I applaud Debra Rienstra’s initial piece, “We Have to Talk About Economics,” to introduce more discussion of economics in the Christian church community. I also applaud Stephen Smith and Todd Steen’s recent response to that challenge, “Yes, We Have to Talk About Economics.”
However, I find Smith and Steen’s response misses the mark of the challenge that Rienstra put forth in her brief summary of Kate Raworth’s theory of doughnut economics. That’s a model of sustainable development that considers both ecological ceilings and social foundations.
Smith and Steen emphasize the importance of cost-benefit analyses for economists. Although cost-benefit analyses are important for shaping economic policies, cost-benefit analyses that exclude environmental costs and benefits, are, by definition, grossly inadequate.
This limited focus soley on cost-benefit analyses is evident in how they encourage us to think about economic matters — saying that “our Lord commands us to be good stewards of the resources that he has provided us.” Implicit in this statement is the notion that God’s creation is reduced to resources for humankind, rather than a creation that we should care for and appreciate in its wholeness. A forest is then seen as a source for lumber for humans rather than an ecosystem that houses a great diversity of God’s creatures. Wetlands are then seen as regions to be drained and developed rather than important ecosystems that serve to purify water that filters through it and as a habitat for numerous and diverse creatures. Some estimates conclude that the ecosystem services performed by wetlands can reach up to $8,000 per acre per year.
This narrow cost-benefit focus of economics is evident also in the website for the conference of Christian economists referred to by Smith and Steen. It reads: “The economics discipline is at the center of some of the biggest questions that humans face, including those about poverty, wealth, the role of the state, inequality, growth, the cost of living, migration, education, and family.”
Missing from this list are the big questions concerning environmental and ecosystem sustainability. I find this puzzling, especially in view of the significant human impacts on the environment and how these impacts are going beyond the ecological ceiling that Kate Raworth has already identified in her doughnut economics.
One such area is the nitrogen and phosphorus loading in the environment. The effects of this loading is evident in the algal blooms in Lake Erie and the coast of Florida, the Dead Zone in the Gulf of Mexico, and the excessive level of nitrogen in the riverine source of drinking water for the city of Des Moines, Iowa. All of these examples of nitrogen and phosphorus loading impacts are caused by the excessive use of fertilizers in agriculture. These environmental impacts are usually considered to be externalities in our cost-benefit economic analysis of agricultural production. The communities bear the costs of these impacts, not the farmers who apply the fertilizers.
A further impact of decades of this nitrogen and phosphorus loading is the loss of soil structure related to the decline of organic matter in the soil and the subsequent decline in healthy, fertile soils. This loss has contributed to excessive soil erosion as well as a decline in the ecosystem service that healthy soils provide in water retention, etc. A healthy soil ecosystem service helps mitigate the need for irrigation and reduces water runoff that may contribute to floods.
The upcoming renewal of the Farm Bill by the U.S. Congress would be a good occasion to implement an economic analysis that internalizes the costs of unsustainable agricultural practices and one that includes the ecosystem service benefits of healthy soils. This should include, for example, the elimination of the major subsidies for corn production. Such subsidies skew our food production to the benefit of feeding animals rather than humans.
Corn production subsidies also lead to an excess of corn production which is channeled to the production of ethanol to meet the requirement that gasoline contains 10% ethanol. Almost as much fossil fuel is used in the total production of ethanol from corn including the growing of corn as in the BTU energy value of the ethanol that is produced. Moreover, a great deal of green house gases are released in the production of ethanol from a large portion of corn production that presumably is supposed to make us more efficient and less reliant on fossil fuels. The latest reports I have seen is that over 40% of the U.S. corn production is used for ethanol production.
Furthermore, a good portion (about 23%) of our corn production is produced by irrigation from the Ogallala aquifer which is an unsustainable source of irrigation. This region should be used to grow less water intensive crops than corn. It is unconscionable to be using an unsustainable water source to grow corn that we really do not need, and for this corn to be wasted in the production of ethanol that results in minimal net gain of energy. Such agricultural lands should much rather be used to produce crops that alleviate global shortages and needs. Economic analyses should be designed to incorporate these environmental externalities.
Smith and Steen mention that perhaps their sharpest disagreement with Rienstra concerns the concept of economic growth. Smith and Steen argue that economic growth is a moral imperative because it provides resources for improved material wellbeing. This is perhaps true for impoverished people, but whether that is true for wealthy people is questionable. As they suggest, there are important tradeoffs in alleviating poverty.
A significant example of these questionable tradeoffs is the Green Revolution. Undoubtedly it helped alleviate massive hunger in a country like India. An important environmental tradeoff in the Green Revolution was the increased production of the new genetic varieties of grain that required both fertilizer and irrigation. The environmental cost of this fertilizer reduced natural soil fertility and increased irrigation from groundwater sources. This in turn led to a decline in groundwater of one to three meters per year. That decline meant an increase in electricity for pumping water, costs that the very poor could not afford. This ultimately resulted in an increased concentration of the farmland to those who can afford the increased costs for irrigation.
According to Sandra Postel, “as much as 10% of the world’s food is produced by the depletion of groundwater – a hidden water debt that creates a dangerous bubble in the food economy.” This is an example of a major economic miscalculation for a sustainable, flourishing environment for the world’s poor. Focusing instead on regenerative agriculture might well provide for a greater material wellbeing for the impoverished throughout the world as well as for those in wealthy nations like the United States.
These examples may serve to illustrate the value of ecosystem services in service of “economic growth.” Doing so may avoid the fallacy of the continual growth of GDP that Rienstra highlights in her review of Raworth’s doughnut economics.
