Category Archives: Ecological Economics

Energy intensity convergence

In climate change discussions, energy intensity is the amount of energy required to produce a dollars worth of GDP.  While there are big differences in energy intensity around the world.  Generally poor countries are more energy intensive than rich, and the US, Canada and Australia are more energy intensive than Europe and Japan.  A recent graph from the Economist illustrates how energy intensities are falling and converging, unfortunately at a slower rate than economic growth, meaning that energy use, and hence CO2 emissions, continue to grow.

From the Economist:

Green light for IPBES

UN agreed to establish the Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES).

IPBES write hopefully on their homepage

This is a major event in the world of biodiversity and ecosystem services as the IPCC-like platform will bridge the gulf between the wealth of scientific  knowledge on the accelerating declines and degradation of the natural world, with knowledge on effective solutions and decisive government action required to reverse these damaging trends.

Persepctives on Convention on Biological Diversity meeting in Nagoya

Eight perspectives on the recent Convention on Biological Diversity meeting in Nagoya.

1. Environmental economist Charles Perrings interviewed by Earth and Sky on his recent Science article 20 Biodiversity targets for 2020:

Charles Perrings: The rate of species decline is increasing, not reducing. And it’s across the board. It’s not just the charismatic megafauna [large animals] that attract the most attention – but a range of species extending across the board.

The new targets follow the acronym ‘SMART’ – meaning, specific, measurable, ambitious, realistic, and time-bound.

Charles Perrings: We’re arguing that it’s important that they not only be SMART but they also be relevant. The targets need to speak to the real interests people have got in ecosystem services and the biodiversity that’s needed to support these services. The targets need to recognize trade-offs between interests.

For example, Perrings said, one of the targets states, “Areas under agriculture, aquaculture, and forestry are managed sustainably, ensuring conservation of biodiversity.” He pointed out that the primary interests of food production and forestry are to feed and shelter people. Those basic human needs will likely overshadow the intent of conserving biodiversity.

Charles Perrings: It’s important to acknowledge that no matter how efficient we make agriculture, it’s almost certain that an expanding human population is going to involve further loss of habitat for other species. We claim that the trade-off should be addressed directly.

He said that in contrast to the 2010 target, it’s important that 2020’s targets are achievable, and that they go along with a set of indicators that can measure the progress towards success. But due to the trade offs, Perrings writes in the paper, “It may not be possible to meet all of the 2020 targets.”

2. Outcomes of the Nagoya meeting  (non-final version from CBD)

The documents provided below are advanced unedited texts reflecting the decisions as adopted on the basis of the documents presented to Plenary (the “L.” document available as in-session documents) and any amendments made during the closing Plenary session. They have not been formally edited. The final official versions of the decisions will be issued as part of the report of the meeting in due course. Statements made by Parties at the time of the adoption of the decision will also be included in the report.

3. Science Insider quotes our colleague Thomas Elmqvist and reports:

…the strategic plan sets 20 specific targets to achieve by 2020. Key targets include conserving in protected zones at least 17% of the world’s terrestrial and inland water areas and 10% of coastal and marine areas, halving the rate of loss of all natural habitats, including forests, and preventing the extinction of known threatened species.

Other targets call for eliminating subsidies harmful to biodiversity, managing fisheries sustainably, and minimizing anthropogenic pressures on coral reefs.

… Negotiators also agreed to increase funding to support the efforts of the strategic plan, though specific targets for percentages or amounts are to be worked out by the time of the COP 11 meeting, scheduled for 2012 in New Delhi, India.The third key agreement is a new protocol to ensure that benefits flow back to countries and indigenous peoples who supply genetic resources that are commercialized. Developing countries had wanted the provisions of the access and benefit-sharing protocol to apply retroactively. They had also hoped for the agreement to specifically assign responsibility for tracking the use of genetic materials to patent offices, research universities, scientific journals, and other “checkpoints.” Retroactivity was stripped from the final text, though the agreement now calls for the investigation of a “global multilateral benefit-sharing mechanism” to address cases where plant or animal resources were commercialized prior to the new agreement. And how to enforce compliance will be left up to each country. “It is not the text we would write ourselves, but it is a good compromise,” says Paulino Franco de Carvalho, head of the Brazilian delegation.

