NY Times Reports on Biophysical Economics Conference in Syracuse
Posted by Gail the Actuary on October 24, 2009 - 10:55am
The New York Times published an article yesterday about a conference that we advertised on The Oil Drum, and several staff attended, called the 2nd Annual Biophysical Economics Conference.
New School of Thought Brings Energy to 'the Dismal Science'
The financial crisis and subsequent global recession have led to much soul-searching among economists, the vast majority of whom never saw it coming. But were their assumptions and models wrong only because of minor errors or because today's dominant economic thinking violates the laws of physics?
A small but growing group of academics believe the latter is true, and they are out to prove it. These thinkers say that the neoclassical mantra of constant economic growth is ignoring the world's diminishing supply of energy at humanity's peril, failing to take account of the principle of net energy return on investment. They hope that a set of theories they call "biophysical economics" will improve upon neoclassical theory, or even replace it altogether.
There were about 50 in attendance at the conference at State University of New York's College of Environmental Science and Forestry. The NYT reports:
The new field shares features with ecological economics, a much more established discipline with conferences boasting hundreds of attendees, but the relatively smaller number of practitioners of biophysical economics believe theirs is a much more fundamental and truer form of economic reasoning.
"Real economics is the study of how people transform nature to meet their needs," said Charles Hall, professor of systems ecology at SUNY-ESF and organizer of both gatherings in Syracuse. "Neoclassical economics is inconsistent with the laws of thermodynamics."
. . .Central to their argument is an understanding that the survival of all living creatures is limited by the concept of energy return on investment (EROI): that any living thing or living societies can survive only so long as they are capable of getting more net energy from any activity than they expend during the performance of that activity.
The article notes that biophysical economists readily accept the peak oil hypothesis, and differ in that way from many other economists, such as the "Chicago School". Nate is quoted as saying:
"The main problem with neoclassical economics is that it treats energy as the same as any other commodity input into the production function," Hagens said. "They parse it into dollar terms and treat it the same as they would mittens or earmuffs or eggs ... but without energy, you can't have any of that other stuff."
Regarding the prospects for oil production, Charlie Hall is quoted as saying:
"It isn't that there's no technology," Hall said. "The question is, technology is in a race with depletion, and that's a whole different concept. And we think that we can show empirically that depletion is winning, because the energy return on investment keeps dropping for gas and oil."
Because of a snow storm, Nate was present at the conference via Skype. Dave Murphy and I (Gail Tverberg) were present in person. There were quite a number of Oil Drum readers present, including Phil Henshaw, who was also quoted in the article.
There is a plan to put presentations from the conference up on a website, but that has not yet happened. We will post a link when that happens.
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To mention "economics" and "physics" in one breathe seems oxymoronic.
Physicists spend great deals of time and effort to uncover and understand the fundamental particles and force interactions of their world, i.e. what is the nature of the quark, where is that darn Higgs Boson? They try to develop a very precise language for accurately describing the Universe and testingly reaffirming the Standard Model.
Economists, on the other hand, spend great deals of time and effort to cover up and prevent understanding of the fundamental actors and exchange particles/forces of their world, i.e. We refuse to acknowledge the missing rational actor in the Standard Chicago Model and we refuse to study the meaning of money. Our language is designed to obfuscate the truths. The fundamentals are strong and the markets are free. Long live the Chicago model.
I wouldn't be so general. I'm an economist and have spent a good deal of time studying the "meaning" of money. Search for some of my posts where I propose an energy currency (I'm far from original or alone in this). I proposed an energy currency at the Biophysical Economics conference during the first open discussion period on the second day (around 1:00 I believe, right after Mobus's presentation). I was shocked as to how poorly the idea was received.
GP,
There is some validity to that approach. But IMHO it fails to capture the true essence of "money".
Money is of course, a vital and crucial ingredient in our global and domestic economies. It lubricates all transactions.
Money carries with it, a set of decoupled promises. One of those promises is made to the holder of large amounts of "money", namely, that the bearer will enjoy a certain "happy" life style he or she has become accustomed to.
But what if oil is no longer easily available?
Will the money still live up to one of its ingrained promises, and who will make good on that promise?
Money carries with it, a set of decoupled promises. One of those promises is made to the holder of large amounts of "money", namely, that the bearer will enjoy a certain "happy" life style he or she has become accustomed to. But what if oil is no longer easily available? Will the money still live up to one of its ingrained promises, and who will make good on that promise?
You seem to think that money can only have one set of properties. Money does not have to be as arbitrary and "decoupled" as you describe it. Money can be whatever we make it. By definition, money is a unit of exchange. That's it. Money is only a store of value if we change its properties to be so.
Your questions are rhetorical. Short of a massive (and miraculous) shift to renewables, the money that one has today would nearly worthless twenty years hence when our oil and nat gas fields are in deep decline.
There is no reason why we could not engage in energy banking wherein promissory notes are issued for units of energy. The issuing energy banks, by law, would have to keep as much energy in reserve, in the form of either a stock or a flow, as the amount of script issued with full knowledge that the said energy would have to eventually be delivered in a physical sense.
And they are wrong. Energy makes the world go round. ;-)
Hi GP.
Nice to have a face to go with a handle!
At last year's 1st annual BPE meeting (now we've had two in a row so I guess the 'annual' is correct - so far) my presentation was on this subject. I drew from HT Odum's earlier work but hoped to refine some of that thinking. Specifically, I suggested that money should be more related to exergy, or the energy available to do economic work, not just raw energy (e.g. oil out of the ground). Since the definition of useful work includes issues such as potential and other qualities, such as transportability, using exergy would eliminate some of the problems encountered by previous attempts to equate money with energy.
However, there is still a problem in that money defined or pegged by total exergy would have tremendous consequences for monetary policy and would eliminate all modern financial (debt-based) instruments. You can't print more money than there is exergy to back it. In that way it has a similar impact as did a gold standard. Some people think that is a good thing (me among them). You would also have to keep national accounts of total exergy produced in a given time period. On a global basis the problems of who is producing the exergy and who is consuming it, and trade issues arising therefrom, would be problematic. Indeed, I suspect the only way such a thing can come about is if we set up a global (UN maybe) agency to regulate a global currency and its distribution. Lots of very complicated issues involved.
Anyway, the discussion last year was not unfavorable and it was lively with a lot of people recognizing this is how it SHOULD be, but unable to see how it could be done. I have some more ideas on that and will blog about them one day.
I'm sorry you got the impression that people didn't like the idea. Too bad we couldn't have sat down to discuss it. Nate Hagens also thinks the fundamental principle of energy-backed money is worth pursuing since energy IS the currency of the economy and money is just, in his words, a marker for it. Charlie Hall, too, is not opposed to the idea, especially since Odum was his PhD advisor and he has a great deal of respect for Odum's work in general. However, he is one of those who has not been able to work out how it could be accomplished. Vaclav Smil is very vocally opposed to any effort to fix money value to energy and he has made some arguments to that effect. Last year, I didn't get to my answers to his objections, but they are still in my slides (which I believe are at the BPE website - if not I can post a URL at my academic website).
