Graphs

1.1 Three ages of human development

5.1 Oil prices, 2008–2018

6.1 Renewable internal fresh-water resources per capita

7.1 European Union emissions of GHG in production and consumption

11.1 Globalization in the last 50 years

12.1 Percentage of population residing in urban areas by country, 1950–2050

Boxes

2.1 The population (on-going) problem

3.1 John Muir: Preservation and healing

3.2 The rules of the game of environmental cooperation

4.1 The top 20 of the “Toxic 100”

4.2 The ecological debt

4.3 The Cochabamba Declarations

4.4 Air (ine)quality

4.5 Environmental justice before the law

5.1 Kenneth Boulding

5.2 The monetary cost of air pollution

6.1 Biodiversity, human development, and political freedom

6.2 Fuel poverty in the UK

7.1 Stanley Jevons and the “rebound effect”

7.2 Four types of decoupling

8.1 Taxing and subsidizing carbon

8.2 How to mitigate climate change: A policy toolbox

9.1 Energy transition in France: The négaWatt scenarios

9.2 Three lessons from the Chinese growth experiment

9.3 The Sveriges Riksbank Prize in Economic Sciences 2018

10.1 Rousseau vs. Voltaire after the Lisbon earthquake of 1755

11.1 The CETA and environmental policy

12.1 The double penalty of urban sprawl: The case of France

12.2 Urban well-being: The case of Paris

12.3 Urban success stories

Figures

5.1 The many values of natural resources

9.1 Human well-being and the biosphere: The self-destructive vicious circle

9.2 Human well-being and the biosphere: The virtuous circle of sustainability

9.3 Three horizons for humanity: Well-being, resilience, and sustainability

10.1 The three linkages of sustainable development

10.2 Social-ecological trade-offs and synergies

Tables

5.1 Social discount rate options

5.2 Social cost of CO₂, 2010–2050

6.1 World fisheries and aquaculture

6.2 Evolution of global forest, 1990–2015

6.3 Global and regional per capita food consumption, 1964–2015

6.4 Energy use, 1980–2014

7.1 The share of country groups in global material consumption in 2010

7.2 Physical and monetary trade of goods for the EU-28

7.3 Import dependency for the EU-28

7.4 Waste treatment in the OECD, 2013

7.5 Material flow accounting for Western industrial Europe, 1950–2010

7.6 Absolute decoupling between GDP and CO₂ in 21 countries

8.1 The global energy mix in 1973 and 2015

8.2 Renewable energy competitiveness

8.3 Global emissions of CO₂ in 2016

8.4 Emissions of carbon dioxide in 2015, country ranking, and shares

8.5 A simple model of fair and efficient climate justice

9.1 Environmental contribution to some diseases

9.2 Environmental deaths in different regions of the world

10.1 Environmentally related tax revenue for some OECD countries, 1994–2016

11.1 Internal and external water footprint (2011)

11.2 Goods transportation, 2000–2016

12.1 The global urban population, 2018 and 2030

12.2 Priority actions for a low carbon building strategy

12.3 Urban population in the EU-28 exposed to air pollutant concentrations (2012–2014)

Are we thriving or are we doomed? That is the question. In our early twenty-first century, two radically different views regarding the fate of humanity on Planet Earth co-exist.

The first one insists on the remarkable prowess of humankind: Once fearful creatures deprived of almost any significant natural advantages in a hostile environment, we have managed in a matter of a few thousand years – and even more in the last two centuries – to become Kings of Nature, Masters of the Biosphere, Rulers of Life. Driven by the power of social cooperation, humanity’s journey toward prosperity in all corners of the world is truly impressive.

What is more, our collective success has allowed us to change for the better our biological and social self: We have become taller, stronger, healthier, smarter, freer, and, most probably, happier. To take just one striking example of our exponential progress, in the last fifty years alone, human health has been improved more than in the seven million years or so of human presence on Earth. Seen from this perspective, the future of humanity calls for reasonable optimism, if not outright cheerfulness. With the right combination of innovation and incentives, no insurmountable obstacle will stand in the way of our ingenuity.