Among other business, delegates agreed to call for a moratorium on geoengineering schemes and to endorse a request to the United Nations General Assembly to create an Intergovernmental Science-policy Platform on Biodiversity and Ecosystem Services that would produce scientific assessments on biodiversity issues much as the Intergovernmental Panel on Climate Change works on the science of climate change. “We’re quite excited about this, it’s really needed,” says Thomas Elmqvist, an ecologist at Stockholm University and a member of the Swedish delegation.

4. Reflection on Nagoya from CGIAR in  Biodiversity International welcomes Nagoya Protocol

Emile Frison, Director General of Biodiversity International, which has represented the Consortium of international agricultural research centres of the Consultative Group on International Agricultural Research (CGIAR) in all the negotiations leading up to the adoption of the Nagoya Protocol, was jubilant.

“The Protocol addresses issues that have pitted countries of the North and South against one other for decades. Its adoption should act as a balm on old wounds. It will help to create transparency and trust between countries, and trust is absolutely essential for countries to cooperate in using genetic resources in ways that promote food security and economic development.”

The adoption of the Nagoya Protocol  has ended six years of hard-scrabble negotiating. At issue were the conditions under which countries will provide access to genetic resources within their boundaries, the kinds of benefits that should be shared when those resources are used, and how far countries will cooperate with one another when there are allegations of illegal uses.

5. From IUCN:

“We’ve seen history in the making here in Nagoya with a landmark agreement now in place that defines the future for life on earth,” says Julia Marton-Lefèvre, IUCN Director General. “Here in Japan the international community have moved closer to the realisation that it’s time we stopped considering nature as expendable, and any related expenditure a write-off – it’s time we valued and conserved nature.”

The stakes have been high at the Nagoya conference. The latest IUCN Red List of Threatened Species™, released two days ago, showed that nature’s very backbone is at risk – with a third of species assessed seriously threatened and many among them facing the risk of extinction. The Economics of Ecosystems and Biodiversity study, known as TEEB, warns us that many of the benefits of nature that we have been taking for granted and enjoyed for free up until now are at risk of running out. The Global Biodiversity Outlook 3 showed that we are on the verge of catastrophic and irreversible tipping points.

“What we’ve decided at this meeting will change the future of life on Earth – and many solutions are available to us,” says Jane Smart, Director of IUCN’s Biodiversity Conservation Group. “We know that targeted conservation action works. Results from the latest Red List show us that the status of biodiversity would have declined by an additional 20 percent at least, if conservation action had not been taken.”

6. United Nations Development Programme (UNDP) welcomes:

the adoption of an international agreement that aims to halve the dramatic loss of ecosystems and species by 2020, and to establish ground rules for sharing and accessing the world’s genetic resources.

… Sustainable management of biodiversity and ecosystem services is essential to achievement of the Millennium Development Goals (MDGs) and to combating poverty.

UNDP is committed to scale up its biodiversity work to help meet the Aichi Targets and to assist countries with improving management of their ecosystems.

Billions of people depend on natural ecosystems for their water supply as well as for food, medicines and other essentials.

7. The World Bank Launches Scheme To Green Government Accounts promotes ‘green’ national accounts:

The five-year pilot project backed by India, Mexico and other nations aims to embed nature into national accounts to draw in the full benefits of services such as coastal protection from mangroves or watersheds for rivers that feed cities and crops.

…”For economic ministries in particular, it’s important to have an accounting measure that they can use to evaluate not only the economic value but the natural wealth of nations,” Zoellick told Reuters in an interview.

8. And to conclude IISD’s Linkages which reports on global environmental negotiations, provides a summary of the conclusion of the Nagoya meeting:

The adoption of the package, in particular the Nagoya Protocol on ABS, was rightfully celebrated as a major success in the history of the CBD. And in this light, fears of “another Copenhagen,” popularized by the media, seem both overblown and inadequate. Aside from the package, COP 10 adopted more than 40 other decisions, including unprecedented developments on new complex issues such as geo-engineering and synthetic biology. Not all other decisions lived up to expectations, but taken together, they represent a significant step forward in multilateral cooperation on biodiversity. The CBD’s approach to implementation based on the ecosystem approach, and its mechanism for addressing new and emerging issues would have allowed work on implementation of the Convention to continue whether or not the package had been adopted. In contrast to the climate change regime, where key activities on implementation, such as the carbon market, depend on adopting a global deal on mitigation, the CBD’s agenda is being advanced through a multi-facetted system of work programmes, collaborations and partnerships across the environmental-policy board. So, even if COP 10 had failed to adopt “the package,” the remaining decisions would have allowed work on implementation of the Convention to continue.