All in all I don't think there is a negative feeling about the idea, at least not from the BPE folks. Some of the economists at the meeting might have felt differently. Honestly I must have been asleep when you mentioned the idea or I would have had some things to say. In any case I urge you to continue posting ideas when you have them because it will take many people thinking and working on the idea if it is going to be resolved. Maybe as one of the BPE organizers I can act as a central collector for money ideas. You have my e-mail I suspect (or I think it is available on my profile page here).
Keep at it.
George
Good to hear that the idea was better received last year. The slides still aren't up on the BPE's website which is a shame because I've told several of my friends about your graph relating gross energy production, energy cost, net energy production, asset production, and the feasibility/in-feasibility of debt. IMO, that was the most profound slide of the entire seminar because it clearly shows the limits of our current monetary system.
I found your email. I'll shoot some of my ideas/papers your way. Look for messages from corneliusxcarroll at yahoo dot com
My money and energy presentation slides can be found here.
George
Thanks!
"On a global basis the problems of who is producing the exergy and who is consuming it, and trade issues arising therefrom, would be problematic. Indeed, I suspect the only way such a thing can come about is if we set up a global (UN maybe) agency to regulate a global currency and its distribution. Lots of very complicated issues involved".
Yes, the trade issues arising from this would be problematic-in the current, energetically obsolete, globalised market. Globalised trade in the capitalist cancer in it's terminal stage. Contraction to localised economies based on bio regional resources is the only energy efficient way forward.
FWIW, we had global trade well before the rise of the petroleum economy. Granted it was lopsided colonialist trade, but trade none the less. While the decline of petroleum production will invariably cause globalization to back track, it certainly won't erase it all together.
Great comments, George. Sweden is already experimenting with placing the amount of carbon emission used to make products/foods in Sweden. Why couldn't we do that with energy, which would be a much more complete energetic picture?
http://www.takepart.com/blog/2009/10/24/carbon-emissions-added-to-food-l...
IMO, Sweden is making the same mistake as the rest of the world by focusing on carbon, which is the sink-end of the picture--only half of the whole picture. Instead, we could place a second calorie label on food products identifying emcalories. The science is already in place
http://www.enst.umd.edu/tilley/emergy/OdumEmergy_intro_Odum(4.2001)b.pdf
The problem using money is that it only circulates within human economy (money is represented by the dotted lines in the diagram at the above link). Since money does not circulate to represent work done in and by the ecosystem for the human economy, and because it does not dissipate like energy, and because it can be printed by typing zeros on a screen, money is a poor representation at this point of much of anything.
However, there is still a problem in that money defined or pegged by total exergy would have tremendous consequences for monetary policy and would eliminate all modern financial (debt-based) instruments
We're going to have to eliminate debt-based finance in a descent economy anyway. No worries there.
GP,
now you have had some time to think about the audiences response to your proposal have you come to any conclusions on why they did'nt take to the idea of an energy currency?
Ahh still not banned
Hmm intoxicated.
Running our world while we are looking at "only the good parts".
Our virtual world (VW) shows us no more than "we" wanne see. Our VW started with the TV, and the commercial boys took over in the late 70's. Showing only the good part sells more than showing the real world. This got "perfected" into the idiocy we have today. A bombardment with positive/negative feelings, used to make us believe anything.
We take it for granted that our youngsters want some sort of surgery just to look a little different, we really think that if we look good we must be good, when we put on some glasses we look smarter so we must be smarter, when we save a whale all whales are saved, this list is endless.
All studies conducted in the past were all based on; keep on doing the same thing we do today. We are at the end of our improving venture, all the things we could possibly invent are perfected into our surroundings. Pushing to make them "better" atm gains little but costs precious energy. But we can't stop doing this, we have worked all our lives in the last 4000 years to get here. Throwing it away will mean the end of this journey.
We think it's our population that's in overshoot. The way I see it, it looks like it's our system, we use to run our daily lives, is in overshoot. All the "things" we have invented to promiss us that we will live like kings when we stop working, are all promisses we can't keep. We know that. We have to break that promiss and instead of that, we make sure all inhabitants of this little blue thing, will have enough food and shelter for the rest of his live. No more worries and we use our VW to get acquinted again with the real world we have banned from our thinking.
The gouvernments must loosen the grip (deathchoke) on the population. We think that we can control everything but at some point this battle will be lost. People must have control over their own surrounding, they will know how to make their places contribute best to our common goals. All information needed can be provided by our search engines. We are using the internet atm to give us the information we need and show us the world we wanne see. Modifying our search engines ... can change the way we think.
Slowly stopping all the jobs with no positive benefit will save more energy than the proces we use now to deflate. All the people who are "freed" from the old system wil be asked to start thinking what they wanne do next. In the mean time they can contribute/learn from the internet. And more importantly make sure that their neighbourhood, helped by our armed forces, keeps functioning the way we want it. Not with force but by reasoning.
Our world isn't broken, it's only a non essential tool (that got us here) that can't function in our energy constrained world. Greed is a nasty habbit and we used it for the final spur in our journey. Sharing has a bad name in our society, but I'm more interrested in food for the rest of my days, than money with no value.
How hard can it be, we only have to THINK: Yes, we can.
Most people are scared and willing to listen to better options.
Which system, the one in China, India, or perhaps Indonesia or Pakistan. It is the world that is deep into overshoot. Blaming everything on our system just shows the shallowness of your thinking.
Damn! Why didn't I think of that? Just modify our search engines and that will solve all our problems.
Yes, we only need to teach everyone on earth hot to THINK, how hard can that be? Just modify our search engines and that will solve the peak oil problem. It will fix those falling water tables in China and India. It will solve all our environmental problems. It will solve the species extinction problem. Rivers will stop drying up and start to rise again; the Aral Sea will be restored to its former glory. CO2 in the atmosphere will start to drop and the world will cool back to normal.
ERR07, your post may provide some comic relief for some folks but it only leaves me shaking my head.
Ron P.
I have read a lot off your posts in the past and you're a prime example of the limitation of our own thinking.
But I sense you're a good guy and I have learned from all the things you stated.
I'm not here to solve all our problems, I only want to stabilize the proces, we use to run our daily lives, before we reach a tipping point in thinking that will make us all passengers without control.
The world is so intertwined now that we cannot continue to think within our own borders. We have to think global to save ourselfes.
Only our leaders have the institutional rights to change our society, they are already talking... They just need some help in my opinion.
I never say that I can't do this or that. I start thinking what the options are and the longer I think the clearer the picture gets and that's the base for my answer.
Edited for this last question:
What's your base Ron?.
Ron
No disrespect for ERR07 but I suspect a mental health issue here, not intoxication, is at play for ERR07 incoherent posts.