The other view is decidedly grimmer. It argues that humanity is, to put it mildly, deeply disappointing: In a matter of a century, even more so since 1950, we have managed to substantially destroy our own habitat, the most hospitable planet for us in the Universe, harming our own well-being and that of our successors for shortsighted gains. To take just one illustration of how fast we are degrading the biosphere, cumulative man-made carbon dioxide emissions causing climate change in the last fifty years alone represent 70% of all recorded emissions (since 1750). Homo sapiens sapiens, the one who knows he knows, appears to be losing the great race between his intelligence and his avidity.

Even more frustratingly, our planet’s riches have been squandered for the benefit of a handful among us: Our societies have become increasingly unequal, fragmented, and polarized in the last thirty years; all the while environmental degradations have accelerated. The planet and life on it will survive our inconsequence, as they have in their billions-year long history, but our near future is gloomy and we are to blame for it. We are right to be afraid of tomorrow. How do we make sense of these two competing narratives? Is one simply wrong while the other is right? Can they be reconciled at all?

The first possible bridging of these two accounts argues that both have their share of the truth; what really separates them is their time horizon: What was an undeniable success is turning before our eyes into an irrefutable failure. Yes, we were able to evolve toward prosperity but we are now destroying its very foundations, and we have to understand why. What kind of social dynamics are becoming dysfunctional to the point of threatening not just our well-being but our very existence?

Another way of doing justice to both arguments is to consider space rather than time: As far as we know, no human community can live outside of the biosphere, so that our exceptional well-being is conditional on our environment. While we have been made to believe that our welfare depends on extra-terrestrial systems powered by self-sufficient innovation, we are actually approaching the finite limits of our “Goldilocks” planet. Humanity’s well-being has become detrimental to its sustainability: Our social systems have become self-destructive, a reality our economic systems and metrics obscure. This is why we have to find practical ways to value our environment and turn the vicious social-ecological spiral we are caught in into a virtuous circle. And we have to find them fast. These are the questions this book attempts to explore.

This is not, in fact, a standard economics textbook. The main reason why is because standard economics has evolved in the last decades of the twentieth century toward a much too narrow approach of social cooperation and human development, fixated on abstract obsessions like efficiency and growth. This book, instead, wants to equip readers with the data, analyses, and policy tools to understand and eventually face the complex social and ecological challenges of the twenty-first century. The positioning of this book, and therefore its purpose, is thus not dictated by ideological inclination but by a concern for relevance.

Yet, this is indeed an environmental economics textbook, which starting point should be the definition of the kind of environmental economics readers can expect to find in it. To put it simply, environmental economics today finds itself caught between physics and ethics, between the inescapable realities of the natural world and the justice imperative of human societies.

Economics entertains a special relation with physics. From the early days of the founding fathers of modern economics, Adam Smith, David Ricardo, and the whole Scottish and English classical school, economics has been fascinated by the quantitative precision and universality of physics laws. We now know that Adam Smith has been influenced by Newton. This fascination was on full display when economics attempted to break free from philosophy and political science, posturing as a science at the turn of the twentieth century. Then, economics started to dream of becoming the physics of the social world.¹

And yet, economics has all but forgotten physics, inventing a closed-circuit world where the sun apparently does not shine, infinite growth is useful and desirable and all that exists and matters on the planet are households, firms, and governments. In the beginning of the twenty-first century, economics is in a sense caught up by physics and again dwarfed by it: Climate change has the power to destroy every single economy around the planet, including the best-managed, efficiency-driven, and most-developed ones. Economics today, very much like in the eighteenth century, is still dominated by physics: There is no economy possible outside of the biosphere and its biophysical laws. The large natural household that Ernst Haeckel had in mind when he coined the term “ecology” imposes its laws on the small human household to which Aristotle and Xenophon referred when they invented the word “economics.” It will never be the other way around, whatever power humans may acquire on Earth.

The other glaring blind spot in today’s mainstream economic analyses, models, and metrics is ethics and, more precisely, the analysis of distributional issues and the consideration for justice principles. And yet Arthur Cecil Pigou (1920) made it clear that injustice is in fact economists calling when he wrote: “Wonder, Carlyle declared, is the beginning of philosophy. It is not wonder, but rather the social enthusiasm which revolts from the sordidness of mean streets and the joylessness of withered lives, that is the beginning of economic science.” David Ricardo or John Stuart Mill thought that inequality was the key issue of economic analysis. But at the end of the nineteenth century, political economy centered on justice gave way to an efficiency focused would-be “economic science” largely blind to inequality and fairness.

