Part of E4a’s “working paper series” · Anthropocene. Critically, we hope to spark a broader...

Contact: Michael Wironen mwironen@uvm.edu

PART OF E4A’S “WORKING PAPER SERIES” Please do not quote or cite paper without authors’ consent

Making Decisions in the Anthropocene: An Ecological Economics Approach

James Arruda*, Nicholas Cole, Anna Kusmer, Alvaro Palazuelos, Michael Wironen *Authors listed alphabetically; all contributed equally to the paper.

Abstract The approaches used by governments and other public institutions to compare alternative projects, policies, and courses of action represent particular worldviews and sets of values that frequently remain implicit and unquestioned. Some prominent tools – cost-benefit analysis chief among them – perpetuate a utilitarian ideology in line with the basic tenets of neoclassical economics. In both orthodox and heterodox economics, critics have called into question the assumptions underlying orthodox economic theory. These challenges are underscored by new, unprecedented realities emerging from the Anthropocene, such as human-induced climate change and economic globalization. Both theory and empirical evidence suggest that new tools are needed to facilitate comprehensive and legitimate analysis of alternatives. In this paper, we combine a deep critical analysis of the tools from traditional decision analysis, drawing from a diverse literature. We develop ecological economics criteria through which the conventional economic decision making methodologies are analyzed and critiqued, in order to understand whether tools such as cost-benefit analysis and multi-criteria decision analysis are compatible with the tenets of ecological economics. In some but not all cases, elements of the methodologies that are incompatible with the ecological economics criteria can be remedied through modification, reconciling them with the tenets of ecological economics. Through this work, we hope to revise and possibly expand the toolbox available to governments and other institutions seeking to chart a sustainable course through the treacherous waters of the Anthropocene. Critically, we hope to spark a broader discussion of the moral underpinnings of our collective choice processes, challenging the hegemony of maximum efficiency as the only rational criterion for choice.

Section 1: Decision-Making in the Anthropocene 1.1 The Anthropocene as a Call for an Ecological Economics Approach to Decision-Making By most measures, the life-support systems of the earth are in decline. In the more than 200 years since the start of the industrial era, humans have wrought massive change, disrupting biogeochemical cycles, transforming the landscape, eradicating species, and polluting the land, seas, and air (Vitousek et al., 1997; MEA, 2005, Steffen et al., 2015). This has led some scientists to declare that society has entered a new geological epoch, the Anthropocene, where humans are a significant, driving force in transforming the biotic and abiotic components of the earth system (Crutzen, 2002; Steffen et al., 2007). As a descriptive term, the Anthropocene is both useful and vague. Determining exactly when and whether the Anthropocene began remains contentious (Steffen et al., 2007; Smith and Zeder, 2013). Whether this new epoch bodes well – the “Good” Anthropocene – or poorly for humans is a subject of considerable speculation, although it clearly will impose changes on how societies organize and function (Dalby, 2015). What appears clear is the growing consensus in the scientific

community that humans have the ability to transform the earth system in ever more powerful ways (Ellis & Ramankutty, 2008; Rockström et al., 2009; Steffen et al., 2015). The fact that this power has been exercised is evident in the abundant literature on global environmental change and the notion that humanity has transgressed fundamental planetary boundaries. The rise of complex systems theory as a framework for understanding the earth system suggests that with humanity’s growing transformative power comes the possibility of unexpected outcomes (Levin, 1998; Scheffer et al., 2001; Walker et al., 2004; Liu et al., 2007). Indeed, the past several decades of global change research is rife with examples of complex, sometimes poorly understood, feedbacks arising from human alteration of ecosystems. Given that there is only one earth with which to experiment, the consternation many scientists feel about the Anthropocene epoch is understandable. Unlike past eras, where environmental degradation contributed to local “collapse” of communities and cultures (Diamond, 2005), the Anthropocene is an era marked by global-scale fossil-fueled interconnectedness of peoples, economies, and ecosystems (Young et al., 2006; Liu et al., 2015). Globalization has amplified the effects of humans on nature while rendering the governance landscape more complex (ibid.). Capital markets, supply-chains, food systems, etc. are increasingly global in scale, providing some buffering of local or regional shocks while also perpetuating crises far from their place of origin (Fischer-Kowalski & Amann, 2001; Young et al., 2006; Liu et al., 2015). What then are the implications of the Anthropocene for decision-making? The decisions made by the present and previous generations are the ones that have so amplified the impact of humans on nature, threatening the integrity of the ecosystems that sustain life. The decisions made in the immediate future may have consequences that shape the lives of others in faraway places or future generations. The complexity of the human-earth system means that these consequences may not always be understood, especially given recent awareness of global “teleconnections” between actors and sectors (Liu et al., 2015). Already, the causes and consequences of the Anthropocene are unevenly distributed amongst the world’s population, creating complex questions of justice and fairness. The notion of planetary boundaries suggests that endless economic growth is not a viable means by which to satisfy humanity’s welfare demands over the long term. It is thus time to revisit the assumptions that underlie our decision-making processes, as they may not align with the new reality of the Anthropocene. Ecological economics has for several decades grappled with the challenges lying at the heart of the Anthropocene discourse: unsustainable use of renewable resources, over-reliance on nonrenewable resources such as fossil fuels, increasing demands on ecosystems due to rising consumption and growing population, failure to account for the costs of pollution, etc. Ecological economists have cogently criticized mainstream economic theories and methods for their failure to address the risks of exceeding the fundamental biophysical limits of the earth system; at the same time, ecological economists have highlighted the connections between the economy and nature, demonstrating that economic production, exchange, and consumption are fundamentally biophysical processes. Ecological economics may be able to provide important insight as society seeks to devise successful strategies to navigate the Anthropocene.