ERR07
You seem to really care and badly want to help make the world a better place but running yourself crazy is going to hurt your goal of accomplishing this. Please think about this in the most positive way and get some help if need be.
atm I have nothing better to do, this will change but until than...
tod can cancel my account...
Until than I'm here to point out some alternatives as I see fit.
we have better things to do than constantly police comment threads. If you comment here because you have nothing better to do, please consider (not just you but everyone) our motto regarding 'improving the silence'. The high signal to noise ratio that still exists here is special - try to only engage if you have something of substance to add to the discussion. Thanks.
My apoligees for disrupting this forum.
I know that you're thinking and searching hard for all the problems we can think of. I sure hope that the books and everything written will give you the answers we need.
I just wrote this aspiration:
Dear Mr Greenpeace,
Our system urges me to apply for a job.
Hereby I'm offering my critical thinking power for all the problems our world faces.
Now more and more people get dished from the workforce I really think we should start a new recycling program to save our polar bears. We must start collecting all the polystyrene before it's too late. All people without a job must be mobilized to glue every bit of polystyrene we can find together and when we have an iceberg we tow it to the northpole, we can keep this up until the last grain of polystyrene is found. At the same time we could start a campaign to convince everybody that we must use our last drops of oil to make more polystyrene. We don't have to worrie anymore about the melting of our polar cap. We offcourse can extend this to all other ice covered places if needed.
We also have to stop the waste of plastic, we only have to collect it before it gets into the ocean and convert them into plastic fishes. We can than drop them into the oceans while we tow the icebergs to the northpole. This way we can replanish our oceans with fish so our children will never be hungry again. If we start now I don't think it is to late to save our precious world. In a few years time everything will start looking the same as Jacques Cousteau found it not so long ago.
At this moment I have roughly 17 hours for this kind of thinking. So if you need some alternatives, I'm available.
Another small example to increase our biodiversity, we can paint white swans black and viseversa in Australia. The options are invinite in my opinion.
Awaiting your reaction.
ERR07 (changed for privacy reasons)
For contact please see my resume.
Could someone please delete my account otherwise I can't help coming back.
PS-please start thinking for yourself, with an open mind, this problem has been discussed for ages and nobody has found an answer yet. Can you achieve our goals on time? Or is this just something you do for a living.
No need for insults, just delete my account!
ERR07, this community welcomes new members all the time but in return there is an implicit expectation that each comment moves the conversation forward. If you can't do that coherently (my observation so far), please find another place to perform your mental ruminations. If you can move the conversation forward, we actually do welcome new ideas. (But please stop making us work so hard to understand yours!)
Slightly OT, but topical:
For a while, TOD had a comment rating system. Unfortunately, it was binary up/down in nature, and amounted to little more than a measure of popularity.
I argued for Slashdot-style ratings on specific qualities: Informative, Interesting, Funny, Well-Referenced and such on the positive side, and Incoherent, Rambling, Tinfoil (hat), Troll and Spam on the negative side. This would have given valuable feedback to the author, and would also have lent itself to automatic remedies: 3 votes of "Rambling" might impose comment length and daily count limits, "Incoherent" could engage a spelling and grammar checker on further comments, etc.
I don't know squat about Drupal so I'm not the one to do this, but I'd love to see it.
http://www.singingtotheplants.com/2008/03/self-control/
ERR07 does get one thing right: it's all about information. It's not the market that is broken. It's the information that is being communicated to the market. We are using fiat currency to mark our economic progress. Everyone (nearly) assumes that the accumulation of these fiat markers assures some sort of a quality of living or buying power. David Murphey elucidated the problem perfectly on day two (rough quote follows)
While this may be the case, the problem isn't with the market, it's with the information communicated by the "dollars." The CEO makes the classical error of confusing a nominal value with a real value. When his company's production tanks (and assume all the other producers decline around the same time) his buying power will be severely lessened as the energy will not be available to provide fertilizer to produce food and so on.
Now if transactions were made in terms of energy, say Joules, it would be clear to the CEO that he has access to both a stock of energy and a flow of energy (and not just a resource that he can deplete to collect fiat markers with the assumption that those fiat markers will entitle him to certain resources or buying power in the future). It would follow that 1.) his stock will run out soon and 2.) his flow will diminish rapidly. His goal, obviously, would be to grow both and to try to do so to such a degree that him and his shareholders could enjoy the good life for a long time. What would he do? Well, if I were the CEO I would use part of my flow to purchase steel, concrete, some neodymium magnets, and some land to build a concentrated solar thermal plant or some other form of energy production that will grow my stock base to near infinity while mildly increasing my flow. Eventually, I would hope to maintain my flow of energy while having a nearly infinite stock. (If Mobus is on here I'll add that I'd divert part of my flow to maintain my "tools" ;)
I'm a little tired so I hope you guys can follow this. If not chime up and I'll try to do a better job of explaining the idea. IMO, it's all about the information. Get the information right and there's a good chance that the market will right our ship. I'm sure someone will ask so I'll go ahead and say it: I'm talking about full on energy banking where the reserve requirement would be parity. In order to issue a promissory note, there must be an equivalent amount of energy in the ground or available as a flow.
When the reporter called I was in the middle of a detailed email so he didn't have my whole attention. As such:
..my brain couldn't think of examples quickly while multitasking so I looked around the living room and saw mittens, earmuffs and eggs and it just came out....;-)
Also - the 'collapse' comment was a bit out of context - reporter asked if a large drop in overall EROI of would collapse society and I said it would collapse this system which depends on growth with lots of waste and if we went from overall of 20 to overall of 3 it would be guaranteed to collapse the economic system as efficiency and conservation couldn't overcome that drop. My recent thoughts are we have plenty of high EROI oil and gas remaining, but not of the scale/gain necessary to service global debt, so if financial markers are fixed we still have wealth of natural resources (but far from infinite). Also, the EROI numbers he showed were funny - I think he conflated US and Global EROI - US was 100+:1 in 1930s, 30:1 in 1970s and 11-17:1 in 2000 (see graph below). Also US peaked in 1970, not a 'decade ago'. Glad to see the Soddy reference. I just reread that book (again amazed that people were sussing out the disconnect between virtual wealth and real wealth 80+ years ago)...
This was a great story Nate. Way to go on getting the word out especially to NYT readers.
Nate -- were the eggs in the earmuffs or the mittens?
My serious question has to do with my reading of Catton's "Bottleneck: Humanity's Impending Impasse."
Catton says that our most important task in survival is to come up with a definition of our situation that is as close to reality as we can. Then our resulting actions will make sense in the actual world we inhabit. Simple enough?
We did learn to lie in order to survive, however. We lied to predators by hiding. In reality we were nearby, but had managed to hide this fact from predators. Hence, we did not become dinner for one more day, and lived to play the game again.
We also lied to our prey. We would build pits filled with sharpened sticks, and cover them over to look like the surrounding surface. Sometimes we even made noises to direct prey to our traps. So by lying, we got lunch and dinner and material to make clothes and blankets and such. What a good deal!
