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AMER. ZOOL., 34:145-158 (1994) The Process of Loss: Exploring the Interactions Between Economic and Ecological Systems1 RICHARD B. NORGAARD Energy and Resources Program, Room 100 Building T-4, University of California at Berkeley 94720 Though only a few naturalists have read much economic theory, current understandings of how biological diversity is being lost are largely framed by the models developed by economists over the past two centuries. There is more than a touch of irony here. While conservation biologists are challenging the course of economic development, their perception of the process of biodiversity loss is driven by historic patterns of economic reasoning that have become a part of popular consciousness. To be sure, the early economic models were designed to address the development of agriculture and the use of land. But agriculture is the most dependent on biodiversity. At the same time, the geographic expansion of agricultural activities and the choice of agricultural technologies have been the key driving force of biodiversity loss. Laterm economic models addressed the limits of markets to provide guiding signals for human interaction with the complexities of ecosystems. Even the way we frame how we should respond to the greatest long-term threat to biodiversity, the likelihood of climate change, is rooted in the economics of more than half a century ago. This article elaborates these economic framings of the interaction of economic systems with the environment and discusses their policy implications. One of the major problems is that even existing economic understandings of the processes of biodiversity loss are only accepted within a part of the economics profession because these understandings conflict with political ideologies held by most American economists. Thus processes of biodiversity loss are maintained, not for a lack of knowledge, but for a desire among people to maintain simple views of biological systems. Even the patterns of reasoning held by economists who do ponder biological systems, however, are inadequate. The paper concludes with suggestions of additional ways of modeling the interactions between human activity and biological systems which may provide further insight into how we might better maintain biological diversity. SYNOPSIS. THOMAS MALTHUS AND POPULATION GROWTH Reverend Thomas R Malthus (17661834) argued that human populations were capable of increasing exponentially and would do so as long as sufficient food and other essentials of life were available (Maithus, 1963). He further hypothesized that people could expand their food supply arithmetically through new technologies and the American Society of Zoologists, 27-30 December 1992, at Vancouver, Canada. expansion into new habitats. Given the geometric potential of population and arithmetic food constraint, population periodicall y surpasses food supply. At these times, Malthus argued, people would ravage the land > 8° t o w a r o v e r food > a n d succumb to disease and starvation (Fig. 1). Human numbers would consequently drop to sustamable levels whence the process would re eat a ain P 8 - Whether or not one finds our demographic history consistent with Malthus's model, it has become a part of human consciousness, making it difficult to contemplate, let alone dlSCUSS, the issues Of population increase and its effects on bio- 145 146 RICHARD B. NORGAARD Population Food Production time FIG. 1. Thomas Malthus's model of population growth and collapse. diversity without his framing coming to mind. The success of Malthus's model stems from its simplicity. But the dynamics of population growth and how people depend on the environment are much more complex than Malthus's model. Thus, while Malthus provided us with a powerful model, its simplicity restricts its usefulness for policy making beyond the obvious prescription that fewer people would probably be better. DAVID RICARDO AND THE PATTERN OF HUMAN EXPANSION David Ricardo (1772-1823) introduced a second model of how economic activity relates to the environment, not because he was concerned with environmental degradation or human survival, but rather because he was justifying why landlords received a rent from their ownership of land (Ricardo, 1926). Ricardo argued that people would logically initially farm the land which produced the most food for the least work. As population increased, farming would extend to less fertile soils requiring more labor (Fig. 2). Food prices would have to rise to cover the cost of the extra labor on the less fertile land, and higher food prices, in turn, would induce a more intensive use of labor on the better land. This model indicates how increasing population drives people to farm in previously undisturbed areas, how higher food prices lead to the intensification and, in modern agriculture, the greater use of fertilizers and pesticides on prime agricultural lands, and how fluctuations in food prices can result in the periodic entry and exit of farmers on the extensive margin and shifts practices on the intensive margin. Ricardo's model of how agricultural activities are patterned on the land in response to population growth and changes in food prices are critical to our understanding of the complex interrelations between human survival and biodiversity. KARL MARX AND THE STRUCTURE OF OWNERSHIP AND CONTROL Karl Marx (1818-1883), among his multiple critiques of capitalism, addressed how economic inequities generated by the