1.2 Public-Sector Approaches to Decision-Making and Policy: The Rise of the Cost-Benefit State The Anthropocene epoch has seen the emergence of many new forms of governance (private, voluntary, transnational, etc.) that go beyond the traditional model of national and subnational governments as governing bodies (Biermann et al., 2012). This trend may continue. At the same time, public-sector institutions (including government agencies) continue to play a dominant role

in governance, where they address resource distribution issues (e.g. through taxing and spending), provide essential public goods, regulate pollution, and manage many important aspects of human life. The choices public-sector institutions make - about competing courses of action, alternative investments, policy options - have profound consequences for human well-being. Hence, this paper focuses on decision-making by public institutions, although the tools and approaches reviewed may have applicability beyond the public sector. This focus reflects a broader interest than that of some variants of orthodox economic theory, in that we recognize and accept the important role of the state and other non-market institutions in guiding and shaping many aspects of economic life at the individual and collective level. The decisions made by governments and other public institutions are, at least in democracies, intended to reflect the consent and interests of the populations they serve, whether directly or indirectly (e.g. via representation). In addition to being formal, often elected, representatives of the people, public institutions directly and indirectly employ many experts and technicians who provide analysis and testimony in support of different decisions. Thus, decision analysis procedures executed by unelected bureaucrats can shape or influence public policy and actions in important ways. The legitimacy and validity of these decision-making processes is of paramount importance. In the context of the United States and Canada - the focus of this paper - there has been a marked shift in the basic approach to public-sector decision-making over the past half century. This is reflected in the slow ascendance and current dominance of cost-benefit analysis (CBA) as a decision-making tool and policy analysis paradigm. The rise of CBA has been well-documented (e.g. Shapiro & Morrall, 2012). In brief, CBA has moved from a specialist tool applied to a relatively narrow set of public infrastructure investments to a broadly applied approach to policy analysis enshrined, for example, in Executive Orders and guidance manuals. This shift is what has engendered much of the criticism, because whether acknowledged or not, CBA rests on a specific set of assumptions that constitute a particular (contested) orthodox economic worldview.

1.3 Scope of the Paper: Establishing an Ecological Economics Approach to Decision-Making The rise of CBA as a tool and approach to public-sector policy analysis has been coincident with the growing impact of humanity on the earth system. Many have argued, not least ecological economists, that CBA is an inappropriate tool to apply to many public-sector decisions, particularly those addressing stewardship of the earth and other social values not typically reflected in market exchange (Bromley, 1990; Vatn and Bromley, 1994; Ackerman and Heinzerling, 2002; Nyborg, 2014). Following this line of reasoning, CBA’s dominance has led to the systematic undervaluing of environmental protection when compared to social objectives such as economic growth. If this argument holds, then CBA may be an inappropriate decision-making tool and framework to guide a public sector facing increasing social challenges arising from complex earth system feedbacks. Ecological economics provides a useful lens through which to evaluate any decision-making approach for the Anthropocene. Ecological economics has been at the center of debates about ‘weak’ versus ‘strong’ sustainability, commensurability of values, technology and the limits to material throughput, ecological risk and uncertainty, inter- and intragenerational equity, and ‘dematerializing’ the concept of human development and well-being. These issues are brought to center stage when making critical decisions in the Anthropocene. Ecological economists have roundly criticized CBA in both theory and practice. The critique has led, broadly, to two alternative approaches: reformers have sought to develop new techniques