The problem is that we are very, very vulnerable to lying to ourselves and one another. We may not want to face reality and so we make up a "definition of the situation" that makes us feel comfortable, but which will backfire on us to the degree that we choose not to face reality. What a bad deal!
We also lie to each other when we want to control or manipulate others to our own benefit. Advertising and public relations are not about telling the truth, but rather are about defining the situation for others so that they will do what the people paying for the ads or PR want them to do.
We also lie to ourselves in huge collective ways: educational institutions, government, politics, religion, the arts all perpetuate myths or meta-narratives that define our situation in ways that please the funders. To the degree that funders of culture are ignorant or selfish or complacent, the institutions of culture will follow along.
I think that this issue of "definition of the situation" or "the current human predicament" is at the heart of our difficultees.
We lie to ourselves and each other in order to feel more safe and comfortable. No matter how brutal we are, we see ourselves as spiritual, righteous, even heroic actors in the world.
It does not matter what ideology or religion we follow, we use these meta-narratives to create lies within which we think we live, but do not.
E. O. Wilson noted in "the Creation" that the most powerful human forces on the planet are science and religion. We'd better figure out how to join these in positive ways -- because neither will go away until we humans do.
Can we get them to issue a correction?
I was sure this was the case but seeing it in print [in the NY Times] started to make me doubt myself... even though I've seen the graph of US production many times.
The meeting was a great experience for all of those involved. If anyone is interested in seeing who spoke or attaining the presentations, please visit the website at Biophysical Economics. The conference agenda is downloadable from the website and the powerpoints will be shortly. We are hoping to have a similar conference next year, so be aware and check the website at the beginning of next school year for an announcement.
Did anything constructive come out of the roundtables? I left around 2:30 on day 2.
Raised more questions, I think.
Cool damp morning with sleet mixed with rain, good day to stay in, tend the wood stove and write a long rambling post…
EROI as a consideration in our purchasing decisions.
When we look at purchasing decisions should we consider the importance of a positive EROI for the seller? If we want to have a fair, equitable, sustainable society, we must.
The classic home economics theory would say no, well it would just omit the existence of, and teach that price is the only important variable to consider. I took such a class and still remember this lecture. Lowest price is the correct choice. Even back then I knew this was some serious warped thinking but this morning I though about how applying EROI in a broad sense helps explain why.
For the economy to be healthy the seller must receive compensation that is greater than cost, must receive a positive EROI. The problem is most people have been trained to hunt for and purchase, when ever possible, a seller negative EROI. This either drives the seller out of business or forces the seller to pass on the loss on to his suppliers.
The last supplier is natural resources. As long as natural resources are basically free, have a very high positive EROI, this system can somewhat limp along. With a falling EROI this system crashes and burns.
Let me attempt to rephrase the argument in (what I understand to be) a more biophysical way: The economy, is an aggregation of willing buyers and willing sellers. All these actors are animated by living humans. All these actors operate under the constraints of human metabolism. In particular, they all have basal metabolism. The market is sustainable only in so far as there are sustainable participants. If suppliers of any particular good or service cannot cover their basal metabolism, then that portion of the market will fail. Since all suppliers are also consumers of some other good or service, the failure will spread to all sectors of the market.
In the above, there is no mention of 'money', and no explicit mention of energy. But, of course, metabolism is the flow of energy in living things, so energy is there, in hiding. Money is a human invention as most everyone on this list realizes. We humans have developed some rather complicated ideas about what we can and cannot do with money. We believe that we cannot 'just print money', but in fact we do just print money. We believe that money ought to have a fixed value, so that we count on our savings being sufficient to provide for our future basal metabolism, but we have great difficulty in achieving this goal.
Equating money with energy is not a rational basis for dealing with this issue, IMHO. Energy is real. Money is an idea that we share, but that none of us really understand. A tendency to believe that money is real seems to be innate in all of us, much like a tendency to believe in the existence of a supreme being. To some extent, it might be useful to proselitize for the idea that money is really energy, but I think it would really be better, more lasting, to deepen our
understanding of this difficult problem.
EROI is an idea that originated in the study of petroleum as an economic commodity. Generalizing from that particular is somewhat valid, but most people have no idea how the petroleum economy works, so they do not readily accept that EROI is a valid idea in petroleum, much less in the wider arena of human life in general. For us, here, it is valid. But for the rest of humanity, it is maybe not so convincing.
Seeing that our well being is largely determined by how well or how poorly we manage energy, would it not make sense to do our accounting in terms of energy? Our current monetary system simply regards energy as another interchangeable factor of production. This is clearly flawed.
Energy does not play a predominant role in every transaction.
Let's say that I promise you, in exchange for you giving me 1,000 units (i.e. dollars) of this "money" stuff, to provide you with a particular customized piece of software. The valuation of the deliverable depends mostly on the number of hours worked and on the complexity of the code, not on the energy expended to make good on the promise.
Now of course, all human activities depend on a certain baseline of food energy being available to sustain human metabolism and in that sense, energy (and more rightly food delivered energy) is a necessary condition for the transaction going forward. But that aspect does not play a major role in economic transactions made in industrialized nations.
But could we not say that the value of such information is the additional energy it yields in the physical world? Society still produces an excess. If I have excess energy income I can afford to pay you for your software development. My payment sustains you, your family, and so on and, assuming you have made a profit, can then afford to use your excess energy income to purchase another information good or a service from someone else.
What I'm saying is that an energy based currency does not totally disregard the value of information.
Geek7
Your rephrase was more or less what I attempted to say except you left out the last part which was the main theme of the post. Saying that everyone could cheat the system as long as resources were cheap and abundant, thus making up for the shortfall, might be a bit of a stretch but I thought it was a interesting concept.
I assumed that the point of biophysical economics was to provide a logical framework the application of which would help over come the shortcomings of classical economics.
I agree, in my post I also did not use the word money and any indirect suggestion was not intended.
Never considered this comparison, but I can go there.
EROI is a concept that I assume that TOD readers are familiar and I wrote this post for a TOD audience. I am painfully aware of how clueless J6P is and if I was writing for that level of reader the post would need a major increase in verbiage.
Equating money with energy is not a rational basis for dealing with this issue
Equating money with energy is rational in this sense and, I believe, it is the most rational solution we have for the EROI problem. One of the things I took away from the Biophysical Economics conference (and I think others who attended would agree) is that EROI is notoriously difficult to work with at this time and that the conversion to and from fiat currencies and then across currencies hides a lot of energy costs. In fact, Dave Murphey, Brian Sell, and Lianyong Fen all commented how difficult it was to calculate EROI and how difficult it was for them to even get generalized EROI figures. How can the entire economy address the issue of EROI without easily accessible information regarding emergy and exergy? You'll need the entire economy, every single one of its participants, to address the problem. There are so many calculations and decisions to be made that you cannot rely on energy producers, politicians, and technical innovation alone to right our ship. For even if we do have the technology and the political will the economy (through its participants) must have the ability to make the right decisions with regard to EROI and in order to have this ability it must be able to readily calculate EROI.
