Environmental Economics and Ecological Economics: Historical Evolution and the Current Status

The nomenclatures ‘environmental economics’ and ‘ecological economics’ are frequently utilised interchangeably in academic and policy spheres. While purportedly complementary in certain aspects, these disciplines diverge significantly in various fundamental principles. Environmental economics boasts a lengthy lineage, with its conceptual foundations traceable to pre-classical economic thought. On the other hand, ecological economics emerged more recently, particularly in the post-1980s, articulating ecological and energy-related concepts beyond the purview of neoclassical-based environmental economics. Although the distinctions between these two fields of inquiry in environment–human interactions have been well established in global academia, such delineations remain inadequately articulated within the Indian context. Consequently, the development of environmental curricula in economics departments predominantly revolves around environmental economics, often lacking critical inputs from ecological economics. In some instances, curricula incorporate an amalgamation of theories, concepts, principles and methodologies from both fields, leading to conceptual ambiguity. Furthermore, the lack of awareness among educators and students regarding these distinctions results in the treatment of both fields as synonymous, thereby limiting exposure to critical aspects of the alternative discipline. This article presents a systematic review of the historical evolution of neoclassical-based environmental economics and argues that ecological economics emerged as a ‘reaction’ to reorient the former with relevant inputs from domains such as political ecology and the laws of thermodynamics. The analysis aims to clarify the demarcations between these two significant branches of economic thought in the context of environmental studies.