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Biophysical | The Biophysical Difference biophysicalcorp.com | Masters Degree in Resource and Applied Economics - Department of... ag.unr.edu | Health Economics - Health Economics njha.com |
Thermoeconomics also referred to as 'biophysical economics', is a school of heterodox economics that applies the laws of thermodynamics to economic theory.[1] The term "thermoeconomics" was coined in 1962 by American engineer Myron Tribus,[2][3][4] and developed by the statistician and economist Nicholas Georgescu-Roegen.[5] Thermoeconomics can be thought of as the statistical physics of economic value.[6] Thermoeconomics is based on the proposition that the role of energy in biological evolution should be defined and understood through the second law of thermodynamics but in terms of such economic criteria as productivity, efficiency, and especially the costs and benefits (or profitability) of the various mechanisms for capturing and utilizing available energy to build biomass and do work.[7][8] Thermoeconomists claim that human economic systems can be modeled as thermodynamic systems. Then, based on this premise, they attempt to develop theoretical economic analogs of the first and second laws of thermodynamics.[9] In addition, the thermodynamic quantity exergy, i.e. measure of the useful work energy of a system, is one measure of value. In thermodynamics, thermal systems exchange heat, work, and or mass with their surroundings; in this direction, relations between the energy associated with the production, distribution, and consumption of goods and services can be determined.[10] Thermoeconomists argue that economic systems always involve matter, energy, entropy, and information.[11] Moreover, the aim of many economic activities is to achieve a certain structure. In this manner, thermoeconomics attempts to apply the theories in non-equilibrium thermodynamics, in which structure formations called dissipative structures form, and information theory, in which information entropy is a central construct, to the modeling of economic activities in which the natural flows of energy and materials function to create scarce resources.[1] In thermodynamic terminology, human economic activity may be described as a dissipative system, which flourishes by consuming free energy in transformations and exchange of resources, goods, and services.[12][13]
[edit] Energy flows in economics"Real economics is the study of how people transform nature to meet their needs," said Charles Hall, professor of systems ecology at SUNY-ESF, "Neoclassical economics is inconsistent with the laws of thermodynamics." Many biophysical economic thinkers are trained in ecology and evolutionary biology.[14] Central to this argument made by thermoeconomists is an understanding that the survival of all living creatures is limited by the concept of energy return on investment (EROEI). Biophysical economics also cites the peak oil hypothesis: that society is fast approaching the point where global oil production will peak and then steadily decline (Hubbert Peak). Thermoeconomists cite Frederick Soddy, a chemist who was awarded the Nobel Prize just a few weeks before, publishing Wealth, Virtual Wealth and Debt, as having influenced their discipline greatly.[15] Biophysical economists say, that the U.S. oil industry's energy return on investment has been steadily sliding since the beginning of the century. "If you go from using a 20-to-1 energy return fuel down to a 3-to-1 fuel, economic collapse is guaranteed," as nothing is left for other economic activity. Proponents of the field say they are moving closer to understanding "peak gas" and "peak coal." Consumption of many of the world's most valuable minerals could likewise see those resources nearing exhaustion, as well, they say.[16] [edit] Energy analysis in historyScientists have speculated on different aspects of energy accounting for some time as to how it might relate to alternatives in social systems.[17] Many variations of energy accounting are in use now, as this issue relates to current (price system) economics directly, as well as projected models in possible Non-market economics systems.[18] Exergy analysis is performed in the field of industrial ecology to use energy more efficiently.[19] [edit] See also
[edit] Notes and references
[edit] Further reading
[edit] External links
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