concentration of land and capital among a small portion of society affected how economies worked (Marx, 1954). Neoclassical models also readily show that peasants or others who work land and interact with biological resources owned by someone else have little incentive to protect them (see: Bator, 1957; THE PROCESS OF LOSS 147 FIG. 2. The "step-function" illustrates increasing labor required to produce a unit of food on lower quality land, resulting in better quality land earning a rent, shaded area, as poorer quality land is brought into production over time. Williamson, 1986). Landlords can only counteract this lack of incentive by diverting labor from other productive activities and employing it to monitor and enforce their interests in protection, a diversion that would not be necessary with a more equal distribution of control. Furthermore, especially wealthy landlords may have little interest in protecting a particular land or biological resource for their descendants when they hold land in abundance. It has long been known that how economies allocate resources to different material ends depends on how resources are distributed between people, i.e., owned by or otherwise under the control of different people, in the first place. Imagine two countries with identical populations and identical resources allocated by perfect markets. In the first country, rights to resources are distributed between people approximately equally, people have similar incomes, and they consume similar products, perhaps corn, chicken, and cotton clothing. In the second country, rights are concentrated among a few people who can afford luxury goods such as beef, wine, caviar, fine clothes, and ecotourism, while those who have few rights to resources, living on their labor alone, consume only the most basic of goods like rice and beans. In each country, markets efficiently allocate resources to the production of products, but how land is used, the types of products produced, and who consumes them depends on how rights to resources are distributed. For different distributions of rights, the efficient use of resources differs. The consequences of concentrated ownership and control, perhaps intuitive to many, owes its history to economic thinking and modeling. Questions of equity are extremely important to the process of biodiversity loss and to its eventual protection. The occupation and ecological transformation of the Amazon has been partly driven by the concentration of the ownership of land in the more productive regions of Amazonian nations and partly driven by the political power of the rich which enabled them to obtain subsidies to engage in largescale cattle ranching. The on-going effort to establish international agreements on the management of biodiversity has been repeatedly forestalled by debates over the ownership and control of biological 148 RICHARD B. NORGAARD FIG. 3. Market distortion due to an external cost. resources. But it is not simply a debate over fairness. The structure of the global economy and how specific economies interact with nature in the future will depend on whether nations of origin or Northern commercial interests which will likely discover new uses for heretofore unused species receive the "rent" from biological resources. A. C. PIGOU AND MARKET FAILURE Alfred C. Pigou (1877-1959) formally elaborated how costs which are not included in market prices affect how people interrelate with their environment. External costs, or externalities, are external to markets and hence do not affect how markets operate when in fact they should. Consider, for example, pesticide use in agriculture and the associated loss of biodiversity. In Figure 3 below, So illustrates the willingness of farmers to supply food at different prices while D is the demand curve illustrating the willingness of people to purchase food at different prices. The market clears at the price Po and quantity Qo. Now, imagine that we could measure the value of biodiversity lost through pesticide use and add this to the cost of pesticides. This would reduce the quantity of food that farmers could produce at any given price, shifting the supply curve to S,, the price of food to P,, and the quantity of food supplied and demanded to Q,. By including the cost of lost biodiversity through farmers' decisions to use pesticides, we internalize a cost which was previously external to the market and affect how the market operates. Following the logic of Pigou and numerous environmental economists since, biodiversity is not adequately protected because its value is not included in the market signals which guide the economic decisions of producers and consumers and thereby the overall operation of the economic system. Pigou also elaborated what has mistakenly come to be known as "The Tragedy of the Commons" (Hardin, 1968). Resources open to access by multiple users without adequate rules governing their use will be overused. Both traditional and modern societies typically develop rules for the use of resources held in common. Societies in transition between traditional and modern form frequently experience the tragedy of open access when neither traditional nor modern regimes of management prevail. Similarly, resources on frontiers beyond the control of governments, resources of the open sea, and wildlife which cross national boundaries are frequently open-access REUENUES AND COST THE 149 PROCESS OF LOSS TOTAL * COST ... / MAX./ / RENTS \ \ Ej FISHING EFFORT TOTAL \ REUENUES E2 FIG. 4. Excessive fishing effort in