmann, K., 1987. Ecological Economics: Energy, Environment and Society. Basil Blackwell, Oxford. 286 pp. Mason Gaffney, M., 1966. Welfare economics and the environment. In: H. Jarrett (Editor), Environmental Quality in a Growing Economy. RFF, The Johns Hopkins Press, Baltimore. MD, pp. 88-101. Maxwell, J. and Costanza, R., 1989. An ecological economics for ecological engineering. In: W.J. Mitsch and S.E. Jorgensen (Editors), Ecological Engineering: An Introduction to Ecotechnology. John Wiley & Sons, London, pp. 57-77. May. P.H., 1992. Brazil ecological economics graduate program continues to develop. ISEE Newsletter, 3: 6.

until it is universally best is not enough.

realised

that the second

Acknowledgements

We are grateful to B.N. Das and M.K. Misra for helpful comments. We are thankful to D.W. Pearce, R. Costanza and H.E. Daly who sent us copies of some of their recent publications used in this paper. We have benefitted from the useful comments and suggestions of P. Soderbaum and two anonymous referees who we gratefully acknowledge. The second author is also thankful to the University Grants Commission, New Delhi, for the award of Research Fellowship to him.

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