A number of developments indicate that the CBD is in the middle of an important transformation process, towards an approach that integrates biodiversity concerns into all areas of human activity. The Strategic Plan and activities such as the TEEB study can give an important impulse to accelerate this transition. With the adoption of the ABS Protocol, it can be expected that future COPs will devote more attention to repositioning the CBD as the key international instrument to further efforts towards “life in harmony with biodiversity.” COP 10 has been a necessary and important step in that direction, not least because it showed that “Copenhagen” was a phenomenon specific to the politics of global climate change cooperation, rather than a crisis of the UN System and of global environmental multilateralism as a whole.

the

What’s driving current food prices?

New Scientist interviewed food policy researchers Maximo Torero and Joachim von Braun from IFPRI about current rise in food prices and they blame financialization of commodity markets:

Is this another crisis like the one we had in 2008?

Not quite. Maximo Torero of the International Food Policy Research Institute (IFPRI) in Washington DC notes that oil, the real driver of food prices and of the 2008 crisis, is relatively cheap, at around $75 a barrel, not over $100 as it was in 2008.

In 2008, both immediate grain prices, and the prices offered for future grain purchases in commodities markets, climbed steadily for months, whereas now they are spiking and dipping more unpredictably, which economists call volatility.

“The market fundamentals – supply and demand – do not warrant the price increases we have seen,” says Torero. Not all harvests have been bad, and after 2008 countries rebuilt grain stocks. “There are enough stocks in the US alone to cover the expected losses in Russia.”

The food riots in Mozambique were not due to world grain prices, he says, but because Mozambique devalued its currency, making imported food more expensive.

So what has been happening this year?

Markets are responding nervously to incomplete information. First there was a series of shocks: Russia’s export ban, lower maize forecasts, then, days later, a US ruling to allow more bioethanol in fuel which seemed likely to further reduce the maize – the main source of bioethanol – available for food. Meanwhile there was no reliable information about grain stocks, which is strategic information that most countries keep secret.

The result was nervous bidding and sporadically surging prices in commodity markets. And that attracted the real problem: investors wielding gargantuan sums of speculative capital and hoping to make a killing. When speculation exacerbated the price crisis of 2008, Joachim von Braun of the University of Bonn, Germany, then head of IFPRI, predicted that it would continue causing problems. “We saw that one coming and it came,” he says. “Food markets have new design flaws, with their inter-linkages to financial markets.”

Volatility also makes it harder to solve the long-term, underlying problem – inadequate food production – by making farmers and banks reluctant to invest in improved agricultural technology as they are unsure of what returns they will get. “Investment in more production alone will not solve the problem,” says von Braun. As long as extreme speculation causes constant price bubbles and crashes, either farmers will not get good enough returns to continue investing in production, or consumers will not be able to afford the food.

“Without action to curb excessive speculation, we will see further increases in these volatilities,” he says.

Is promoting climate change disinformation a new type of crime against humanity?

Donald Brown,a professor of law and environmental ethics at Penn State University,on his blog Climate Ethics wonders whether funding climate disinformation is A New Kind of Crime Against Humanity?. He writes:

On October 21, 2010, the John Broder of the New York Times, reported, that “the fossil fuel industries have for decades waged a concerted campaign to raise doubts about the science of global warming and to undermine policies devised to address it. According the New York Times article, the fossil fuel industry has ” created and lavishly financed institutes to produce anti-global-warming studies, paid for rallies and Web sites to question the science, and generated scores of economic analyses that purport to show that policies to reduce emissions of climate-altering gases will have a devastating effect on jobs and the overall economy.”

Without doubt those telling others that there is no danger heading their way have a special moral responsibility to be extraordinarily careful about such claims. For instance, if someone tells a child laying on a railroad tracks that they can lie there all day because there is no train coming and has never checked to see if a train is actually coming would be obviously guilty of reprehensible behavior.

Disinformation about the state of climate change science is extraordinarily if not criminally irresponsible because the consensus scientific view of climate change is based upon strong evidence that climate change harms:

(1) are already being experienced by tens of thousands in the world;(2) will be experienced in the future by millions of people from greenhouse gas emissions that have already been emitted but not yet felt due to lags in the climate system; and,

(3) will increase dramatically in the future unless GHG emissions are dramatically reduced from existing global emissions levels.

