Economics in the 21st century
Here are two satellite images showing patterns of deforestation in a Bolivian tropical dry forest. The rectilinear, light-colored areas in the bottom image are fields of soybeans cultivated for export. The dark strips running through these fields are wind breaks, needed because, once the trees are cut, the fine soils in this area are prone to wind erosion.
DB: This is Earth and Sky, speaking with Nobel prize winning economist Kenneth J. Arrow of Stanford.
JB: Arrow told us that some 21st century economists are beginning to see a need to re-frame some classic economic issues. For example, he said, there’s the need to look forward.
Kenneth Arrow: Another thing is what I call the forward-looking thing, where what you do today, may not be so serious today, but it affects tomorrow. And of course, the typical situation is using up fossil resources, oil and coal, degradation of farmland. . .
DB: Those things are profitable today, he said, but don’t take into account the fact that in the future there are going to be some scarcity problems.
JB: Arrow called this a dynamic effect – an effect over time – that some 21st century economists are taking into account.
Kenneth Arrow: One more specific thing would be what they call ecosystem services. If you have a forest, not only do you have wood, but it also tends to control the flow of water. When you start deforesting, you start to get erosion, you start to get floods, becaue the forest actis like a big xsponge. These things are very indirect. You think of forests, you think of the wood. And of course there are a lot of subtle things. Of c ourse, the forest is a habitat for many species, and so forth. And those are just a few topics that are rather hot on the agenda.
JB: That’s today’s show. For more, come to earthsky.org. We’re Block and Byrd for Earth and Sky.
Read the complete transcript of our interview with Kenneth Arrow.
Arrow and other prominent economists authored a paper entitled Are We Consuming Too Much? published in 2004 by the Journal of Economic Perspectives
Our thanks to:
Kenneth Arrow
Department of Economics
Stanford University
1972 Nobel Laureate in Economics
Additional Teacher Resources
NASA Earth Observatory Tropical Deforestation
People may disagree about whether the extinction of other species through human action is an ethical issue, but there is little doubt about the practical problems that extinction poses.
NASA Checking Earth’s Vital Signs
“If we think of the planets ecosystem services as a bank account that could last indefinitely if managed wisely, we are instead spending the principal. That does provide short-term benefits, but the long-term costs will be significant,” said Reid. By altering the planet, be it through deforestation, over-fishing, or degradation of land and climate change, “we’re depleting a capital asset.”