Dave Murphey had a slide that showed how as your EROI calculation increased in precision the number of people who accepted that calculation decreased. I believe he called it the EROI acceptance curve. How about that? Now if we had an energy currency, EROI would be as easy to calculate as ROI.
The reason that money, that is fiat currency, does not work is that it is not real. There is nothing real backing it up, so you are trying to equate something real, energy to something that is not real, money. Now if you want to make an argument that you could equate the value of gold to energy then I can see this.
EROI might be a challenge to put into numbers but that in no way diminishes its validity and importance.
In math there is a relationship between precision and accuracy that would seem to explain this.
I think we are on a wild goose chase with each other here.
Money actually works quite well. I think our economic progress to this point quite clearly illustrates that much (read Niall Ferguson's Ascent of Money). The only reason our monetary system is now beginning to fail is because there is such a large disconnect between net energy production and outstanding credit/debt.
There is nothing real backing it up
That is only true if we choose to make it true. There is no reason that we could not, by law, decree that currency be backed by real producible energy reserves.
Well thats why we have wild geese... :)
So we are, I think I get what you are driving at now. You want to peg the value of paper money to energy. In theory this has some merit, IMO, but the devil is in the details and that means putting hard numbers to EROI.
Being more familiar with neoclassical economics that I care to admit, two ironies occur to me. The first is that neoclassical practitioners often describe their discipline as "the study of scarcity." The second is that economics has historically involved the study of production. However, all of this has been largely divorced from any serious reference to the physical system in which production is imbedded.
I'm not just referring to thermodynamic laws...economic modeling often involves defining and manipulating mathematical quantities that are not well-defined. Controversies around what economists mean by "capital" have, rather than being resolved, simply been swept under the carpet. Yet these issues raise serious questions about the validity of the premise that income distribution is determined by the marginal productivity of the various factors of production (land, labour and capital).
Economic theory encourages a kind of intellectual laziness whereby the theorist postulates that some quantifiable feature influences the economy (e.g. human capital, the stock of knowledge) and constructs an abstract measure of this quantity, all without ever asking whether there is any reason to believe that such a cardinal measure can even be measured.
Picking up a small comment from the NYT article: The law of thermodynamics that "entropy always increases" is not very relevant to our case. We are in a system where low entropy energy flows in, and exactly the same amount of energy flows out at higher entropy. The sort of law that might apply to such dynamic systems is the Maximum Entropy Production Principle (MEPP), which seems to be effective in many circumstances but is hard to justify. In a rough way it says that Mother Earth is always searching for ways to improve her rate of entropy production. Certainly this works well as a way of explaining our weather/climate [which was shown by Prof Paltridge in the 70s]. MEPP would argue that, having invented intelligent life as a way of increasing her entropy production, Mother Earth is unlikely to go back to lower levels of entropy production if she can help it :-).
Well put. One of my pet peeves in peak oil discussions is when people with no scientific understanding of thermodynamics start bandying talk about the second law and what it implies about our energy resource situation. It's hard to explain to these people the differences between open and closed systems. The problem is that they believe that they already understand it. "I understand that", they'll insist .. and then proceed to demonstrate clearly that they don't.
The only concept that occurs to me where preconceptions and what people think they know interferes more strongly with actual understanding is the relativity of simultaneaty. Almost nobody actually get that -- however much they think they do when you try to explain it. You can't "get" that concept without overturning everything that experience and intuition tell us about the nature of time.
Good point, I don't get it. Please try again. Thanks.
I disagree. Trophic dynamics and succession at the ecosystem level indicate that as ecosystems evolve from primary to climax the assimilation efficiency increases for the ecosystem as a whole. This means that ecosystems are able to reduce the amount of energy lost to entropy (Schneider and Kay, 1994).
So people like me who are arguing that human society can at least theoretically sustain itself by increasing the efficiency of use of natural energy flows can point to ecosystems as a model. That's a great insight.
"Central to their argument is an understanding that the survival of all living creatures is limited by the concept of energy return on investment (EROI): that any living thing or living societies can survive only so long as they are capable of getting more net energy from any activity than they expend during the performance of that activity."
Perhaps it is more a semantical matter, but in the form it is stated the above premise is simply NOT correct. Furthermore, it also reflects some of the confusion that results when the concept of EROI is conflated with the concept of energy efficiency.
As I have stated several times here in the past, to make complete sense the concept of EROI should only be applied to those sets of activities directly related to primary energy production, such as the finding, extracting, processing, and bringing to market fuels such as oil, natural gas, and coal.
However, once that fuel is in hand and ready to use (regardless of how good or poor its associated EROI), then when considering downstream energy-consuming activities one should speak in terms of energy efficiency rather than EROI. Why? Because once one is actually using the energy, it is impossible for the EROI to even get up to unity, due to conservation of energy considerations.
When my utility burns coal to produce electricity that I will consume in my house, only about 40% of the original energy content of the coal is converted to electrical energy. Then when I use that electrical energy for lighting and running appliances, probably no more than 80% of the initial energy input to my house is converted into useful light and useful work. Thus, in both of these activities (making electricity and consuming electricity) I do NOT get more energy out than I put in, yet they are both useful (nay essential) activities in our modern society, in total contradiction to the above-stated premise.
If we render unto the term EROI what it rightfully covers, and render unto the term 'energy efficiency' what it rightfully covers, then I think this confusion goes away, because it is (or should be) abundantly obvious that energy efficiency can never exceed unity, and in fact rarely even comes close.
So, it makes no sense to me at all to talk about the EROI of driving a car, but it makes perfect sense to talk about the energy efficiency of driving a car.
joule,
I think this distinction between EROI and efficiency is essential. EROI is a very useful idea, but it often gets misused.
The two ideas do couple. Say I have an energy source and I want to build more. In the simple case that all losses are included in energy expended term then with EROI greater than 1 I have an exponentially increasing source of energy. But often some losses are ignored and then it is the efficiency between production and use multiplied by the EROI that has to be greater than 1 for an exponential increase of the energy source.
Note that here I make the opposite mistake that most economists usually make. They ignore energy as an input and I have ignored capital, land, and labor as inputs.
ganv -
To clarify a bit further on what I previously said, when it comes to primary energy production, such as in causing fossil fuels to appear in the market place for common usage, it is absolutely essential for the EROI to be significantly great than unity (preferably many multiples of unity). After all, it would be totally pointless to expend more energy than you produce. And in the real world, the EROI will steadily decrease until the energy production becomes not worth the effort.
But let us also keep in mind that energy, in whatever form, is totally useless unless and until it is harnessed in doing useful work (the 'useful' in this case often a highly subjective judgement largely in the eye of the beholder). In other words a gallon of gasoline is of no use until it is burned in propelling my car. I may use the car wisely or use it foolishly, but that doesn't change this basic truth. As I value the ability to drive my car, I am implicitly accepting the unavoidable fact that a goodly portion of the energy I use will be wasted as low-level heat. This is where energy efficiency comes in.
