The ecological economist, Herman Daly, proposed the concepts of "empty world" and "full world" to describe two different stages of human economic development in relation to the environment. Let's look at one of the core concept of ecological economics.
Empty world vs Full World
In an "empty world", resources and natural spaces are abundant, while human population and economic activity are small. In this context, human actions have limited impact on the environment, and economic growth can proceed without causing major ecological harm.
In contrast, a "full world" is one where human population and economic activity have grown so much that they start to strain Earth's resources and ecosystems. There, traditional economic growth has negative consequences (e.g. pollution, resource depletion, loss of biodiversity).
To represent the interaction of 'the economy' with the environmental, H. Daly famously used simple drawings made of circles and squares. His very simple drawing illustrates something obvious, but often forgotten: the economy (drawn as a square) is a subset of the environment (a circle).
Not the other way around.
Ecological economics in a nutshell
The economy relies on natural inputs to function: materials extracted to manufacture goods and services, etc.
However, our ecosystems do not need the economy to function. They’ve functioned very well, without 'the economy', for billions of years.
In an empty world, the square is small compared to the circle, showing that the economy is a small subset of the environment.
In a full world, the square has grown so large that it nearly fills the circle, indicating that the economy is now a dominant force shaping the environment. In other words, the “economy bumps against the environment’s edges and can’t grow bigger”.
There are finite resources on this planet, e.g. finite reserves of oil, finite reserves of rare earth etc. So, if economic growth is driven by extraction of raw materials and planetary resources, well, at some point there will be nothing left to extract and thus no more growth possible.
The physical limits of Earth's resources, do not allow for infinite economic growth, especially if this growth is fuelled by natural resource extraction. This sounds obvious, but this simple fact is often overlooked.
Thriving in a circular economy
A more sustainable economic system is one where, instead, of extracting resources to throw them away, we value what we already have and embrace circularity.
The way forward is to design a world where value is preserved and amplified, wastes are minimized, and where robust goods circulate to generate healthy, long-lived cash flows.
For instance, circular business models can emerge to create positive economic outputs and generate profits without relying on resource extraction. For instance, one can buy a high quality drill (costing £250), rent it 50 times for +£10 to neighbours looking to do one-time DIY projects, repair the drill when needed (-£50), rent it 50 times again, sell it to someone else (+£70) who will use it and who will then sell it for +£5 to a recycler once it doesn't work anymore, etc.
In our example, of course, energy is used along the way to power the drill, but embracing circularity lowers the extraction of resources used to produce poor quality single-use goods. A circular business model produces healthy cash-flows, profits and doesn't come at the expense of the planet.
Opmerkingen