Ecological Efficiency

Ecological efficiency measures the success of production activities in minimizing a required natural flow.

A change in ecological efficiencies can shift budget shares and share limits, and thus ecological limits and target quantities.

The concept is also required to establish target rates for natural flows. Note that, although the other limits discussed are based on biological flows, ecological efficiency applies to all natural flows, and can therefore be specified for nonrenewables as well.

Ecological efficiency (EE) is the relationship between a natural flow and its associated output, and is expressed as a ratio — the output's quantity divided by the amount of the flow used in its production:

EE = Q/flow

If an output incorporates multiple natural flows, it will have multiple ecological efficiencies associated with it.

Because ecological efficiency is a technical measure (its definition excludes health), it is relevant to production in general, and can therefore be applied to any stage of the output life cycle.

For instance, even though a printing press is an intermediate output and thus lacks potential value, we can calculate the ecological efficiencies for the natural flows used in its production.

Ecological efficiency is a ratio of mixed dimensions. The numerator is a unit quantity of an output, and the denominator reflects the material nature of the associated flow. Following are three examples of such ratios:

  • One house/Board feet of lumber
  • One construction beam/Pounds of iron
  • 1,000 hours of consulting services/Kilograms of greenhouse gases

The mixed nature of this ratio means that ecological efficiencies are commensurable only if the outputs are the same and the natural flows are of the same types. For example, it is possible to compare the ecological efficiencies of two house-building methods by citing how many board feet of lumber each requires for a standard-size house.

However, it is not possible to compare these ecological efficiencies with those for the construction of a commercial building that uses steel.

The effects of changes in ecological efficiencies on share limits (for a single final output) and budget limits (for the economy as a whole) are depicted in the following figure.

Ecological efficiency and share/budget limits
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An increase in ecological efficiency will increase a share limit or budget limit, thus permitting higher output quantities. A decrease has the opposite effect. "EV" and "IC" indicate effectual value and input cost respectively.

Consider a single output first. If ecological efficiency rises for a biological flow, less of the flow is required per unit of output, which means that more of the output can be produced within its budget share.

The output’s associated share limit thus increases — that is, it shifts to the right. If this share limit is also the ecological limit, the ecological limit increases. If the ecological limit is also the target quantity, the target quantity increases as well.

The reverse sequence applies if ecological efficiency falls. For an economy's total outputs, a rise in ecological efficiency means that the associated budget limit shifts to the right. If ecological efficiency falls, the budget limit shifts to the left. The impacts on the ecological limit and target scale are parallel to those for a single output.

It is important to recognize that increased ecological efficiency is the only way to increase share limits and budget limits. These limits are based entirely on the physical world, and therefore cannot be affected by economic factors such value, cost, or population levels.

On a graph the limits could therefore be imagined as fixed, with the other quantities shifting around them, unless technical changes occur that modify their associated ecological efficiencies.

Ecological efficiencies can be illustrated by the example of houses. If we stop clearcut logging and choose a more environmentally benign method of harvesting wood, habitat destruction per unit of wood will decrease.

This will constitute an increase in ecological efficiency for this flow, and will permit us to extract more wood and thus to build more houses.

If we are sufficiently successful in reducing habitat destruction, the ecological limit will shift to the wood budget. If this occurs, our efficiency efforts should be redirected — we should now focus on using less wood per house, building smaller houses, emphasizing multiple-occupancy residences over single-family houses, or perhaps moving away from wood to a construction material with less environmental impact.

Efforts such as this will continually shift the ecological limit to the next higher share limit, until the ecological limit is higher than the optimum quantity and we can rationally produce up to the output's economic limit.

A few additional points should be made regarding ecological efficiencies:

First, if an output is recycled rather than discarded, some of the natural resources it contains will be recovered. This will effectively reduce the natural flow requirement per unit of output quantity. Recycling is thus one way to increase ecological efficiency.

Second, ecological efficiency applies not only to scarce resources (those obtained through economic production, such as metals and oil), but also to resources that are widely available without production, such as air, sunlight, and water.

For example, a solar panel than uses less sunlight per unit of electricity is more ecologically efficient than one that uses more, even though sunlight is not the result of production. The same can be said for a windmill with respect to wind requirements.

The unconditional maximization of ecological efficiencies is necessary if we are to delay the onset of scarcity, thus postponing the day when painful choices must be made with respect to resource allocation.

Third, an increase in ecological efficiencies will typically lower natural cost. If less of a pollutant is generated per unit of output, the human damage from this production will likely be reduced as well.

Of course this reduced cost can easily be negated by an increase in output quantity. This is called the rebound effect or Jevons paradox, and arises when people consume more of the same output with the money they save from higher efficiencies. Although this is always a potential danger, it should not be a major issue for an ENL-driven economy.

Last, ecological efficiencies complicate the ranking of production facilities, which in ENL is based solely on potential gains. However, it is possible that facility A achieves higher potential gains than facility B, but that B has higher ecological efficiencies than A.

In such cases, which production facility should be preferred?

Unfortunately, no analytical method appears to exist here. Potential gains relate largely to present health, whereas ecological efficiency relates largely to the natural conditions for future health. Such temporally separated quantities are difficult to compare, and social judgment must therefore determine which production facility should be preferred.

ENL’s definition of ecological efficiency is strongly reminiscent of the well-known “IPAT” equation. This was developed in the 1970s during debates about the factors involved in ecological impact.

Written out in full, the IPAT formula is this:

Impact = Population * Affluence * Technology

This means that the level of ecological impact is determined by population, affluence (per capita consumption), and the level of technology. If we interpret the latter as efficiency, it must appear as the denominator. The formula then becomes:

I = PA/T

Thus, ecological impact rises if population increases or per capita consumption increases; it drops if technical efficiency increases.

Compare this to ENL’s formula for ecological efficiency: EE = Q/flow. This can be rearranged as follows:


The terms in these two formulas are equivalent: ecological impact is the result of natural flows, population multiplied by affluence results in output quantity, and technical efficiency is equivalent to ecological efficiency.

The formulas are thus consistent with each other, reflecting the fact that they are different approaches to the same underlying issues.

From this brief discussion it should be clear that the IPAT formula, when interpreted in ENL terms, is a powerful tool for reducing ecological impact, and thus for reversing our perilous overshoot condition.

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