When to you get right down to it, energy efficiency is about getting the most bangs for the buck once you have the bangs, whereas EROI is about being able to produce the most available 'bangs' in the first place.
"it is absolutely essential for the EROI to be significantly great[er] than unity (preferably many multiples of unity)...In the real world, the EROI will steadily decrease until the energy production becomes not worth the effort."
It would be interesting to see a full economic model of a specific energy source to see what EROI would be exploited. Clearly it has to be enough greater than one to account for losses and opportunity costs. It seems that fossil energy sources need to be distinguished from renewables. For renewables, EROI could be constant or increasing with time so with EROI great enough to cover losses and provide profits sufficient to cover opportunity costs you really do have an exponentially growing source of energy.
Yes, that comment was too broad...but at least the conversation is expanding. :-)
Or wind...
http://www.uvm.edu/giee/publications/IKub_2009_wind_EROI.pdf
I would very much like to see an analysis like this for a Concentrating Solar Thermal Power project(s).
The primary problem with CSP is EROWI (Energy Returned On Water Invested). Where CSP is most effective water is most scarce.
Darn, you do bring up an inconvenient truth...so to speak. But, dry cooling towers have been around the power industry for decades. They are not as efficient but they use a lot less water and may be able to significantly reduce the EROWI for these types of thermal power plants as discussed here. http://social.csptoday.com/industry-insight/dry-cooling-slaking-thirst-c...
CSP offers huge potential especially in the USA as discussed in this recent radio interview with Dr. Richard Gilbert and Professor Anthony Pearl who wrote the book Transport Revolutions: Moving People and Freight Without Oil. http://www.archive.org/details/ListenUpNorthwestProgram66
Dr. Gilbert will be speaking about this at our upcoming Conference on Michigan's Future www.futuremichigan.org
The hitch with dry cooling is that it invariably lowers the EROI as it requires a massive amount of metal for a closed cycle heat exchanger. There is a concept in Isreal that has some potential where they super-heat air that then expands through a turbine. No EROWI issues there and potentially a much better EROI despite the lower overall efficiency.
Yes, it does degrade the EROI and overall thermal efficiency to use dry cooling. The Stirling engine approach mitigates this impact. http://solar.calfinder.com/blog/products/stirling-engine-addresses-large...
I have heard a brief audio clip on the Israeli technology and would like to learn more about it.
The sun offers so much energy supply potential if we can get around some of these issues....particularly water. And, some of the solar cell manufacturers are making good progress on solar PV shingles which will probably be pretty good in terms of EROI. http://news.dow.com/dow_news/corporate/2009/20091005b.htm
A Stirling engine is still a closed-cycle heat engine and is going to require heat rejection just like a steam turbine. An open-cycle air turbine will not be as efficient as a Stirling engine, so either way you pay.
Your info is dated.
SES system uses almost NO water.
http://www.stirlingenergy.com/advantages.htm
Again, it needs a heat exchanger which (for now) requires a metal (probably aluminum) and therefore it will have a lower EROI than an open evaporation system. The amount of metal needed depends on the desired temperature delta, the thermal conductivity of the metal, the temperature of the input sink, and the temperature of the rejection sink. One could probably come up with some sort of a rule of thumb for how much metal is necessary per unit of power.
Not trying to be combative, just pointing out that there is an inherent trade off between EROI and EROWI in CST power generation.
WRT solar thermal.
In 1911, Frank Schuman (the inventor of wire-imbedded glass, and (reputedly) safety glass), built a solar thermal power plant in Egypt.
This was an unique venture, in that it used very inexpensive materials and novel technology (negative pressure turbines using efficient 212 degree hot water) to generate mechanical motion (24/7).
This was a large-scale water-using (but recycling) power plant, which, (once investment paid for) utilized FREE fuel.
And, coming to mind, the possible inclusion of Tesla turbines, heat engines/turbines and other obscure technologies provide potential for real neighborhood-scale and regional-scale power generation.
At age 18, I built my first two solar collectors. One was a flat plate, and the other a parabolic. They both boiled water in <5 minutes. I haven't stopped since.
Focussing solar is the magic ring. It does NOT have to use copious water, can in theory and practise smelt aluminum, glass, etc., and is FREE power.
It will run Sterling, Ericcson (? sp.?), and Tesla engines, provide neighborhood-utilizable high temperatures, and is FREE.
It can power local belt-style-lathe/milling manufacturing and can provide food-drying, dessication, (read sewage condensing), and large scale community solar ovens.
It can be neighborhood-scaleable. And is FREE power (after investment)
It can heat your hot water, and dry your clothes.
It can produce jobs, upkeep (continuing jobs), and be paid for by a portion of those savings on your monthly power bills in reasonably short term.
IMHO, water considerations of focussing solar are pretty much nasty BS, and not conducive to future discussion.
The sun is free, will last far beyond out meagre culture, and is very environmentally friendly.
There is enough solar falling on 1/3 of your roof to power your house.
One square meter of (perpendicular) solar produces almost 1 HP of energy.
In the 1850's solar power was used to pump the water from mines, and later run printing presses.
In the 1880's, Ericcson built 7 solar engines to produce free mechanical/electrical power.
IMVHO, if you brilliant minds on this space do not, cannot, and will not promote solar thermal, then we are all fu'd, our kids are fu'd, and our grandkids will be fu'd.
Thermal Solar can cook/bake our foods, dry our grains, power our nightlights, and even do the internet.
Regarding the EROEI, and EROWI of thermal solar, even if it may be less efficient, once payback is done, ...it...is...free....
WIN WIN!!!
We must use our remaining fossil fuels to ennable, enhance, and empower solar thermal.
Else we are but a minor footnote in time.
A failed cold footnote.
That's all I got, I'm burned out.
Craig
That observation threw me.
If you meant to say the 1Kw/m^2 falling on your roof represents more than a Horsepower (746 watts), you're right. However, modern PhotoVoltaics (PV) do not provide anywhere near even 75% conversion efficiencies.
Here is the latest on CSP from California. Looks like dry cooling towers are in.
http://greeninc.blogs.nytimes.com/2009/10/27/water-use-by-solar-projects...
+1
Hunger cuts through all of EROI and economic theory. When economists are hungry, then and only then will they get a glimpse of the real world of scarcity. Bottom line, hunger trumps anything virtual. It is a function of body, thus real, and not a function of mind or words which are always virtual. The reality one talks or writes about is not reality. Reality is a potato not the talk about a potato. IMHO more people need to realize the difference. Do you hear the "ummm" in the background? :-)
I wonder what e-mail was more important than the reporter’s questions. Is it like answering a cell phone call when having coffee with a friend? It appears that reporters in general overlay their personal bias over anything said so should we even talk to them? Is there an ego trip involved?
