Ecological Economics sets a price to the ecological services of the planet. Environmental economics, works out to being the same thing, or, depending on who you've asked, is a broader concept which encompasses effects on human health and productivity.
The Economist has come out with a pair of articles on the subject: Are you being served?, which begins by exploring the problems deforestation along the Panema Canal are causing, and a novel approach to reforestation which is, ahem, taking root there:
[A]ny scheme to reforest the canal's watershed is, in fact, an investment in infrastructure. Normally, this would be provided by the owner. But in this case the owner is the Panamanian government, and Panama is in debt, has a poor credit rating and finds it expensive to borrow money. And yet investing in the canal's watershed clearly makes economic sense. Who will pay?In the case of the Panama Canal, the answer may turn out to be John Forgach, an entrepreneur, banker and chairman of ForestRe, a forestry insurance company based in London. Mr Forgach's plan is to use the financial markets to arrange for companies dependent on the canal to pay for the reforestation. Working in collaboration with several as-yet-unnamed insurance and reinsurance companies, Mr Forgach is trying to put together a deal in which these companies would underwrite a 25-year bond that would pay for the forest to be replanted.
Which is a pretty great example of restoration for profit.
The second article, an opinion leader, Rescuing environmentalism, contends that "market forces could prove the environment's best friendif only greens could learn to love them." I disagree, personally, with some of the conclusions, but it's as readable a summary of "free-market environmentalism" as you're likely to see:
One example lies in the assignment of property rights over commons, such as fisheries, that are abused because they belong at once to everyone and no one. Where tradable fishing quotas have been issued, the result has been a drop in over-fishing. Emissions trading is also taking off. America led the way with its sulphur-dioxide trading scheme, and today the EU is pioneering carbon-dioxide trading with the (albeit still controversial) goal of slowing down climate change.These, however, are obvious targets. What is really intriguing are efforts to value previously ignored ecological services, both basic ones such as water filtration and flood prevention, and luxuries such as preserving wildlife. At the same time, advances in environmental science are making those valuation studies more accurate. Market mechanisms can then be employed to achieve these goals at the lowest cost.
...The world may yet leapfrog from the dark ages of clumsy, costly, command-and-control regulations to an enlightened age of informed, innovative, incentive-based greenery.
I particularly find the use of leapfrogging in the last paragraph to be a cynical and content-free use of the term. That said, this is an important debate, and learning to attach value to ecosystem services is, I believe, absolutely critical.