The Greek word “oikos” (meaning “household”) is the root word in both economics and ecology. I think we can all agree that principles of healthy economics must incorporate the principles of healthy ecosystems. Sound principles of economics cannot be established without recognizing sound principles of ecology.
The broader meaning of “oikos” is God’s creation for all creatures.
Articulate, convincing, timely! Thank you Uko
This is a great and illuminating discussion. Than you, prof. Rienstra, for getting it started, profs. Smith and Steen for engaging it, and prof. Zylstra for moving it compellingly.
Ditto to what Dan Meeter has just said. This is helpful engagement!
Thank you. I am woefully ignorant on so many of these issues. I have appreciated the urgent discussion.
I have yet to see any benefit from attending to the benefit of cost benefit.
That camel still gets through the needle’s eye a lot easier. I am so tired of “We could make more money if . . . “
Doing for is not Jesus’s way. Being with (the most important word in the Bible) was.
Thank you! So very much!
I echo Dan’s thank you, Uko!
When one terms the Green Revolution as “a questionable tradeoff” are we not simply hiding human misery behind a certain set of academic and policy words? If I understand the argument properly it is that perhaps it wold have been better for millions to remain in dire poverty, subject to famine and death so as to avoid certain environmental and political harms (the latter, being the concentration of wealth). All this strikes me as something easier to consider in the safety of a pleasant summer day in W Michigan, however in terms of lives and immiseration, I have my deep doubts.
Cost-benefit analysis only works when you can know and calculate all the costs, including externalities. In 2020, the Rockefeller Foundation estimated that the hidden costs of food in the United States amounted to $2,105 billion, almost double the amount spent on food ($1,100 billion). The majority of these costs pertained to the health sector (54%), followed by environmental damage (38%), poor working conditions (6%), and lastly agricultural subsidies (1%) (Barrett et al., 2021). This study didn’t include all our food imports. This is why we need more than the utilitarian calculations that most economists use. We need to add our values too.
Thanks for this. The situation is dire and knowing how to be good stewards is difficult. Indeed, there are many tradeoffs. Thanks for sharing info and an educated perspective to guide us.
Uko is spot on in pointing out that Todd and Stephen’s emphasis on cost-benefit analysis misses the challenge of Debra’s argument that we need to include ecological ceilings and social foundations as essential in any truly adequate analysis. God’s creation is not reducible to human “resources” and in doing any cost-benefit analysis the costs and benefits to “the environment” must also be included. In short, ecosystem services must be included. As argued cogently by 14 authors in the book “Beyond Stewardship: New Approaches to Creation Care” (Calvin University Press, 2019) we must move away from viewing the non-human world as merely having instrumental or use value and re-imagine how we understand the world of which we are a part and rethink how we are to live sustainably within it. We all inhabit the same oikos (home planet). This means (as I and others have argued) that economists must know ecology and ecologists must know economics, since both academic disciplines are about our common oikos.
Prof. Zylstra-
Thanks for responding to the article that Stephen Smith and I wrote in Reformed Journal. Let’s keep the discussion going.
I absolutely agree with your statement that “Although cost-benefit analyses are important for shaping economic policies, cost-benefit analyses that exclude environmental costs and benefits, are, by definition, grossly inadequate.” A large part of economic analysis includes the study of externalities and environmental costs and benefits.
However, I must disagree with your assertion that we have a limited focus in our analyses. You suggest that our statement that “our Lord commands us to be good stewards of the resources that he has provided us” implies that we believe that “that God’s creation is reduced to resources for humankind, rather than a creation that we should care for and appreciate in its wholeness.” Nothing could be farther from the truth; we don’t imply that or believe it. We don’t see the forest as merely a source of lumber for humans either. Let me be very clear. When we talk about costs and benefits and being a good steward, we believe this includes all the costs and benefits, including environmental costs and benefits.
Economists regularly, systematically and seriously include environmental costs and benefits in our analyses. The field of environmental economics is one of the leading sub-fields in the discipline. Although the wording of the call for papers that you quote doesn’t say the word environmental, these issues are implicit and explicit in our discussions. A further look at the Association of Christian Economists website would find many explicit treatments of these topics. Two additional quick and short examples from my colleague and Faith & Economics editor Steve McMullen are https://www.thebanner.org/features/2012/10/can-we-be-good-stewards-of-the-economy-and-the-environment and https://christianscholars.com/stewardship-as-an-environmental-and-economic-ethic/.
When I read your discussion of the production of corn and ethanol, your analysis makes total sense to me. For an economist, this is exactly the kind of questions that we like to ask and must ask. Economics analyses are designed to incorporate environmental externalities. We might not always agree on the evaluation, and things are not always easy to measure, but we are always asking the questions. As a result, I would agree with you that sound principles of economics should recognize what you describe as “sound principles of ecology.”
I know that economists could learn a lot about the full nature of costs and benefits from ecologists. I must push back, however, on the idea that Stephen Smith and I implied that “God’s creation is reduced to resources for humankind.” Although we might weigh costs and benefits differently, economists certainly believe environmental costs and benefits matter. As just one example, when we evaluate whether electric cars are really better than gas-powered vehicles, we would want to consider the impact on the environment of the production of materials for batteries and how they are disposed, and where the electricity comes from to power the cars as well as the ecological impact of creating an entire new system to power vehicles. All of this would have to be compared to the known costs and benefits of having gas powered vehicles, including the costs of exploring and refining oil, and the emissions for gas-powered vehicles. Both economics and ecology would have a lot to say in this analysis.