Ecological resources constitute the basic support system for all activity on earth. These resources include products such as air, water, minerals and crude oil and services such as carbon sequestration and pollution dissipation (Tilman et al. 2002; Daily 1997; Costanza et al. 1997; Odum 1996). However, traditional methods in engineering and economics often fail to account for the contribution of ecosystems despite their obvious importance. The focus of these methods tends to be on short-term economic objectives, while long-term sustainability issues get shortchanged. Such ignorance of ecosystems is widely believed to be one of the primary causes behind a significant and alarming deterioration of global ecological resources (WRI 2000; WWF 2000; UNEP 2002).
To overcome the shortcomings of existing methods, and to make them ecologically more conscious, various techniques have been developed in recent years (Holliday et al. 2002). These techniques can be broadly divided into two categories, namely preference-based and biophysical methods. The preference-based methods use human valuation to account for ecosystem resources (AIChE 2004; Balmford et al. 2002; Bockstael et al. 2000; Costanza et al. 1997). These methods either use a single monetary unit to readily compare economic and ecological contributions, or use multi-criteria decision making to address trade-offs between indicators in completely different units. However, preference-based methods do not necessitate compliance with basic biophysical laws that all systems must satisfy, and require knowledge about the role of ecological products and services that is often inadequate or unavailable.
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Ukidwe, N.U., Hau, J.L., Bakshi, B.R. (2009). Thermodynamic Input-Output Analysis of Economic and Ecological Systems. In: Suh, S. (eds) Handbook of Input-Output Economics in Industrial Ecology. Eco-Efficiency in Industry and Science, vol 23. Springer, Dordrecht. https://doi.org/10.1007/978-1-4020-5737-3_23
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