9.2.3 The Scope, content and process of the economic
analysis of environmental issues
It is against the background of the development of environmental and ecological economics given in the previous section, and their applicability to tourism, that Figure 9.2 was compiled. In the figure an attempt has been made to reflect the contribution of both these fields by identifying their principal areas of study and the methods adopted. It largely reflects the commonality of their approach, but as far as is possible it indicates how they differ. No claim is made that the figure is comprehensive. Indeed some areas of environmental and ecological economics, for example the analysis of such concepts and issues as the precautionary principle, safe minimum standard, the uncertainty of outcomes of particular actions or the effect of policy initiatives, cannot easily be depicted in it. Nor is the figure meant to show the interrelationship between consumption, production and the environment as presented in economics texts, for example Turner et al. 1994.
While Figure 9,l puts economic activity into the wider context of systems analysis, relating it to the two principal economic fields’ stances on sustainability and environmental issues, Figure 9.2 looks in more detail at the scope, content and process of economic analysis. The figure is again based on the premise of pursuing the transition to sustainability of human activity
in which the economic system is entirely embodied within the biosphere. It has been constructed to indicate not only the economic analytical approach to and process with regard to sustainability and environmental issues, but also the use of non—renewable and renewable resources and the mitigation
of pollution and waste. The figure endeavours to reflect the two extremes of stances on sustainability. The left side, from the markets and market exchange valuation boxes directly to the resource use/conservation and two pollution/waste boxes, indicates the very weak, ‘technocratic’, essentially traditional economic analytical stance. The centre column largely relates to the very strong, ‘ecocentric’ one. Identifying the distinction between eco-logical and environmental economic approaches is not an issue here.
As is made evident from the examination above of their representative bodies’ objectives and journal papers, there is no fundamental difference between them in the analytical methods employed. It is more a question of the nature of their disciplinary bases and focus of research. In general, the two fields are increasingly in agreement on the need to intervene in the operation of markets, the definition of economic value, the valuation methods adopted, the policies needed and instruments employed to attain environmental goals and the transition to sustainability. Thus the centre route through Figure 9.2 is now considered common to both fields. It is worth emphasizing in this respect that irrespective of the different shades of opinion within economics, its principal rationale is to contribute to the derivation of economic policy and instruments and to investigate their implications for society at large regarding the distribution of income and wealth, allocation of resources and economic efficiency.
Figure 92 should be read from the bottom upwards. The second box, concerning human activity, corresponds to the bottom six in Figure 9.1 that are embraced by Km and Kh. The two boxes that head the figure, sustain ability and biosphere, are common with those in Figure 9.1 and so do not require further explanation. The content within the boxes labelled markets, market exchange valuation of resources, market failure, resource use/conservation and pollution/waste (two boxes) is explained later in this chapter.
The remaining boxes concerning total economic value, valuation methods, environmental policy, policy instruments, environmental practice and their evaluation are examined in the following chapter. As appropriate, the interpretation of Figure 9.2 from the economic perspective is illustrated by examples from tourism, concentrating on issues arising from its operation and performance at a local level.