Interpreting Ecological Economics in the Neoclassical Paradigm: Limits to Substitution and Irreversibility in Production and Consumption

There are many methodological approaches within ecological economics. Modifications to the neoclassical paradigm represents one of the principal modes of analysis. This paper examines the parallels between the ideas of some ecological economists concerning production and consumption, when viewed from a neoclassical perspective. It is well known that ecological economics is characterized by various arguments concerning limits to substitution between various inputs (energy, natural capital etc. vs. manufactured capital, labor etc.) in production and the implications these have for sustainability. However, various authors have also expressed concerns regarding limits to substitution in consumption. Ideas about irreversibility in production and economic development are also prominent in ecological economics. Likewise, many authors have argued for similar irreversibilities in consumption behavior. In analogy to the term technological change, I coin the term "preferential change". This paper illuminates the parallels between these four mostly independent research programs.