While inequality economics is making a much-needed comeback, environmental economics must embrace this revolution toward reality. Environmental economics is still too focused on mainstreaming environmental crises for decision-makers using standard economics frameworks and toolboxes: models, equilibrium, markets, prices. Because it is an attempt to speak the language of power, it might seem like a commendable effort, but it should mostly be looked at critically: The environment is not an economic issue among others. The current destruction of the biosphere, its social causes and consequences, actually offers a chance to go back to the key question of economic analysis: justice.

Linking physics and ethics through environmental economics is precisely what is needed to understand our world, a world where inequality and ecological crises feed one another. Sustainability is intertwined with justice: Human communities depend on natural ecosystems, environmental issues are social matters, planetary boundaries are human frontiers. This is a new day for environmental economics.

We have indeed lived through three ages of economics of the environment. In the first age – resource economics (which started roughly in the mid nineteenth century) – the central question was the efficient management of scarce natural resources, some renewable, some non-renewable. In the second age, externality economics took center stage (from the 1920s onward), with scholars seeking practical ways to lower degradations of the biosphere from economic activity by changing consumption and production behaviors through well-designed policy. Our time, since the early 1980s, has seen the emergence of sustainability economics as a potential answer to a hugely complex and daunting issue: Can we prevent the biosphere from collapsing under the weight of human domination? Can we maintain human well-being on Earth and if so, how, for whom, for how long?

Although each age saw progress, economics of the environment, like other disciplines, has very much been a process of cumulative knowledge. There is still much to learn from Pigou or Ronald Coase in order to design relevant climate mitigation policy, although they were unaware of climate change and their analyses were embedded in a now much discredited standard neo-classical vision of the economy. This is why this textbook is scientifically pluralist and does not exclude any insightful stream of knowledge on ideological grounds. But the following pages are guided by two strong imperatives: It is unreasonable (and empirically wrong) to dissociate humans from Nature and the economy from the biosphere that contains it (economics without the environment makes little sense in the twenty-first century); it is unconvincing and ethically dubious to reduce environmental economics to a science of efficiency that leaves aside distributional analysis and justice policy. In short, a fourth age of environmental economics is upon us and this textbook wants to introduce readers to it.

To put it simply, this textbook is different from existing ones because it attempts to bring together the insights of environmental economics (resource economics, externality economics) and ecological economics (sustainability economics) under the imperative of justice. Political economy of the environment is the disciplinary category that best fits this ambition. The two major crises of the early twenty-first century, the inequality crisis and ecological crises, demand to be studied jointly to be fully understood and possibly mitigated.

This academic line of work resonates with recent texts grounded in native culture (the “Cochabamba Declaration”),² religious ethics (the encyclical Laudato Si) and political thinking (“the Green New Deal” in the US or the promotion in the European Union of “sustainable equality”). In Laudato Si, published in June 2015, under the auspices of St. Francis of Assisi (friend of the poor and author of the Canticle of Brother Sun and Sister Moon, declared patron of ecologists by Pope John Paul II in 1979), Pope Francis writes: “We are faced not with two separate crises, one environmental and the other social, but rather with one complex crisis which is both social and environmental.” In the “Green New Deal” bill of February 2019,³ US Democratic representative Ocasio-Cortez and her colleagues identify “systemic injustices” (social and ecological) as the root cause of US ill-being and intend conversely to implement a “fair and just transition” benefiting in priority “frontline and vulnerable communities.”

Policy-makers in Europe are also advocating concrete proposals to advance the goals of “sustainable equality.” A report from the Progressive Alliance of Socialists and Democrats in the European Parliament, for example, acknowledges that “inequality is an environmental issue just as environmental degradation is also a social issue.”⁴

Finally, Greta Thunberg, a fifteen-year-old climate activist at the time, made the social-ecological connection explicit when she declared: “our biosphere is being sacrificed so that rich people in countries like mine can live in luxury. It is the suffering of the many which pays for the luxuries of the few.”⁵ “Our civilization is being sacrificed for the opportunity of a very small number of people to continue making enormous amounts of money.”

