Reintegrating Energy/natural resources into economic theory

Reintegrating Energy/natural resources into economic theory

Programs should be interdisciplinary -i.e. required to provide courses/modules on a) the centrality of energy and resources to our economies and b) the biology underpinning utility, wants and needs. A more biophysical curriculum.

Points

The energy-economy interface is generally ignored in most economic schools of thought. Original economists (Smith, Ricardo) operated with land and land producitivity as key parameters. Due to cheap energy, macro econ somehow got reduced to labor and capital, ignoring nat resources, especially energy. Oil/gas/coal ==> the real Solow residual.

All fields of science and engineering have enormous bearing on economics--not just issues involving energy and natural resources. Information and communication, medical sciences, and transportation technology, to name a few, have enormous influence on the economic system and on economic agents. We should teach more generally on the "economics of science and technology" where we would include energy and natural resources as one of the topics. Perhaps this qualifies as a new idea - I'm not sure.

The point made by Nate Hagens below on how we only pay the extraction costs of carbon fuels explains how markets fail to allocate resources sustainably. Students need to learn how pre-modern societies allocated life sustaining common resources without either markets or hierarchy as reported by Elinor Ostrom. Refer to my postings on "How to allocate resources sustainably without markets" at https://economic-pluralism.yrpri.org/post/18991 and also https://economic-pluralism.yrpri.org/post/18946

Biophysical economics is crucial. Natural resources underpin the world economic system. See a recent update of a system dynamics "limits to growth" model, now called WORLD. You can find an overview in Sverdrup H.U. and Ragnarsdottir K.V. (2014) Natural resources in a planetary perspective. Geochemical Perspectives 3(2), 129-341. Available from: https://www.geochemicalperspectives.org/online/v3n2

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