Environment, Power, and Society

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Book: Environment, Power, and Society, Howard T. Odum : book on Biophysical Economics, i.e energy economics


"In Environment, Power, and Society, Howard T. Odum developed a systematic methodology using energy flows to analyze the combined system of humans and nature. Odum combined Darwin’s theory of natural selection and Lotka’s hypothesis of natural selection as an energy-maximizing process into a ’general energy law’: maximization of useful work obtained from energy conversion is the criteria for natural selection. Odum coined this ’law’ 'the maximum power principle'. The maximum power principle, while yet to be subjected to rigorous empirical testing, rests on the principles of natural selection set forth by Darwin and Lotka. Odum observed that ecological and other systems that survive and prosper used energy at some ’optimum’ rate ’better’ than competing energy utilization strategies. Since human systems are subjected to the same energy constraints as any other system, Odum suggests that any ethic for the survival of humans must meet this same logical and cultural, operated on differential rates and efficiencies of energy use by ecosystems and economies.

Two of Odum’s most important contributions to biophysical economics are energy quality and the countercurrent flow of energy and money in the economy. Energy quality refers to the relative ability of the economy to use different fuels to produce economic output per heat equivalent burned. Odum argued that because fuels differ in quality, societies with access to higher-quality fuels have an economic advantage over those with access to lower quality fuels. Odum also stressed the importance of matching economic tasks with fuels of appropriate quality. High-quality fuels such as electricity are best used to control the flow of larger, lower-quality flows in the economy. Electricity is well-suited to operating a computer which can perform tremendous amounts of work per kcal of electricity. Electricity used for space heating is a poor use of high-quality energy because space heat could also be provided by lower-quality fuels such as petroleum, coal or wood.

Odum argued that energy was the source of economic value. He pointed out that wherever a dollar flow existed in the economy, there was a requirement for an energy flow in the opposite direction. Money is used to buy goods and services, of necessity derived from energy. Each purchase operates through the economy as a feedback, stimulating more energy to be drawn from the ground and into the economy to produce additional goods and services. Money circulates in a closed loop, whereas low-entropy energy moves in from the outside, is used for economic tasks, and then leaves the economic system as degraded heat. Odum also observed that the large natural energy flows—solar radiation, water, wind, etc.—that are essential for life, have no associated dollar flows. The costs of using these energy flows do not, therefore, enter into economic transactions directly, often leading to their misuse or the mismanagement of life-sustaining environmental services." (http://www.eoearth.org/article/Biophysical_economics)

More information

Another important article by Odum: Energy, Ecology and Economics