By linking justice and sustainability in a “sustainability–justice nexus,”⁶ a number of scholars echoes these concerns and argues that our societies will be more just if they are more sustainable and more sustainable if they are more just.⁷ In the profound words of James Boyce: “economic activities that degrade the environment generally yield winners and losers. Without winners – people who derive net benefit from the activity, or at least think that they do – the environmentally degrading activities would not occur. Without losers – people who bear net costs – they would not matter in terms of human well-being.”⁸

In the twenty-first century, it thus makes environmental sense to mitigate our social crisis and social sense to mitigate our environmental crises. We should worry about our fragile societies, weakened by inequality, facing unprecedented environmental shocks. We should be anxious about the potential explosion of injustice in the face of deteriorating ecological crises.⁹ To give life to these concerns and translate them into meaningful policies, justice needs to take back its place as an input and outcome of environmental economics.

Consider the issue of climate change. A handful of countries, ten percent exactly (and a handful of people and industries¹⁰ within these countries) are responsible for 80% of human greenhouse gas emissions, causing climate change that is increasingly destroying the well-being of a considerable part of humanity around the world, but mostly in poor and developing nations. On the other hand, the vast majority of the people most affected by climate change (in Africa and Asia), numbering in the billions, live in countries that represent almost nothing in terms of responsibility but are highly vulnerable to the disastrous consequences of climate change (heat waves, hurricanes, flooding) triggered by the lifestyle of others, thousands of miles away. Why is climate change still not mitigated and actually worsening before our eyes, while we have, as we will see in detail in this book, all the science, technology, economics, and policy tools we need to fix it? Largely because the most responsible are not the most vulnerable, and vice-versa. Climate justice is the key to understanding and eventually solving the urgent climate crisis. Climate justice is the solution to climate change.

What is true in space among countries is also true in time, between generations. Climate strikes and marches have taken place and grown in momentum in a number of countries around the globe in 2019 (on March 15, 2019, in 120 countries and 2,000 cities, hundreds of thousands of students strike to call on global leaders to act against climate change). Part of the new generation is now aware of the grave injustice it will suffer as a result of choices over which it has yet no power. But the recognition of this inter-generational inequality comes up against the wall of intra-generational inequality: The implementation of a true ecological transition cannot escape the social challenges of here and now; in particular the imperative of inequality reduction. The ecological transition will be social-ecological or it will not be. It will be just or just not be. This is why, to take just one example, when this book will explore the necessity of carbon taxation, it will also highlight the need for social compensation of the poorest households who are the hardest hit by energy price increases.

There are indeed two possible ways to connect the current inequality crisis with ecological crises. The first arrow of causality, which runs from inequality to environmental degradation, can be labelled “integrative social-ecology,” as it shows that the gap between the rich and the poor and the interaction of the two groups leads to the worsening of environmental degradations and ecological crises that affect every member of a given community (for example, greater international income inequality leads to more waste and pollutions being outsourced to poorer countries).

The reciprocal arrow of causality that goes from ecological crises to social injustice can be labelled “differential social-ecology,” as it shows that the social impact of ecological crises is not the same for different individuals and groups, given their socio-economic status (the most vulnerable socially are “ecological sentinels” in the sense that they are first and foremost affected by current ecological crises: the poor generally suffer the most from environmental degradations). In the words of the Brundtland Report: “As a system approaches ecological limits, inequalities sharpen. Thus, when a watershed deteriorates, poor farmers suffer more because they cannot afford the same anti-erosion measures as richer farmers. When urban air quality deteriorates, the poor, in their more vulnerable areas, suffer more health damage than the rich, who usually live in more pristine neighborhoods. When mineral resources become depleted, late-comers to the industrialization process lose the benefits of low-cost supplies.”¹¹

The main goal of this book is to show how social dynamics, such as inequality, cause environmental degradations and, reciprocally, how environmental conditions such as climate change impact social dynamics. It is aimed at considering the reciprocal relationship between social and environmental issues, demonstrating how social logics determine environmental damage and crises and exploring the reciprocal relation, that is, the consequences of these damages on social inequality. Environmental risk is certainly a collective and global horizon but humans are socially differentiated actors of their living conditions. In this spirit, at every turn, this textbook will articulate social and natural systems, highlighting social and political causes and consequences of environmental issues. Who is responsible for what and with what consequences for whom? Such is the central question on which the following pages will shed light.

