Economic Profitability vs. Ecological Entropy

Martin L. Weitzman

Harvard Institute of Economic Research Working Papers from Harvard - Institute of Economic Research

Abstract: Privately, the most profitable human use of biomass is widespread monoculture, which creates large target hosts that invite potentially lethal pathogens. In analyzing the tradeoffs, I explain how the famous formula for ecological entropy, H'= -E qj log qj, can be given a mathematically rigorous interpretation as measuring the "generalized resistance" of an ecosystem to extinction failure. Using this measure, a relationship is derived between standard economic welfare produced by a specialized biomass regime and the social-texternality risk of its ecosystem failing. The paper shows that efficient combinations may be conceptualized as if there is some overall balance between economic profitability and ecological entropy.

Date: 1999

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Persistent link: http://EconPapers.repec.org/RePEc:fth:harver:1860

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