an open-access fishery. resources (Berkes, 1989). Open access has led to the extinction of diverse species and the genetic impoverishment of many. H. Scott Gordon (1954) formulated the problem as shown in Figure 4. Imagine an open-access fishery with total costs and total revenues from fishing effort as shown. Profits or rents from the fishery are maximized at level of effort E, but with unrestricted access, people would put more effort into fishing, until the level of E2 where no rent would be earned from fishing and no one would consider additional fishing worth the effort since costs would now be greater than revenues. Since more fish are caught at greater levels of effort, over fishing is more likely to occur in an open-accessfisherythan in a fishery managed as a commons. HAROLD HOTELLING AND THE EFFICIENT USE OF RESOURCES OVER TIME Harold Hotelling developed a model of efficient resources use over time that helps explain how species are driven to extinction (Hotelling, 1931). According to Hotelling's model, even when market prices fully reflect the value of a biological resource, it will be efficient to exploit a species to extinction or totally degrade an ecosystem if its value over time is not increasing at least as fast as money deposited in an interest bearing bank account. The logic is distressingly simple. If the value of the biological resource is not increasing as fast as the rate of interest, both an individual owner of a biological resource and society at large would be better off exploiting the resource faster and putting the returns from the exploitation in the capital market where it would be invested in the creation of human-produced capital which earned a return greater than the rate of interest. In this view, biological resources are a form of natural capital which can be converted into other forms of capital and should be so converted if they do not earn as high a return as other forms of capital. 150 RICHARD B. NORGAARD CTS $ niB I / 10 h tine Fio. 5. Commercial and non-commercial tree growth and harvest time. This argument both describes why economically rational owners of biological resources exploit them to extinction or destruction and prescribes that they "should" do so. So long as markets reflect true values, historic and ongoing losses of genetic, species, and ecosystem diversity are efficient and "should" occur. Biological resource management, biodiversity loss, and the rate of interest Hotelling's argument highlights the importance of interest rates in the management of biological resources. It has long been argued, for example, that trees which grow slower than the rate of interest will never be commercial. Imagine that it costs $ 10 to raise and plant a tree seedling. Imagine that the rate of interest is 8%. An entrepreneur has the choice of putting $10 in the bank earning 8% or planting the tree and harvesting it at a later date. Each year, the money in the bank (MIB in Fig. 5) increases in value: to $10x(l.08) or $10.80 at the end of the first year, to $10x(l.08) 2 or $11.66 at the end of the second year, to $ 10 x (1.08)3 or $12.60 at the end of the third year, etc. So long as the value of the tree grows faster than the money in the bank, it is a commercial tree species (CTS) and it pays to invest in the tree. Eventually, of course, the tree would begin to grow more slowly and when it is only growing in value as fast as money in the bank (th in Fig. 5), it pays to cut the tree (Fig. 5). But if the tree never grows in value faster than money in the bank, it is a non-commercial tree species (NCTS), and it never pays to plant the tree in the first place. Slow growing trees such as teak and many other hardwoods will be cut down and not replanted when interest rates are even moderately high. The World Bank considers returns of 15% to be acceptable and hence has rarely financed timber projects except those with very fast growing species such as eucalyptus. Historically development aid has financed the replacement of natural forests of mixed species by monocultural forests of fast growing species on this understanding of economic efficiency. Clearly the level of the rate of interest affects how biological resources are managed and hence the rate of ecosystem transformation and species extinction. This has led economists and biologists alike to question whether the rate of interest generated in capital markets is the socially correct rate. Might capital markets work imperfectly, THE PROCESS OF LOSS generating rates of interest which are too high and hence leading to excessive biodiversity loss (Marglin, 1963; Goodland and Ledec, 1987)? There are good reasons to expect that lower rates of interest would favor the conservation of biodiversity, though there are situations when this would not be the case (Markandya and Pearce, 1988). This has not been simply an academic argument. The World Bank now realizes how its own evaluation policies have hastened biodiversity loss and, in part for this reason, no longer finances the transformation of natural forest habitat. Preserving biodiversity as an option Behind the logic of Hotelling's argument, there are many assumptions about the characteristics of natural capital and humanproduced capital, future technological developments, the limits of peoples' ability to comprehend social and ecological complexities with respect to how the future will unfold, and the appropriateness of current peoples exposing future peoples to the risks of not having biological diversity they might later find of