Ecological pricing and economic efficiency

There is a need to accurately account for the contributions of environmenta l assets to the overall economy. Such accounting would permit policies that allow protection of important natural resources and aid the analytic proce ss to determine an accurate basis for a sustainable economy. The aim is to develop an accounting framework for ecology that is sufficiently consistent with the economic framework that the two can be fruitfully combined. With appropriate definitions of the flows, the two systems can be connected into a common framework. No single measure of the system productivity and effic iency can be given for the combined system, however, until the ecosystem me tabolism can be converted into economic terms. This could be done with a se ries of economic valuation techniques. Ecological prices could then be esti mated and a single measure of ecological economic output could be given. Wi th the net combined system input and output now in common terms, a technica l system efficiency measure can logically be proposed. Because human activi ty inevitably involves dissipation, such emissions would now have a monetar y price. Because such emissions are irrecoverable, the total output of the combined system is greater than it is under the current definition, giving rise to a technical system-wide efficiency measure. (C) 2001 Elsevier Scien ce B.V. All rights reserved.