Discuss the differences between neoclassical, ecological, and environmental economics

Question

What will be an ideal response?

Answer 1

Neoclassical economics is based on the psychological factors affecting both consumer choices and seller strategies to explain market prices for goods and services. Arising from this model is the "supply and demand" curve in which market stability is reached as a compromise between buyers wanting the cheapest price and sellers wanting the maximum profit. Decisions are often based on a "cost-benefit" analysis where expense outlays are measured against potential profits. Perhaps most important from an environmental point of view is the idea that the only relevant costs of a venture are internal, i.e., limited to the exchange of goods and services between individuals involved in the transaction. Anything else, such as environmental damage or ecosystem services, is considered external and irrelevant. A sign of health in neoclassical thinking is continuous economic growth.
Ecological economics holds that economies should mirror the principles governing natural systems, where there are no external costs. Everything must be included, since economic transactions are part of Earth's systems and depend on ecosystem services. Therefore, the principles of limiting factors and sustainability apply, and economics should pursue a steady-state, no-growth policy reflecting the availability of materials, energy, climate and other factors which are linked to any transaction. Environmental economists take a slightly less radical stand than ecological economists. They agree that there are no externalities and that unlimited growth is unsustainable. However, they seek to modify the neoclassical system by assigning dollar values to ecosystem services. This they feel adds the inescapable reality of environmental concerns to the traditional cost-benefit analysis. In addition, environmental economists seek to improve efficiency as an important goal for sustainability.