value. This has led economists to argue, given the irreversibility of biodiversity loss (Fisher and Hanemann, 1985), that it is appropriate to maintain biological diversity as an option even though narrow economic reasoning suggests otherwise. Better-safe-than-sorry reasoning has led to the introduction of option value and safe minimum standards in the economic interpretation of how biological resources should be managed (Bishop, 1978). POLICY IMPLICATIONS Each explanation of the process of loss indicates possible ways the process could be slowed or halted. Incorporation of species into the market system The logic of market failure has led economists, and increasingly biologists as well, to argue that species need to be incorporated into the market system (Hanemann, 1988; McNeely, 1988). For those species where it is possible to give private individuals of local communities the rights to their use, their exploitation by others will be averted, the 151 owners may benefit from conserving the species and thereby choose to do so, and consumers will pay a higher price reflecting the costs of managing the species in a more sustainable manner. It is important to keep in mind, however, that incorporating species into the market system may not result in their conservation and indeed could even accelerate their extinction. Species within the market system, for example, will not be conserved if their value is expected to grow at less than the rate of interest unless other controls are also put on their harvest. Strengthening common management Where species cannot be assigned to individuals, common management institutions are appropriate and may need strengthening. In some cases, traditional institutions can be maintained in the face of modernization. In other cases, new institutions will be needed. Common management institutions may be communal, regional, national, or global. The valuation of biodiversity Even when species cannot be better conserved in the market or better managed through commons, knowing their value can help convince people and their political representatives that the species deserves protection. Valuation can also improve costbenefit analyses for development projects which threaten species. Techniques for valuation include determining people's willingness to pay to maintain species through questionnaires and through analyses of their expenditures to observe the species (Brown and Goldstein, 1984; Randall, 1988). While several techniques are proving interesting, valuation is by no means an easy task and estimates should be used cautiously. A major difficulty is related to the systemic nature of economics, ecosystems, and the process of loss. Market systems related everything to everything else. When the price of oil changes, for example, the price of gasoline changes the demand and hence the price of products which use gasoline such as automobiles changes, the demand for and hence the price of goal changes, etc. Prices bring markets to equilibrium and their flexibility is essential to this task. Similarly, the value 152 RICHARD B. NORGAARD of any given species will depend on the availability of a host of other species on which it is dependent as well as other species which may be substitutes or complements in use. To think that a species has a single value is to deny both ecosystem and economic system interconnections. Nevertheless, the valuation of genetic diversity, species, and even ecosystems can assist us in understanding their importance and conveying this understanding to the public and in the political process. A N INTERIM SUMMARY OF THE PROCESS OF LOSS The foregoing presents a summary of the history of models developed by economists for comprehending how people interact with the environment. These understandings are generally shared among environmental economists and have become a part of the understanding of conservation biologists and environmental policy analysts. Several caveats must be kept in mind, however. First, the models have been presented in their most simple form to highlight each model's special contribution to our understanding of the process of biodiversity loss. It is important to keep in mind that the different processes each model emphasizes are interactive. In reality, we are dealing with Malthus's concern with population growth, the patterns of land-use suggested by Ricardo's model, the maldistribution of rights to biological resources highlighted by Marxian thinking, the problems of open access and other forms of market failure identified by Pigou, and questions as to the appropriateness of interest rates as well as the level of information about the future used by economic factors as highlighted by Hotelling's model. Reducing the rate of biodiversity loss will almost always entail multiple instruments for adjusting economic decision-making. A single instrument, such as the inclusion of the values of biological resources in the cost-benefit analyses of development projects, will rarely be sufficient alone. Second, environmental economists, conservation biologists, and environmental policy analysts share these understandings of how biodiversity is lost, but the consensus does not extend to economists, policy makers, and political representatives in general. Each of the foregoing models complicates or raises questions about the general model of neoclassical economics. Hence, each complicates and questions the general policy conclusions of neoclassical economics. In light of these models, for example, the general "rule" that