These harms include deaths and harms from droughts, floods, heat, storm related damages, rising oceans, heat impacts on agriculture, loss of animals that are dependent upon for substance purposes, social disputes caused by diminishing resources, sickness from a variety of diseases, the inability to rely upon traditional sources of food, the inability to use property that people depend upon to conduct their life including houses or sleds in cold places, the destruction of water supplies, and the inability to live where has lived to sustain life. In fact, the very existence of some small island nations is threatened by climate change. …

The October 21 New York Times article … concludes that some US corporate sponsored activities are helping elect politicians that have been influenced by the most irresponsible climate change scientific skeptical arguments. These corporations are clearly doing this because they see climate change greenhouse gas emissions reduction strategies as adversely affecting their financial interests. This fact leads to even greater moral culpability for American corporations because their behavior is as offensive as if the person who tells the child train that no train is coming when they don’t actually know whether a train is on its way makes money by misinforming the child.

The October 21 New York Times article concludes that the oil, coal and utility industries have collectively spent $500 million just since the beginning of 2009 to lobby against legislation to address climate change and to defeat candidates who support actions to reduce the threat of climate change. It would be one thing for an American corporation to act irresponsibly in a way that leads to harm to Americans, but because of climate change’s global scope, American corporation’s have been involved in behavior that likely will harm tens of millions of people around the world. Clearly this is a new type of crime against humanity. Skepticism in science is not bad, but skeptics must play by the rules of science including publishing their conclusions in peer-reviewed scientific journals and not make claims that are not substantiated by the peer-reviewed literature. The need for responsible skepticism is particularly urgent if misinformation from skeptics could lead to great harm. For this reason, this disinformation campaign being funded by some American corporations is some kind of new crime against humanity.

Environmental externalities and institutional investors

The UN Environment Programme Finance Initiative is a collaboration of between UNEP and the financial sector that aims to improve the understanding of the connections between environmental and financial performance.

A new report Environmental externalities for institutional investors from UNEPFI and the UN endorsed Principles for Responsible Investing group estimates the costs to the global economy from environmental damage, in terms of consequences for investors and company profits, by synthesizing current estimates of the consequences of climate change, resource depletion, biodiversity loss and water use.

The report proposes that:

Large institutional investors are, in effect, “Universal Owners”, as they often have highly-diversified and long-term portfolios that are representative of global capital markets. Their portfolios are inevitably exposed to growing and widespread costs from environmental damage caused by companies. They can positively influence the way business is conducted in order to reduce externalities and minimise their overall exposure to these costs. Long-term economic wellbeing and the interests of beneficiaries are at stake. Institutional investors can, and should, act collectively to reduce financial risk from environmental impacts.

And concludes that:

  • US$ 6.6 trillion was the estimated annual environmental costs from global human activity equating to 11% of global GDP in 2008.
  • The most environmentally damaging business sectors are: utilities; oil and gas producers; and industrial metals and mining. Those three accounted for almost a trillion dollars worth of environmental harm in 2008. The top 3,000 companies by market capitalisation, which represent a large proportion of global equity markets, were responsible for $ 2.15 trillion worth of environmental damage in 2008.
  • 50% of company earnings that could be at risk from environmental costs in an equity portfolio weighted according to the MSCI All Country World Index.
  • Environmental damage costs are generally higher than the cost of preventing or limiting pollution and resource depletion. The costs of addressing environmental damage after it has occurred are usually higher than the costs of preventing pollution or using natural resources in a more sustainable way.

Food security and financial markets


FAO says that Food price volatility a major threat to food security:

Concluding a day-long special meeting in Rome the experts recognized that unexpected price hikes “are a major threat to food security” and recommended further work to address their root causes.

The recommendations, put forward by the Inter-Governmental Groups (IGGs) on Grains and on Rice, came as FAO issued a report showing that international wheat prices have soared 60-80 percent since July while maize spiked about 40 percent.

The meeting said that “Global cereal supply and demand still appears sufficiently in balance”, adding, “unexpected crop failure in some major exporting countries followed by national policy responses and speculative behaviour rather than global market fundamentals have been the main factors behind the recent escalation of world prices and the prevailing high price volatility.”

Among the root causes of volatility, the meeting identified “Growing linkage with outside markets, in particular the impact of ‘financialization’ on futures markets”. Other causes were listed as insufficient information on crop supply and demand, poor market transparency, unexpected changes triggered by national food security situations, panic buying and hoarding.

The Groups therefore recommended exploring “alternative approaches to mitigating food price volatility” and “new mechanisms to enhance transparency and manage the risks associated with new sources of market volatility”.

