The Challenges of Ecological Economics, Essay Example

Ecological economics as a discipline marks a radical change in regards to business theory and practice in general, to the extent that not only is the latter defined by the economic and market context, with its dynamic relations to a number of entities, such as legal authorities, competitors, suppliers, the consumer and the economy as a whole, but now is confronted with the environmental effects of business decisions. In essence, ecology, which was not part of the traditional business paradigm, now plays a prominent role in business decisions, from the necessity to adhere to various legal environmental regulations to maintaining ethical commitments to the environment that have arisen in conjunction with the rising ecological consciousness in the greater society.

In this regard, ecological economics begins from the assumption that externalities are crucial to the business process. For example, environmental damage caused by a company can result in future losses, while remaining ethically questionable. Accordingly, equitable treatment of externalities seems to be a necessary factor to consider in economic planning, to the extent that the business can no longer be posited in relation to factors that have traditionally been excluded from economic theory, such as the environment.

One of the key features of ecological economics therefore is the balance between consumption and waste. Excessive waste needed to reach production levels can obviously have a negative effect on consumption in the long run. The question of how to maintain the balance is precisely keep the necessity of this balance in mind. Consumption and waste must be viewed as variables that in an ideal situation reach a point of equilibrium, although perhaps not in the present moment, within a reasonable time-frame. Namely, externalities must once again be conceived as crucial to any type of business planning and strategy. Ecological economics is thus not only an ethically-tinged form of economics, but makes sense from a purely business perspective, since it deals with fundamental economic concepts such as consumption and production.