Economics and Environment Number 2: The limits to growth.

The club of Rome: Their report showed how the resources would end soon if the rate of consumption increased exponentially.

In 1972, the Club of Rome made a report arguing that economic growth and overpopulation would quickly deplete finite natural resources, this report was severely criticised because of its methodology and failing to account for the substitution of the resources because of the introduction of the second law of thermodynamics (entropy economy) as an econometric to determine the probability of chaotic problems not measurable by conventional economics, therefore determining scarcity during time. The name of the report was, "The limits to Growth" and it stemmed out of the question, Is there a limit to growth?

An optimistic response called the Kuznet's curve, developed during the 50s by Simon Kuznets, was used to show one of "the limits to growth" weak spots in taking to account different variables. This response represents how pollution would cease during a determined period of time. It is designed in relation to the curve of inequality and states that when as a determined economy develops, environmental concerns increase at the same time It's population attains a certain standard of living. That is easily observed now more than half a century later when comparing pollution emissions between developed and developing countries. Another criticism was made against the methodology used through entropic economy stating that the club of Rome did not take into account technological advancements in production reduce entropy as a natural consequence in necessity oriented free market models.

The ideas discussed during the 70s by the club of Rome had a major impact on the development of Environmental Economics by sparking the development of further paradigms in the field. The word paradigm on philosophy of science is used to refer to common assumptions or axioms among scientists which provide basis for further theories. In environmental economics there are various authors that develop their theories upon these basic assumptions and their theories can be divided into 3 major groups.

The Pigouvian tradition is one of these major groups and focuses on addressing the problems of physical externalities with an emphasis on fiscal tools (Pigouvian Tax). Their main propositions stem through the axiom that in an equilibrium state, marginal benefits equal marginal costs, the demand will buy until it equals the marginal benefits and the supply will offer until it equals the marginal cost. There might be exceptions to this rule, some coming from positive externalities when social benefits are not added to the price producing of few units and negative ones when social costs are not added to the production of many units.

Coasians on the other hand emphasise on the lack of proper private distributions and access to resources and believe there must be a clearer definition of property and access to resources similar to what today one may casually Environmental Marxism.

The third major Paradigm that arose during that time is that of Ecological Economists who believe in the implementation of physics and ecology instruments, inspired by the Club of Rome's use of the second thermodynamical law to predict non ergodic problems, with long term perspectives giving rise to modern models like Quantum Economics or Econophysics which break with the paradigm of conventional economics.

Cayetano Sotomayor, Lima Peru, 2023.