A Comprehensive Model of Economy-Environment Interactions

Abstract

There is a small but growing number of studies on economy-environment interactions accounting for thermodynamic constraints on natural resource use (see Chapter 5). A primary contribution of these studies to our understanding of economy-environment interactions is the recognition of the importance of exergy and entropy as measures of the change of quality of natural resources. Guided by thermodynamic concepts, these studies frequently treat all material and energy inputs into each sector of the economic system and waste release into the environment indiscriminately of whether these inputs and outputs are in the form of materials or energy (see Ayres and Miller 1980, Eriksson et al. 1984, and Ayres 1988 for examples). Rather, a single measure reflecting the quantity or quality of inputs is frequently employed to depict these flows. With the sole concentration on a single measure for the quality of inputs, however, information is lost on the substitutability of inputs and the distinct effects of material and energy degradation on the environment.