The Biophysical Economics Workgroup is composed of academic and industry leaders from different parts of the world, all hailing from various fields of both the natural and social sciences. The workgroup seeks to advance a new paradigm in understanding the properties, structures and processes of economic systems and to offer an alternative to the neoclassical economics model our global system is currently dependent on.
The workgroup is currently coordinated by Dr. Charles Hall of the State University of New York College of Environmental Science and Forestry.
We invite you to explore our website and to consider joining our community in contributing to the development of an exciting and emerging discourse in economics.
Dr. Hall was trained as a systems ecologist by Howard Odum at the University of North Carolina. Since then he has had a very diverse career at Brookhaven Laboratory, The Ecosystems Center at the Marine Biological Laboratory, Woods Hole, Cornell University, University of Montana and, for the last 20 years, at the State University of New York College of Environmental Science and Forestry (SUNY ESF). He worked initially on streams, estuaries and tropical forests but increasingly on human-dominated ecosystems in the US and Latin America. All of his research reflects his interest in understanding and developing analyses and computer simulation models of the complex systems of nature and humans and their interactions. His focus has always been on energy and especially energy return on investment (EROI). He became increasingly interested in studying systems of humans and nature using ecosystems perspectives, that is, by studying material and energy flows, and applying this perspective to attempting to understand human economies form a biophysical rather than just social perspective.
Dr. Hall is currently a faculty member of the SUNY ESF, where he teaches a freshman course called The Global Environment and the Evolution of Human Culture and graduate level courses in Systems Ecology, Ecosystems, Energy Systems, Tropical Development and Biophysical Economics. He also has a strong graduate program with usually about 10 students enrolled.
Visit his website at www.esf.edu/EFB/hall/
Professor Charles Hall
Coordinator
Who We Are
Biophysical economics is a system of economic analysis that is based on the biological and physical (as opposed to social) properties, structures and processes of real economic systems as its conceptual base and fundamental model. It acknowledges that the basis for nearly all wealth is nature, and views most human economic activity as a means to increase (directly or indirectly) the exploitation of nature to generate more wealth. As such, it focuses on the structure and function of real economies from an energy and material perspective, although it often considers the relation of this structure and function to human welfare and to the money (i.e. dollar) flows that tend to go in the opposite direction to energy.
The figure below is a perception of the simplest diagram that one could use to represent a real economy, although it is far more complex and infinitely more accurate than the “firms and households” diagram said to represent the economy in most introductory economics textbooks. This diagram, and real economies, includes (from left to right): (1) energy sources (principally, the sun) that are essential for any economy; (2) the material that circulates upon the earth’s surface through natural and semi-natural ecosystems; and (3) the human-dominated steps of exploitation, processing, manufacturing and consumption. Black and white arrows show the transfer of materials and energy through the economy. Raw materials are refined by human activities until the heat is dissipated and the materials are either released as wastes to the environment or recycled back into the system.
Biophysical Economics Versus the Alternative
Biophysical Economics
In neoclassical economics, the model is represented by a circular flow of income between producers and consumers. In this circular flow model, the inter-dependent entities of producer and consumer are referred to as "firms" and "households" respectively and provide each other with factors in order to facilitate the flow of income. Firms provide consumers with goods and services in exchange for consumer expenditure and "factors of production" from households.
The circle of money flowing through the economy is as follows: total income is spent (with the exception of "leakages" such as consumer saving), while that expenditure allows the sale of goods and services, which in turn allows the payment of income (such as wages and salaries). Expenditure based on borrowings and existing wealth – i.e., "injections" such as fixed investment – can add to total spending.
This model does not take into account exogenous flows of energy and matter from the environment. It also gives the impression that the firms and households thrive in a “perpetual motion” sort of interaction - i.e. energy and matter are completely recycled with utter disregard in the 2nd law of thermodynamics.
Neoclassical Economics