minimizing government interference in markets and trade does not hold. Maurice M. Kelso aptly titled one of his papers: "Natural Resource Economics: The Upsetting Discipline" to emphasize this very problem (Kelso, 1977). Most economists still minimize the complexities of how economies interact with environmental systems because if they conceded that such complexities were important, economic analysis would be much more difficult and would result in much more complex economic policies. General economic theory books, whether beginning or advanced, rarely refer to environmental complexities as a special problem, let alone as a general problem (Varian, 1984; Kreps, 1990; Stiglitz, 1992). Thus, the understanding of the process of biodiversity loss that exists is not effective because economics as the science of systems is relatively insignificant compared to economics as political ideology. Biodiversity is being lost, in part, because most economists, policy analysts, and politicians refuse to admit complexities that confound or blatantly contradict their political economic worldview. In short, the process of loss is intimately related to human beliefs that the world is a very simple system which people can control, is very resilient to human interaction, and has infinite potential for human exploitation through new knowledge and technologies (Beckerman, 1972; Becker, 1991). These beliefs are deeply rooted in economic thinking and blind economists to their own more sophisticated models which complement biological understanding. Third, though the economic explanations of the process of biodiversity loss are quite helpful, they have serious weaknesses. On the one hand, a concerted effort is needed to bring what is now conventional understanding among environmental economists into the mainstream of economics, policy THE Utility o f Current PROCESS OF LOSS 153 Generation FIG. 6. A move from Points A to B, towards the frontier, increases efficiency. A move from Points B to C, along the frontier, affects equity. analysis, and political discourse. On the other hand, our understanding of the process of loss needs further improvement. New directions are discussed below. THE RIGHTS OF FUTURE GENERATIONS The politics of conservation has been largely about the rights of future generations. Our concern with conserving biodiversity over the long run is rooted in our concern for future generations (Partridge, 1981; Weiss, 1989; Norton, 1986, 1991; Laslett and Fishkin, 1992). Economists have also pondered how economic logic treats future generations, as evidenced by their own concern with the ethics of discounting costs borne and benefits received by future generations. The models economists have developed and advocated for use in the policy process to date, however, have implicitly assumed that current generations hold all rights to resources. These models are designed to show how current peoples can efficiently exploit resources rather than how they can be shared with future generations and efficiently be used between generations. Environmental economists, though concerned with the future, have followed this tradition in economic thinking, false to their own theory, of looking for the efficient allocation of resources when there are many depending on how we care about the future by extending rights to, or protecting existing rights of, future generations. Recently, however, economists have constructed models which allow them to understand how resources can both be efficiently used and shared between generations. The relation between allocative efficiency and the intergenerational distribution of resource rights is illustrated in Figure 6 (Howarth, 1990; Howarth and Norgaard, 1990, 1992; Norgaard and Howarth, 1991). The utility or welfare possibility frontier U indicates the highest utility possible for people in each future generation given the util- 154 RICHARD B. NORGAARD ity of people in the current generation. Each point on this frontier results from an efficient allocation of resources between uses associated with different distributions of resource rights between generations. Clearly, there are many possible efficient allocations. Where an efficient economy is located on U is determined by the initial distribution of rights to productive assets, including natural assets. A society which accepts the obligation of sustaining itself over generations must operate above the 45° line in Figure 6. To assure sustainability, each generation must transfer sufficient assets to the next generation so that the next generation is as well off as it is. The models of environmental, resource, and development economists to date, even in the most recent literature on sustainability, are inappropriate for addressing intergenerational equity. The emphasis has been on internalizing externalities to increase efficiency, on moving the economy from a position such as that at Point A in Figure 6 toward a position such as Point B. There is a different set of prices for goods traded in the market and for non-market goods for each point on the utility frontier in Figure 6. Biological resource valuation as currently conducted, for example, derives prices which would move an economy towards Point B, increasing efficiency, helping future generations relative to Point A, but not necessarily making the economy sustainable. Wholly new ways of thinking about environmental valuation will be needed. The new models have an exciting theoretical result. When the current generation decides to assure assets for future