that work within a CBA framework but address some of the weaknesses of the approach; others have rejected CBA altogether, often pointing to Multi-Criteria Decision Analysis (MCDA) among other alternative approaches to decision-making (e.g. Gowdy & Erickson, 2005). Despite this, there has been no systematic attempt to identify (or establish) a decision-making approach that is fully compatible with the core viewpoints of ecological economics. The focus of this paper is a systematic evaluation of the compatibility of the two dominant decision-making approaches used by public-sector institutions – CBA and MCDA – with some of the core tenets of ecological economics. We seek to determine whether CBA and MCDA can be used in a manner coherent with ecological economics, and if so, what specific methods and techniques must be employed within each broad analytical framework to achieve coherence. To accomplish this, we first introduce CBA and MCDA in Section 2. In Section 3, we define a set of central tenets of ecological economics relevant to public sector decision-making. We recognize that this is a subjective exercise, and hence seek to ground our choice in the literature while accepting that the criteria we selected may be discordant with some views about the central ontology of the diverse (trans)discipline of ecological economics. In Section 4, we evaluate CBA and MCDA in light of the ecological economics criteria, comparing and contrasting the methodologies in theory and in contemporary practice. In Section 5, we discuss the results and propose an approach to public-sector decision-making that is coherent with the tenets of ecological economics and, in our opinion, well-suited to the challenges facing humanity in the Anthropocene.

Section 2: Introduction to Cost-Benefit Analysis and Multi-Criteria Decision Analysis Public-sector institutions use many different approaches to analyze investment and policy alternatives, with cost-benefit analysis (CBA) and multi-criteria decision analysis (MCDA) being arguably the two most popular decision analysis frameworks. While CBA is quite strict in its structure and approach, MCDA has many variants which share a common logic. The MCDA family includes multi-attribute utility theory (MAUT), the analytic hierarchy process (AHP), outranking methods, and approaches such as structured decision-making. In this paper, CBA and MCDA are referred to as decision-making frameworks or approaches, each of which includes specific procedures, methods, and tools within their broad scope. 2.1 Public-Sector Approaches to Decision-Making: An Overview of Cost-Benefit Analysis Economics is sometimes described as the “science of scarcity,” focused on the efficient allocation of finite resource to competing ends (i.e. making efficient choices or decisions). The theory and models of mainstream economics (referred to alternatively as orthodox economics), which initially focused on the behavior of individual consumers and private firms, have increasingly been applied to decision-making by public institutions. This represents a transfer of the tools and theory of neoclassical welfare economics, including its underlying assumptions. These assumptions and their relevance to decision-making practices are discussed at length in later sections and include: the universal expression of value in monetary terms (Gowdy & Erickson, 2005); welfarist and utilitarian notions of compensation and net benefit to society (Hanley & Spash, 1993; Jollands, 2006; Pearce, 1998); a model of human behavior as rational, self-interested, and perfectly informed (Becker, 2006; Nyborg, 2000); competitive markets with no transaction costs; and the singular importance of economic efficiency (Robbins, 1932; Jollands, 2006). In addition to being consistent with these foundational assumptions, the appeal of CBA lies in the way that the commensurability it enforces allows it to be applied in an intuitive manner, that is, by “weighing up the costs and benefits” to determine whether or not to proceed with a project. Its contemporary

widespread application means that there is a sizeable body of theory and many example applications for decision-makers to draw upon. Today, the widespread application of CBA by public institutions is somewhat inextricable from the acceptance by decision-makers of the welfare economics assumptions that underlie it. The rise of CBA started modestly enough as fiscally-minded decision-makers began to advocate the robust investigation of costs and benefits before certain forms of land development occurred. While some attribute the concept to the US Secretary of the Treasury, Albert Gallatin, in 1808, it has also been suggested that the foundation of CBA owes much to the work of the French engineer and economist Jules Dupuit (Pearce, 1998). The economic analysis of large-scale engineering projects in the late 19th and early 20th centuries slowly became common practice through legislation such as the 1936 Flood Control Act in the United States, and over time it spread to policy making and other parts of the world (Hanley & Spash, 1993; Hanley, 2001). Along with a large body of independently produced practical and theoretical literature, many governments today publish materials on and train their technical staff in CBA. The history of CBA has been characterized by numerous modifications to adapt it to new fields and users as well as to correct for deficiencies (Pearce, 1998). Today, although many different tools and methods have been created to calculate costs and benefits, the basic structure of CBA is relatively mature and stable (Hansjurgens, 2004). Potential projects or policies, and their alternatives, are first scoped and defined to provide a boundary in which to evaluate the impacts, at which point the economic relevance of impacts can be established. Information on costs and benefits are derived from economic and engineering data, surveys, etc. in an analyst-driven process (Treasury Board of Canada Secretariat, 2007). Costs and benefits which accrue at different times are transformed into Net Present Value through the application of a discount rate (Hanley and Spash, 1993). All costs and benefits are aggregated, giving a benefit-cost ratio which, if positive, suggests that implementation of the alternative will increase total social welfare (e.g. it is an improvement in Pareto efficiency). In most cases, a sensitivity analysis will be run to assess the robustness of the conclusion in the face of some uncertainty. In the case of the public decisions which are the focus of this paper, the CBA may be used to determine whether or not to enact a new form of environmental regulation or to fund public infrastructure (e.g. a wastewater treatment upgrade). Many of the more controversial instruments of CBA come into play when quantifying costs and benefits. Markets never meet the “perfect” stipulation that theory demands, and so externalities must be accounted for and nonmarket goods must be incorporated into a price framework to allow analysis to proceed. In environmental cases, Hansjürgens (2004) notes that it is often necessarily to physically quantify the flows of materials and services that are affected by the project. These flows, which may include a variety of values such as the services provided by a forest, the social importance of a particular viewscape, or the resilience provided by biodiversity, must be made commensurate in monetary terms through mechanisms designed to assign them monetary value (Martinez-Alier, Munda, & O’Neill, 1998; Mitchell & Carson, 1989; Spash, 2007). It is important to emphasize that CBA is designed to test the economic efficiency of different alternatives. It is not envisioned by economists as a single decision-rule or test that would trump all other considerations. However, in practice, CBA has grown in scope and prominence, in tandem with the rise of the neoliberal discourse of free markets and government efficiency (Bromley,1990; Jollands, 2006; Nyborg, 2014).

