Absolute & Relative Scarcity

Thomas Robert Malthus (1766 – 1834) introduced the notion of absolute scarcity of nature into classic economic thought. He maintained that a population grows faster than the food required to sustain the population, and that will eventually lead to a decline in the population.

In contrast, Mainstream Economics focuses on relative scarcity which defines a good as scarce in relation to other scarce goods. A scarce good carries opportunity costs, which in turn results in a positive price. Goods with no price are not scarce. However, many pollutants have no price, therefore they are not dealt with. In contrast, Ecological Economics focuses its analysis on the damage caused by these pollutants.

We show why the concept of relative scarcity is too narrow to secure the natural basis of life. For example, ground water is irreversibly lost, and climate change causes draught and flooding. In contrast, Ecological Economics is very much aware of the absolute scarcity of natural goods: A good which cannot be substituted with another is absolutely scarce Ecological Economics focuses its analysis on non-priced goods.

This concept is necessary to recognise that many services provided by the environment become absolutely scarce in the long run, therefore we must take precautionary measures now.

To illustrate our critique, we examine the concept of relative scarcity in the context of the present loss of biodiversity.

Key Contributers: Stefan BaumgärtnerChristian BeckerKirsten HertelReiner Manstetten