A new programme, hosted by ICTP, seeks to use mathematical principles and statistical tools to better understand the forces driving the intricate relationship between economics and ecology.

Valuing Nature Through Science

"It is no accident that the words 'economy' and 'ecology' share the same linguistic roots. In Greek, oikos means home, suggesting that both disciplines have more in common than we think."
This insightful, yet simple, observation, recently made by Nobel Laureate Kenneth Arrow, professor emeritus at Stanford University (USA), serves as the guiding principle behind ICTP's newest hosted activity.
The subject is ecological economics. The programme, which was launched this spring, will continue until 2003. By then, those behind the project, including former ICTP director Miguel Virasoro, hope to find outside funding and a permanent home, perhaps in Trieste. If successful, they envision the creation of an International Institute of Ecology and Economics for Scholars from Developing Countries.
Ecological economics is not a new subject. In fact, its roots date back to the late 1960s and early 1970s when the environmental movement in the United States reached new levels of public support culminating with the celebration of the first Earth Day on 22 April 1970.
At the time, environmentalists were searching for more effective ways to protect the world's treasure trove of natural resources, which seemed to be under constant threat due to incessant population growth, higher consumption levels and never-ending industrial and commercial development.
Economists, meanwhile, were continuing their search for methodologies that would enable what they call 'externalities'--the hidden cost of maintaining clean air, water, and other common goods and services that we all depend on for our economic and social well-being--to be integrated into a nation's general accounting system.
The ultimate goals of this unusual marriage between ecology and economics was, first, to obtain a true assessment of the cost of development over the long term and, second, to devise policy strategies that would take advantage of market forces to protect the environment.
"We've learned a lot over the past several decades," says Partha Dasgupta, Frank Ramsey professor of economics at Cambridge University, UK, "particularly as we've become increasingly sophisticated in the use of mathematics and statistical modelling in our efforts to decipher the driving forces behind human behaviour when it comes to the use and conservation of our natural resource base."

Partha Dasgupta

The problem is that much of the work originated and has continued to be done in the United States and Europe. Consequently, researchers have concentrated on resource issues of particular concern to rich countries. In fact, this multidisciplinary effort has too often focussed on what Dasgupta calls 'amenities'--for example, the economic value that may be derived from putting land aside for recreational parks or preserving farmland to enhance such lifestyle concerns as the desire for open space, pleasant vistas and even tranquillity in our noisy, frenetic world.
One persistent challenge has been how to determine the economic value of such concerns and then how to integrate that value into existing systems of national accounting. Another challenge has been to transfer or modify these research efforts to meaningfully address critical issues in the developing world.
Progress has taken place on both fronts. For example, Dasgupta notes that "the World Bank has recently published statistics on 'genuine investment' for almost all countries of the world in a volume entitled World Development Indicators 2000. Such efforts," he says, "have tried to incorporate assessments of economic growth with assessments of resource depletion to come up with a true accounting of a nation's economic well-being."
Dasgupta admits that "these new accounting methodologies remain crude but it's important to remember that traditional methods of accounting also have had their shortcomings," not the least of which has been their failure to recognise the depletion of the natural resource base as a threat to long-term economic development.
"A person's spendable income can continue to rise," he notes, "even as he or she depletes his or her bank account. That, in effect, could be what is happening in many parts of the world when it comes to our natural capital." The hope is that increased applications of mathematics, statistics and game theory will help refine these efforts at 'eco-calculations' and make them even more valuable in the future.
"The developing world, at least until very recently, has been largely excluded from such studies," adds Karl-Göran Mäler, director, Beijer International Institute of Ecological Economics of the Royal Swedish Academy in Stockholm, Sweden. "That's a void we hope to help fill through our partnership with ICTP." Dasgupta and Mäler will guide the development of this activity over the next two years.
As part of the partnership, ICTP agreed to sponsor two workshops this spring: a Research Seminar on Property Rights Structures and Environmental Resource Management, held in South Africa, in late May 2002, and a Workshop on the Economics of Complex Spatial Models of Ecosystems, held in Namibia, in early June. Both activities were organised by the Beijer Institute. Each attracted a dozen or so researchers from the region in which it was held.
"Property rights," notes Mäler in describing his long-range expectations for the seminar in Durban, "provide important underpinnings for assessing the value of land. Yet, these rights differ from one country to the next. In Durban, we discussed the nature of property rights among the region's tribal chiefs to try to determine the impact such rights have on the value--and thus use--of both individually owned and communal land."
"The workshop in Namibia," observes Dasgupta, "had a different focus. Its intent was to lay the groundwork for eventually making economic valuations of such locally important ecosystems as range- and wet-lands. The inherent monetary value of such ecosystems, despite their importance to the economy, has been ignored when assessing the region's economic and social well-being--especially its long-term economic and social well-being."
"Our ultimate goal is to help local researchers acquire the tools that they need to make such assessments. These efforts not only present an academic challenge but could also have an important impact on economic and environmental policies throughout the region."
In describing how this new initiative fits into ICTP's mandate, Dasgupta notes that "for the developing world, ecological economics is a relatively new field of scholarly inquiry. It's a field that not only relies increasingly on mathematical and statistical tools that ICTP is well-versed in, but also promises to open new employment opportunities for those gifted in such areas."
Former ICTP director Virasoro sees the initiative even more broadly. "This effort," he declared in a ceremony marking the launching of the ecological economics initiative, held at the University of Trieste in May, "marks a natural progression of the Centre's efforts to build scientific capacity in the developing world."

Launching of the ecological economics initiative at the University of Trieste

"ICTP, created in 1964, remains the centerpiece of what has come to be called the Trieste System," Virasoro continued. That system now boasts a wide-range of international science institutions dedicated to the promotion of science in the South, including the Third World Academy of Sciences (TWAS), the International Centre for Genetic Engineering and Biotechnology (ICGEB), the International Centre for Science and High Technology (ICS) and, most recently, the InterAcademy Panel on International Issues (IAP). "Each of these institutions," he noted, "steered Trieste's broad science initiative in new directions and each brought applications of science to a broader audience."
"And that is the path we hope to continue on through this new initiative in ecological economics. If we are successful over the next several years, I envision a new institute that will play an important role in strengthening a system that has become synonymous with high-quality research and training for scientists from the developing world."

For additional information about the Ecology-Economics initiative, please contact Karl-Göran Mäler, Beijer International Institute of Ecological Economics, Royal Swedish Academy, PO Box 50005, SE-104 05 Stockholm, Sweden, phone: +46 8 673 95 00; fax: +46 8 15 24 64; email: beijer@beijer.kva.se. The local contact is: eee@ictp.trieste.it.

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