In a recent IFPRI discussion paper, Recent Food Prices Movements: A Time Series Analysis, Bryce Cooke and Miguel Robles analyze the food price spike of 2008.  They asses multiple proposed explanations (from biofuels, oil prices, weather, trade barriers, and speculative markets) using econometric time series analysis.  They conclude that financial activity in futures markets and proxies for speculation can best explain crisis.  They write:

Results of our rolling windows Granger causality tests show the following:

(1) In the case of rice prices we find weak evidence that for few 30-month intervals between 2004 and 2007, the U.S. dollar depreciation rate has marginally Granger-caused the growth rate of rice price; and also the growth rate of real world money holdings seems to be more important in explaining the growth rate of rice prices after 2004, but this evidence is not really statistically significant.

(2) When we analyze the price of soybeans we find that, starting in mid-2005 (which implies a 30-month period ending December 2007), the growth rate in the world exports of soybeans shows evidence of Granger causing the growth rate of soybean prices.

(3) In the case of corn we find that starting in the second half of 2004 the growth rate of oil prices shows evidence of Granger causing the growth rate of corn prices, but with a negative relationship.

(4) When analyzing our speculation proxies we observe that the ratio of monthly volume to open interest in futures contracts indicates that for the case of wheat and rice, starting in 2005, it has influence in forecasting price movements.

Also we find that for the case of rice, the ratio of noncommercial long positions to total long (reportable) positions has an effect on prices, starting in 2004. When we analyze the same ratio for short positions we find additional evidence for speculation affecting the growth rate of corn and soybean prices. In the case of corn there are signs of causality between March 2004 and September 2006, and during the 30-month span from May 2005 to November 2007. In the case of soybeans we find weak evidence, in particular for the 30-month period ending February 2008.

Interestingly as the rolling samples include 2008 and 2009 data, picking the decrease of grain prices since mid 2008 and the adverse effects of the global financial crisis, the evidence of speculation activity affecting spot prices vanishes in all cases. This supports the view that during the food crisis agricultural grain markets were operating under a different regime in which speculation activity played a role in spot prices formation. The overall evidence points to the following interpretation: before and after the food crisis speculation activity had no effect on spot prices formation while during the crisis it did. This is not to say that before and after the crisis speculation was not present, it was (probably to a less extent) but didn’t granger cause spot prices.

Overall, we conclude from our time series analysis that when taking the four commodities analyzed here there is evidence that financial activity in futures markets and/or speculation in these markets can help explain the behavior of these prices in recent years. Other explanations are only partially supported for the particular case of one agricultural commodity or not supported at all. We do not claim, however, that these other explanations should be disregarded; all that we can say is that in using the variables considered in this study and the particular time series models herein, we do not find such evidence.

Frederick Kaufman wrote a Harper’s magazine in July 2010 The food bubble:
How Wall Street starved millions and got away with it
that reports on finance and the food crisis. The Harper’s version is behind a paywall, but Kaufman was interviewed on Democracy Now.

More academic takes on the food crisis and the possible future of food price volatility are in:

C. Gilbert and C. Morgan’s article Food price volatility in Proc Royal Soc (DOI: 10.1098/rstb.2010.0139 ). They conclude:

We have highlighted the extensive evidence demonstrating interconnection of financial and food commodity markets as the result of speculative activity. Nevertheless, this contention remains controversial and, until the mechanisms are better understood, the policy debate will remain confused.

and

C. Gilbert’s How to Understand High Food Prices in Journal of Agricultural Economics (DOI: 10.1111/j.1477-9552.2010.00248.x) whose abstract states:

Agricultural price booms are better explained by common factors than by market-specific factors such as supply shocks. A capital asset pricing model-type model shows why one should expect this and Granger causality analysis establishes the role of demand growth, monetary expansion and exchange rate movements in explaining price movements over the period since 1971. The demand for grains and oilseeds as biofuel feedstocks has been cited as the main cause of the price rise, but there is little direct evidence for this contention. Instead, index-based investment in agricultural futures markets is seen as the major channel through which macroeconomic and monetary factors generated the 2007–2008 food price rises.

Untangling the Environmentalist’s Paradox

My colleagues are I recently published a paper in BioScience, Untangling the Environmentalist’s Paradox: Why Is Human Well-being Increasing As Ecosystem Services Degrade?

