Analysis of physical interactions between the economy and the environment

In this chapter methods for analysing the physical interactions between the economy and the environment will be discussed. The historic roots of such methods lie in the 19th century and go back to Karl Marx and Friedrich Engels, who used the term 'metabolism' (Stoffwechsel) to imply a relationship of mutual material exchange between man and nature, an interdependence beyond the widespread notion of man simply 'utilising nature'. Like many of his contemporary economists in the mid-19th century, John Stuart Mill linked this concept of metabolism to the idea of a 'stationary state', a form of economic development with no physical growth. This fi rst phrasing of 'sustainable development' was then forgotten for some time. It was not until the 1960 of the 20th century that the physical interactions between the economy and the environment again formed a basis for scientifi c thought, induced by the upcoming acknowledgement of the side effects of economic growth. Thus the economist Kenneth Boulding was worried that a 'cowboy economy' might not be compatible with 'Spaceship Earth', and outlined a coming change to a 'spaceman economy' that was suitably cautious in its dealings with fi nite resources. At the end of the 1960s, the physicist Robert Ayres and economist Allen Kneese laid the basis for a physical model, for the United States, of the material and energy fl ows between the economy and the environment, proposing to view environmental pollution as a mass balance problem for the entire economy.