This essay was an interesting piece of reading, although it did not quite deliver what the title promised: We were hoping for an “abc for dummies” kind of a paper, literally explaining what every conservation biologist should know about economic theory. Instead, the essay largely focused on criticizing the Walrasian model of economics that underlies much of modern econimical thinking. It very well described all its flaws and inconsistencies with the real world, but it did not seem so specifically targeted to conservaion biologists.
The paper had a strong focus on critique, with little about alternatives, such as ecological or biophysical economics, that are mentioned, but nothing else. This essay would have been an excellend opportunity to give a brief introduction to what those relatively modern branches of economics actully are.
The authors emphasized how strongly current economic theory is based on the Walrasian foundation, even though it is so clearly flawed in many ways. Most of the flaws appear to have been recognized already a long time ago, but with little influence to the practice. It would have been nice to be able to discuss the paper with an economist to get an idea of how well these problems are recognized among researchers in economic theory, people applying theory to practice in one way or another, and among politics. We at least would guess the last group to be the most ignorant about these issues, but sadly also a very powerful group, imposing these dysfunctional principles in their everyday decision making.
In general, I at least was nevertheless happy to read this paper and agreed with its contents. It very nicely complements and deepens the discussion on what we were trying to say withour own essay just published in Cons Biol (DOI: 10.1111/j.1523-1739.2010.01539.x). Gowdy et al. provide a wealth of convincing evidence indicating the flaws of the free market, which in our layman version we tried to explain with help of the cebus monkey Mr. Monk. So it would have been nice to see this published together with ours, which unfortunately did not happen.
A memorable quote from the paper: “Since the scientific revolution began, scientists have made simplifying assumptions to make analysis tractable. But natural scienctists generally make sure their assumptions do not contradict reality”. 😀
DOI: 10.1111/j.1523-1739.2010.01563.x
I discussed the paper briefly with a economist friend and asked for comments on the paper. He agreed with our conclusion that the paper seems to be targeted more to other economists rather than conservationists/biologists. He also would like to have seen the simple economical model extended and opened a bit more, or at least references to such work. However, he – like us – felt that the paper was a good read and made the following point that at least I liked very much (translation from Finnish mine):
“I think that too often economics equates people’s monetray income and the perceived utility. The utility of economics for decision making is to analyse the costs of different actions in monetary terms. The difference is some X amount of Euros. The choice between the two (or more) options is a decision based on values. The trick here is that it really is up to people to make the decision, not that the economists tell what to choose based on given prices.“
A response to the paper by Petrolia & Interis (10.1111/j.1523-1739.2011.01668.x) indeed clarifies that in environmental economics these problems are well recognized, and provide a better answer to the original title, what conservation biologists should know about (environmental) economics!