I am a woodworker. It is very difficult to explain to students that how you feel about a piece will determine the quality of the output. I can teach one how to saw and plane but I cannot teach how to care. I am sure at some point a few will understand and the rest don't really matter because they will never be a woodworker. Their woodworking pieces will be better bought at a furniture store made by people in factories who do not care.
Again IMHO, I don’t believe much will happen until more people in the US are hungry. Then they will start raising food or die. Armed gangs will not go hungry first so what is one going to do to keep your child or grandchild alive? $10 fuel cuts the furnace out of the home heating EROI especially if you have lost your job. Right now there are well over 6 million Americans learning economics to choose food or fuel or candy or the lottery. What they are learning is the real Econ 101.
How big is your garden? Can you feed your family if/when the JIT supermarket and other essentials go tits up?
I really appreciate that TOD is showing facts (mostly) about fuel depletion timing, given no ominous Black Swan shows up we should have a little more time to get ready. Thank you all.
To pick a nit: certainly you can teach how to care and people can learn how to care. It happens all the time. The problem has always been, to my mind, can we teach enough people to care in time?
Andre:
I believe what you are describing by the word 'care' is better covered by the word 'understanding' but this is simply semantics. By 'understanding' where we are on the slippery slope, then certain actions are logical and of course getting more people to understand where we really are is important. I have visited your website and you and yours are working toward that understanding, which, to me, is well worth the effort.
I was cutting the curve of a small bubinga piece that will be part of a walnut table. It took about half an hour to get the arc fair. The first cut was quite good enough for the average customer but not for me. This is the type of 'care' I was talking about. I guess it could be called 'pride' but it is the difference between an "oh hum" furniture piece and piece of graceful beauty in the Yanagi* sense.
Unfortunately, my garden takes on the same characteristics which in turn takes a lot of time and I wonder if the results are worth it (but that's my problem, isn't it?).
I often wonder what a Zen master would think of our thrashing around with the concept of Peak Oil and other 'Peaks' like NPK or water. If I knew one, I would ask him. Askazenmaster.com is about the same as a fortune cookie or magic eight ball which may be as good as anything. :-) If you know one in the Bay Area, ask him/her for me TIA.
*author of "The Unknown Craftsman". Look directly at the object, not the price tag or who is the maker. It may have a beautiful fair curve or it may not. Some of the most beautiful Japanese pottery was made by unnamed 10 year old children 300 years ago in the sweat shops of the times.
I have read a little on Zen.
To see into the heart of something, you know, penetrate into its essence without being encumbred by illusions, that is my idea of Zen. (I like Zen and have been to some Zen temples by the way.)
Peak oil and Zen??
Well, oil was always a kind of illusion. Since it would not last it was in a sense, never here in the first place. It was not solid enough, material enough, truly substantial enough. In all this illusory and unsubstantial world, it would no doubt be classified by a Zen master as one of the most illusory.
It was thus a mistake to let so many lives and livelihoods depend on something so transitory and ephemeral as petroleum.
Actually, Peak Oil people are naturally closer to Zen ways of thinking than most others I know. Because they know that the difference between 10,000 years and 10 years is only a fleeting breath, I suppose. There is a natural tendency among PO people to try to see into the underlying realities (EROEI) of something material which escapes mere casual observation. That kind of thinking is related to Zen!
Penetrate into the heart of something and go beyond the illusory shell you can see.....that is Zen in a nutshell.
Yet you must start with the exterior and work your way through. It is a process, a task, a working-out in the mind.
In a way, Zen formalizes what we humans do anyway.
1. There is suffering.
2. The origin of suffering is craving.
3. The cessation of suffering is attainable.
4. There is a path to the cessation of suffering.
Been giving this some thought lately.
Leave it to a wealthy lord walking in the slums for the first time (i.e. Buddha) to decide that the path to happiness for all those poor people is to just stop "craving" useless things... like food, clean water, a place to sleep out of the rain, or access to some medicine for that nasty rash... [/sarcasm]
(Sorry for that; there obviously is some room in our hyperconsumerist society to cut down on the "cravings," but the idea that all suffering is caused by one's attitude is a little much.)
This rejection of desire isn't for everybody-literally every single aspect of my life that has made it worthwhile to myself was based around or originated in desire. Walk into any old age home and what do you see? An entire building almost completely filled with humans free of desire-for many people desire and happiness are the same thing.
God grant me the serenity
To accept the things I cannot change;
Courage to change the things I can;
And wisdom to know the difference.
Trite but true?
No, no! The wealthy lord was also suffering in his own way. He couldn`t achieve or have what the one higher up than him had, or maybe there was an illness, an embarrassment, a scandal, a worry. Whatever it was, it was suffering, just as horrible as poverty because it might end in poverty or worse, death. Even if not, it would cause agony.
Don`t misunderstand Buddhism. My feeling is that it is more helpful than harmful.
I`ve grown close to it as I`ve lived in a largely Buddhist country. I think its message is quite positive.
I tend to agree with just about everything you said:
- Upward comparison tends to generate envy and desire for what the "higher-ups" have
- The brain doesn't really distinguish between psychological pain and physical pain, or at least it makes use of the same brain systems... it could, however, function similar to dreaming vs. waking, where imagination used while awake doesn't feel as real as actually perceived stimuli - or imagination while asleep - because of inhibitory neural loops that are turned off while one is dreaming (i.e. even though psychological pain uses the same brain regions, the qualia need not necessarily "feel" exactly the same, and thus the nobleman's worry may not be quite as pressing as the peasant's hunger)
- The buddhist message is, generally, a positive one
On the other hand, the idea that (all?) desire causes suffering, and therefore the means to eliminating suffering is via eliminating all desires is also simply not very useful for the majority of the population. To give an example, as a social species, we have collective norms that govern expectations about people's behaviour; this is a form of "desire" that each of us has about each other.
And yet, if we gave up all our expectations about "appropriate" behaviour, we could not function in social situations without extreme difficulty. We wouldn't "know" what to expect next from others, how to interact without offending them, or how to build cooperative relationships - tit-for-tat is a kind of expectation, after all, and most people won't put up with being parasitized for very long before they tell the parasite to get lost. (Not to say that social norms can't be problematic in their own way, but they form heuristics for simplifying behavioural strategies that are, on the whole, also positive).
One solution is to isolate oneself in the hills away from all other people so that one can avoid these apparent contradictions, and many monks have done this over the years. However, this simply isn't helpful advice for the species as a whole because even if our large modern populations didn't occupy just about all of the Earth's land, we evolved to function in groups. Therefore, we also "desire" each others' love and companionship in order to avoid feeling lonely - among other things.