The paper originated from the involvement of the first four authors, my former PhD student Ciara Raudsepp-Hearne, my colleague at McGill Elena Bennett, and my former post-doc Maria Tengö and I, in the Millennium Ecosystem Assessment.  While we were all happy with our work on the MA, we felt that the MA had not had enough time to digest its findings.  I was particularly interested in the apparent contradiction between the MA’s assumption that ecosystem services are essential to human wellbeing and the observation that human wellbeing has been increasing as ecosystem services decline.

Our paper compares four alternative explanations of this apparent contradiction.  Our abstract outlines the paper:

Environmentalists have argued that ecological degradation will lead to declines in the well-being of people dependent on ecosystem services. The Millennium Ecosystem Assessment paradoxically found that human well-being has increased despite large global declines in most ecosystem services. We assess four explanations of these divergent trends: (1) We have measured well-being incorrectly; (2) well-being is dependent on food services, which are increasing, and not on other services that are declining; (3) technology has decoupled well-being from nature; (4) time lags may lead to future declines in well-being. Our findings discount the first hypothesis, but elements of the remaining three appear plausible. Although ecologists have convincingly documented ecological decline, science does not adequately understand the implications of this decline for human well-being. Untangling how human well-being has increased as ecosystem conditions decline is critical to guiding future management of ecosystem services; we propose four research areas to help achieve this goal.

BioScience has highlighted the article by writing a press releaseproviding a set of teaching resources, and featuring the article in the issue’s editorial.  BioScience’s editor-in-chief Timothy M. Beardsley writes:

BioScience will publish commentary on aspects of their analysis in a future issue. Yet the article clearly strengthens the case for research that integrates human well-being, agriculture, technology, and time lags affecting ecosystem services. Raudsepp-Hearne and her colleagues urge more attention to how ecosystem services affect multiple aspects of well-being, ecosystem service synergies and trade-offs, technology for enhancing ecosystem services, and better forecasting of the provision of and demand for ecosystem services.

The recent oil calamity in the Gulf of Mexico, the biological impacts of which will take years to fully manifest and will persist for decades, should be reminder enough that although technology can insulate us from degrading ecosystem services locally, it often does so by creating problems elsewhere. As the human population grows, fewer places remain where the impacts can be absorbed without adversely affecting somebody. Aggregate global human well-being is, apparently, growing—though it is obviously declining in some places. Extending and defending the gains, particularly as the quest for energy becomes more intense, will require policymakers to understand the complicated relationship between ecosystem services and the humans who use them.

I’ll summarize our paper and respond to some of the media coverage of our paper in followup posts.

The paper is:

  • Ciara Raudsepp-Hearne, Garry D. Peterson, Maria Tengö, Elena M. Bennett, Tim Holland, Karina Benessaiah, Graham K. MacDonald, and Laura Pfeifer.  2010. Untangling the Environmentalist’s Paradox: Why Is Human Well-being Increasing As Ecosystem Services Degrade? BioScience. 60(8) 576-589.

Thanks to BioScience an open access version is temporarily available here.

IUCN’s Guidebook to the Green Economy

IUCN has just published a guidebook to the green economy. It can be freely downloaded from their website (pdf 490 kb). Guidebook presents an overview of key ideas and themes surrounding discusisons of the Green Economy. They write:

The guidebook is structured as an annotated compilation of relevant papers, reports, and articles that can be freely accessed on the internet. It is not intended to serve as a complete bibliography of available literature, but more as an overview of the different concepts and ideas that animate ongoing discussions on the topic of the Green Economy.

It includes the concept of resilience but points to the secondary literature (it does provide a link the the RA’s website). The Guidebook writes:

The concept of resilience is becoming increasingly used in both natural and social sciences. It is highly relevant to economics in general and the Green Economy concept in particular. The resilience of an economy is intimately linked to its sustainability. The concept of resilience is most appropriately used for analyzing various systems in an effort to assess its capacity to absorb shocks without resulting in a change of state. From an ecological perspective, emphasis is placed on the role of biodiversity in sustaining ecosystem functions (Hooper, 2005). In an economic perspective, it is particularly useful for analyzing vulnerability and dependence of societies on their natural resources base and the capacity that local economies have for ensuring that they are resilient to disturbances (e.g. climate change; market fluctuations, etc.) (WRI, 2008). The notion of resilience also highlights the importance of anticipating potential thresholds and tipping points for a global economy that is expanding within a finite biosphere is faced with (Rockström et al., 2009).