generations, the rate of interest goes down. Economists have been reasoning backwards in their search for reasons interest rates perhaps should be lower in order to protect future generations. When we decide to protect future generations, interest rates become lower. The new models elaborating the relationship between efficiency and intergenerational equity highlight how economic reasoning must work in conjunction with ethical criteria exercised through politics. While many economists will continue to argue in political arenas that protecting biological resources for future generations is ineffi- cient, their arguments violate economic logic. There are more efficient and less efficient ways to protect biological resources, but caring about the future is not a matter of economic efficiency alone. FUTURE DIRECTIONS FOR RESEARCH There are some critical issues that are still not addressed by our formal understanding of the relationships between economic and environmental systems. In each case, some research has been done and many have an intuitive grasp of the issues. Further formal modeling, however, is needed. The globalization of the economy The interface between the environment and the modern global economy is clearly different than that of historically more regional economies. While considerable environmental concern has been expressed in hemispheric and global trade negotiations, we are surprisingly ill-equipped to understand how the globalization of the economy relates to environmental management. The global economy is rationalized around the assumption of individualism as much as around the logic of trade. The logic of trade is simply that when two choosers choose to enter into an exchange, it is because it makes each of them better off. To argue that free trade is good policy, one must also assure that there are no costs and benefits external to those who choose. Economists have always assumed that it is individuals and corporations who should be free to choose. But the logic of trade is indifferent to whether the choosers are individuals, communities, bioregions, or nations. The association of trade with individualism reflects the dominant premise in modern political thought. It reflects western culture rather than economic logic. The difference between individual and community interest, of course, is intimately tied to the systemic character of environmental systems. Nature cannot readily be divided up and assigned to individuals, hence the failure of markets. "Free to choose" as individualist ideology and its use to justify the expansion of exchange across communities opens up new THE PROCESS OF LOSS 155 VALUES KNOWLEDGE • ENVIRONMENT f- • ORGANIZATION TECHNOLOGY FIG. 7. The Coevolutionary Development Process. opportunities for market failures. Spatial economic expansion increases the social phenomena labelled "distancing" by sociologists (Giddens, 1990), the increased separation of individual action from its social and environmental consequences, creating externalities and increasing the difficulty of internalizing them. Exchange theory assumes away distance while western political philosophy assumes away community. To the extent that environmental problems are more easily perceived and controlled at local and community levels (Dryzek, 1987), unsustainable interactions between the economy and environment result from too much distancing. Similarly, trade shifts the nature of risk much like it opens up the possibilities for externalities (Norgaard, 19896). Formal models are needed to elaborate how trade and distancing can create market failures and to highlight appropriate geographic scales for different human activities. The arguments raised by those advo- cating bioregionalism (Sale, 1991) are incorporated in the informal understanding of conservation biologists but have yet to be formalized in economic thinking. The coevolution of modern societies We, Homo sapiens, distinguish ourselves from other species in terms of the nature and extent of our knowledge and the ways in which we use knowledge to devise technologies and organize our activities. We are also the only species known to have initiated the wholesale extinction of other species. These distinctions are undoubtedly related and slowing biodiversity loss will ultimately depend on our uncovering and transforming these relations. Consider development as a process of coevolution between knowledge, values, organization, technology, and the environment (Fig. 7). Each of these subsystems is related to each of the others yet each is also changing and affecting change in the others 156 RICHARD B. NORGAARD through selection. Deliberate innovations, chance discoveries, and random changes occur in each subsystem which affects the distribution and qualities of components in each of the other subsystems. Whether new components prove fit depends on the characteristics of each of the subsystems at the time. With each subsystem putting selective pressure on each of the others, they coevolve in a manner whereby each reflects the other. Thus, everything is coupled, yet everything is changing (Norgaard, 1993). Environmental subsystems are treated symmetrically with the subsystems of values, knowledge, social organization, and technology in this coevolutionary explanation of development. New technologies, for example, exert new selective pressures on species, while newly evolved characteristics of species, in turn, select for different technologies. Similarly, transformations in the biosphere select for new ways