Proper attachment in babies requires that they receive consistent love and affection from their parents throughout their early development. Failure to do this can cause a great many problems for the person later in life. In other words, "desire" for others is written right into our development; it's not really surprising either, seeing as how we're all born incapable of self-preservation for the first several years. We need each other in order to be human; seeking to eliminate all desire, therefore, is like tilting at windmills. And for myself, Don Quixote can keep his quest because I would rather pursue the following:
Happiness is proportional to:
+ Love
+ Meaning
+ Flow
- Pain
- Poverty
(In other words, seek out people you can love who will also love you - that's the most important, btw - as well as something more important than your own self-interest that motivates you to give of your time and effort freely. Pursue activities that you find interesting and engaging, and that you can "lose yourself" in. Try to avoid physical and psychological pain, including by keeping your body healthy and by proactively addressing cognitive dissonance when it occurs. If possible, earn enough to put a roof over your head - even a modest one - as well as food in your belly and clothes on your back, and do your best not to compare yourself upwards to those who have more money than you.)
Thank you.
Is suffering the separation of the human from nature not unlike Greer’s Druid philosophy which has nothing to do with the common concept of physical suffering? This human frailty called ‘duality’ is keeping man from nature (you may call it ‘God’; without the guy in robes somewhere in the sky). The Zen master might say, “Put straw on your garden.” as per the book ‘One Straw Revolution.’ Obviously crude oil in all its complexities is real and part of this world. Is our fascination with its depletion real or is this like a scream prior to impact? Are we fascinated with the scream? Putting straw on your garden is action not fascination.
Most of us here understand the fundamentals of Peak Oil. It is ‘flow’ not ‘reserves‘, ELM, various relationships between capital and exploration, ERoI, etc. No one not even WT can know all the details of Peak Oil. Toto and others have shown us Peak NPK, Peak Water, Peak Soil, and AGW. All up, it seems we are in deep caca. The question is what to do about it. Nate and Andre and so many others are trying to get the word out so people can minimize the effects of Peak Oil. In a small way even I contribute to this. I talk to people and generally get the brush off. When I asked my doctor for a years prescription he asked, “What do you know that I don’t know?” So I told him about “Peak” things while some poor bastard froze in the next room waiting for the doctor.
Later.
Ron,
You`ve correctly summarized Buddhist precepts but "Zen was often opposed to the precepts of orthodox Buddhism even as Taoism was opposed to Confucianism. To the transcendental insight of the Zen, words were but an incumbrance to thought; the whole sway of Buddhist scriptures only commentaries on personal speculation. The followers of Zen aimed at direct communion with the inner nature of things, regarding their outward accessories only as impediments to a clear perception of Truth...." (The Book of Tea, by Okakura Kakuzo, p. 60. 1906)
Thus Zen art is black and white (more interested in penetrating abstract truth), while orthodox Buddhist art is elaborate and features bright colors (wants to highlight and decorate glorious message). Don`t get me wrong, Zen is definitely a form of Buddhism at heart. But it is different too. It`s only my feeling, I`m not a religious scholar, but I`ve visited maybe about 50 Buddhist temples.
I am new around here, but thought I would post a couple of ideas related to biophysical economics.
The first is a simple calculation that helps people understand why even moderate growth can't be sustained indefinitely: Consider 1 dollar invested at a 7% real return in the year AD 1. What is its current value? (Note that 7% is what investment experts often use...10% stock return minus 3% inflation) The answer is 1.07^2000 which is roughly 10^58 dollars, which is the value of a sphere of gold that is a few light years in diameter. Hopefully if someone has an economic model that predicts this result they will note the need to reconsider the assumptions of their model. (I first heard this from William Bernstein http://www.efficientfrontier.com/)
Second, I wish people would be cautious in dismissing neo-classical economics in its entirety. Human economic activity is an unbelievably complicated system to model. Economists have some simple models that capture some parts of the behavior of the system in some of the regimes that have existed in recorded history. Biophysical economics is attempting to add some constraints, but hasn't yet developed into a full enough model to make many useful predictions. In the mean time, reasonable people will keep using neo-classical economics...hopefully we can make them aware of the places where it is likely to break down. Of course, many unreasonable people will continue to use whatever aids them in subjugating the rest of the planet. There is the real problem...lip service to neo-classical economics is just one of the tools they have found useful.
Fair enough. There is a lot of value in neo-classical economics...it's just that the edge conditions are where all the interesting stuff happens.
Also, biophysical economics only deals with supply side - demand side constraints are equally if not more important. For example, I would argue that Jevon's paradox applies equally to technology's impact on our brain/behaviour (as it does to efficiency resulting in more energy use in totality). The more efficient gadgetry we have (cell phone, Ipod, email, twitter, facebook, the more our brains are becoming overtaxed to point of ignoring other, more human scale, activities. To give one example.
Man can not live on energy alone. Some things we need are based on intellectual and physical efforts such as medical technology, computer technology, clothes, shelter, food etc. These things are not easily measured in barrels of oil.
They have not built a single nuclear power plant in the U.S. since 1988 and they want clean energy fast, but are not willing to pay to have the photovoltaic cells put on their roofs because it costs too much. The cheaper thinfilm photovoltaics are limited by the scarcity of indium and tellurium. No one has gone out and dismantled their cars to prevent global warming. Few people walked to work. They wanted to go to the new car lots to pick out something nice; not switched to battery powered bicycles.
They will probably end up demanding gasoline and fossil fuels anyway. China is growing without complex pollution controls. Their growth is evident my their oil consumption surpassing Japanese oil consumption. Wealth in China is evident by the number of new cars on the road along with the number of new high rises in their cities.
If the U.S. will build nuclear power plants, who are they going to borrow from? For 25 years the U.S. has been spending more than it makes.
It is like promising a 30 million more doctor visits a year when there is a shortage of doctors and nurses. It takes more than money to cure an ailing economy.
One of the problems that your statement hints at is that we use money as a marker for physical resources as well as use it to place value on certain objects. To further complicate things, value can be broken down into two types (at least): intrinsic value and emotional value. I doubt we will ever come up with a measurement system to fully address these needs.
yes, good points. As we have seen, money is not a very good marker to reflect reality and it has been getting worse over the decades. I think it is inevitable that we will move toward other measures that take into account energy among other biospheric limitations plus social capital to the extent that we can get a handle on this. Having this article on the biophysical conference run in the NYT is an example of a new visibility for these concepts which I am excited to see. People are looking to make sense out of the new normal in this economy and there is no doubt that these principles attracting a lot more interest.
This subject is not new. Some economists realized sometimes ago that neoclassical economics model is based in false premises and warned about the consequences such as economist Kenneth Boulding when he said “"Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist."
A good book about this subject is Nicholas Georgescu-Roegen “The Entropy Law and the Economic Process.”
Picked it up about a month ago. Good read :D
As an aside, I can why Roegen's ideas weren't accepted at the time. They had an ever-growing energy base, possibly a constant or growing EROI, and plenty of unexplored land that could be assumed to contain easily extractable fossil fuels. Economists (or anyone else) who subscribed to Malthus's ideas had been successfully tarred and feathered for over 100 years. In other words, Roegen's ideas didn't match up with the human experience.
As Dr. Costanza puts it so well, people were living in an "empty world" with seemingly limitless resources.