Far from a survey of authors, schools, and controversies, I will first attempt to define a consistent social-ecological framework and then apply it to the real-life ecological challenges of the twenty-first century, focusing on biodiversity and ecosystems, pollution and waste, energy and climate change, well-being and the environment, and urban sustainability.

The book is divided into two parts, Part I providing ideas and tools, Part II applying them to the major social-ecological challenges of the twenty-first century. Chapter 1 intends both to familiarize the reader with big ideas and notions important to the book (the purpose of economic analysis and policy, the imperative of justice, the challenge of sustainability) and to show her/him why and how history of thoughts up until the twentieth century (very often forgotten in existing textbooks) matters when revisiting our own ecological challenges in the light of classical ideas and intuitions. Chapter 2 will lead readers toward understanding how humans became the dominant force in the biosphere and de facto stewards of the Earth’s ecosystems. But it will also show that domination does not imply autonomy: The economy is not a separated system from the biosphere; quite the contrary, and the principle of interdependence of species fully apply to humans. Hence the paradox of domination and dependence that defines the Anthropocene, the age where humans rule the Earth.

Chapter 3 will start by illustrating the co-dependence of natural and social systems through environmental history classic studies (such as the US “Dust Bowl” of the 1930s), to introduce readers to the ways economics can be useful in governing natural resources in a sustainable and fair way. It will then contrast Garrett Hardin’s social pessimism with the empirical evidence and theoretical breakthroughs of Elinor Ostrom in understanding how “commons” can be successfully and sustainably governed. In this perspective, the notion of environmental justice is essential to map and grasp. It has been defined by the US Environmental Protection Agency as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation and enforcement of environmental laws, regulations, and policies.” But there is no universal approach to it. Chapter 4 thus aims at equipping readers with analytical tools to understand the plurality of its approaches. Finally, to conclude Part I, Chapter 5 will assemble a “critical environmental economics toolbox,” putting inequality and justice back at the center of analysis and policy.

Part II opens with biodiversity and ecosystems challenges, which are daunting. For each of the Earth systems studied in this chapter, a brief review of its importance and role in the biosphere and current and future state will be presented. The chapter will also focus for each system on political dynamics and social issues, such as inequality in access to food and energy or the role of poverty in biodiversity destruction. In Chapter 7, two models of economic system are being contrasted: The current economy in which massive resource extraction leads to pollution and waste and a twenty-first century economy that genuinely minimizes the use of natural resources and toxic materials as well as the emissions of waste and pollutants over the life cycle of the service or product. This chapter will explore how to shift economic systems from one to the other, discussing the meaning and possibility of “decoupling.”

In Chapter 8, the much-documented nexus between fossil fuel consumption and climate change will be detailed as well as the policy needed to accelerate the on-going but painfully slow low carbon transition. This low carbon transition must be a “just transition” that gives its full place to climate justice. On this path, it is decisive to demonstrate that environmental sustainability is not incompatible with well-being; quite the contrary. Energy transition can lead to massive job creation and mitigation of ecological crises can provide crucial health co-benefits, while new indicators of well-being, resilience and sustainability can reform policy for the better. This is what Chapter 9 intends to show.

Social-ecology analysis and policy are the topics of Chapter 10. The gap between the rich and the poor and the interaction of the two groups leads to the worsening of environmental degradations and ecological crises that affect everyone, but not the same way. The current global effort to avoid the worst of these consequences and shift social and natural systems toward a more sustainable path does not take place in a vacuum but in a specific institutional context where capitalism, globalization, and digitalization all impact the social-ecological transition. Chapter 11 will thus explore their complementarities but also many contradictions. Finally, Chapter 12 focuses on urban sustainability and polycentric transition. Under the combined influence of globalization and urbanization, cities (and metropolitan areas) have become key players alongside nation-states in our world. They matter greatly in the opportunities given to people (geography influences history) but also have a critical impact on sustainability (cities account for 75% of global CO₂ emissions). As Elinor Ostrom rightly pointed out, “polycentric transition” toward sustainability is happening, with each level of government seizing the opportunity of the well-being and sustainability transition to reinvent prosperity and policy without waiting for the impetus to come from above. But cities and localities, like nation-states, regional organizations, and international institutions, have to articulate the challenge of sustainability with the imperative of justice.