of understanding the biosphere. For example, the use of pesticides induces resistance and secondary pest resurgence, selecting both for new pesticides and for more systematic ways of thinking about pest control. Pests, pesticides, pesticide production, pesticide institutions and policy, how we understand pest control, and how we value chemicals in the environment demonstrate an incredibly tight coevolution in the second half of this century (Brown, chapter 2, 1991). In the short-run people can be thought of as interacting with the environment in response to market signals or their absence. The coevolutionary model, however, incorporates longer-term evolutionary feedbacks. To emphasize coevolutionary processes is not to deny that people directly intervene in and change the characteristics of environments. The coevolutionary perspective puts its emphasis on the chain of events thereafter— how different interventions alter the selective pressure and hence the relative dominance of environmental traits which, in turn, select for values, knowledge, organization, and technology and hence subsequent interventions in the environment. From the coevolutionary perspective, we can see more clearly how economies have transformed from coevolving with their ecosystems to coevolving around the com- bustion of fossil hydrocarbons. In this transformation, people have been freed from environmental feedbacks on their economic activities that they experienced relatively quickly as individuals and communities. The feedbacks which remain, however, occur over longer periods and greater distances and are experienced collectively by many peoples, even globally, making them more difficult to perceive and counteract (Norgaard, 1993). By tapping into fossil hydrocarbons, western societies freed themselves, at least for the short to medium term, from many of the complexities of interacting with environmental systems. With an independent energy source, tractors replaced animal power, fertilizers replaced the complexities of interplanting crops which were good hosts of nitrogen fixing bacteria with those which were not, and pesticides replaced the biological controls provided by more complex agroecosystems. Furthermore, inexpensive energy meant crops could be stored for longer periods and transported over greater distances. Each of these accomplishments was based on the partial understanding of separate sciences and separate technologies. At least in the short run and "on the farm," separate adjustments of the parts seemed to fit into a coherent, stable whole. Agriculture transformed from an agroecosystem culture of relatively self-sufficient communities to an agroindustrial culture of many separate, distant factors linked by global markets. The massive changes in technology and organization gave people the sense of having control over nature and being able to consciously design their future while in fact problems were merely being shifted beyond the farm and onto future generations. This explanation of the unsustainability of modern societies then is simply that development based on fossil hydrocarbons allowed individuals to control their immediate environments for the short-run while shifting environmental impacts, in ways which have proven difficult to comprehend, to broader and broader publics, indeed the global polity, and on to future generations. Working with these collective, longer term, and more uncertain interrelationships is at least as challenging as environmental man- 157 THE PROCESS OF LOSS agement has been historically. People's confidence in the sustainability of development is directly proportional to their confidence in our ability to address these new challenges. The coevolutionary perspective helps us see that the problem of biodiversity loss is not simply a matter of establishing market incentives to adjust how we interact with nature. Our values, knowledge, and social organization have coevolved around fossil hydrocarbons. Our fossil-fuel driven economy has not simply transformed the environment, it has selected for individualist, materialist values; favored the development of reductionist understanding at the expense of systemic understanding; and preferred a bureaucratic, centralized form of control which works better for steady-state industrial management than for the varied, surprising dynamics of ecosystem management. And the coevolutionary framing highlights how our abilities to perceive and resolve environmental problems within the dominant modes of valuing, thinking, and organizing are severely constrained. CONCLUSIONS Like the multifaceted, hierarchical nature of biodiversity itself, the loss of biodiversity has many, nested explanations. From a systemic perspective, how we value, know, organize, and do things have coevolved in a manner which reduces biological diversity and will ultimately result in our demise. At the same time, there is fortunately sufficient diversity in modern understandings that some foresee this fate and are drawing on more sophisticated ways of knowing and exploring alternative ways of organizing and doing things. From this perspective, it is clear that modern societies put too little value on the future, modern peoples are responding to an incomplete set of price signals and are consequently interacting with biological resources in ways which destroy them. While economic reasoning emphasizes price signals, we have a residual sense of how communities can influence values and behavior. 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