2.2 Public-Sector Approaches to Decision-Making: An Overview of Multi-Criteria Decision Analysis Environmental decisions are often complex and multifaceted and involve many stakeholders with different priorities or objectives – presenting exactly the type of problem that behavioral decision research has shown humans are poorly equipped to solve unaided. Most people, when confronted with such problems, will attempt to use intuitive or heuristic approaches to simplify the complexity until the problem seems more manageable. In the process, important information may be lost, opposing points of view may be discarded, and elements of uncertainty may be ignored. Therefore, effective decision-making approaches are necessary since individuals will often experience difficulty making thoughtful choices in a complex environment involving value tradeoffs and uncertainty (Chung & Lee, 2009). Multi-criteria decision analysis (MCDA) is a tool growing in popularity in the context of sustainable resource management. There are hundreds of studies involving the use of MCDA specifically relating to environmental management, such as waste management, water quality, air quality and energy production (Huang, Keisler, & Linkov, 2011). MCDA allows analysts and decision-makers to combine both quantitative and qualitative inputs from studies of risk, costs, benefits, as well as stakeholder views and values in order to rank or compare alternatives (Kiker et al., 2005). Furthermore, MCDA can be used to discover and quantify decision-maker and stakeholder preferences about various decision factors, many of which are non-monetary in nature, in order to compare alternative courses of action. In other words, MCDA does not use prices (or only prices, real or imputed) to assess tradeoffs amongst different decision factors; it uses stakeholder and/or decision-maker input to guide tradeoffs. This represents a considerable shift in power from analyst to stakeholder when compared to CBA. In MCDA, an analyst defines different factors (criteria) relevant to the decision in question, often with input from stakeholders and decision-makers. Depending on the MCDA methodology utilized, these factors are assigned a priority rating or ranking (weight) by the different stakeholders in order to enable the identification of a desirable solution to the multi-dimensional problem (Huang, Keisler, & Linkov, 2011). The weights/ranks can be assigned through revealed preference or stated preference methods, or as the result of a consensus-oriented deliberative process. The analyst will assign scores or values to each decision factor based on expert analysis and stakeholder engagement. A typical approach is to then calculate the total value score for an alternative as a linear weighted sum of its scores across several factors (Figueroa, Greco, & Ehrgott, 2005). The MCDA process generally follows the sequence of (1) identifying DMs (final decision-makers), actors (people involved in the decision analysis process), and stakeholders (anyone involved in the decision analysis process); (2) selecting criteria; (3) defining alternatives; (4) choosing an MCDA technique(s); (5) weighting the criteria; (6) assessing the performance of alternatives against the criteria; (7) transforming the criteria performance values to commensurable units and normalized values; (8) applying the selected MCDA technique(s); (9) performing sensitivity analysis; and (10) making the final decision (Chung & Lee, 2009). Some MCDA methods are, in closer alignment with CBA, primarily analyst-driven, whereas others are intensely participatory. There are at least four basic MCDA approaches. The following share common mathematical elements, i.e., values for alternatives are assigned for a number of dimensions, and then multiplied by weights and finally combined to produce a total score.

Outranking: Outranking methods essentially involve holding various “votes” across factors. The range of possible scores for different alternatives is considered within each factor, to derive alternatives that can be combined across factors. An alternative's relative score on a specific factor is thus a function of how well it compares against the set of other alternatives. Then weights are applied across factors to come up with an overall attractiveness for each alternative, which may be interpreted as a level of confidence or agreement or in other ways. (Huang et al., 2011). Two outranking methods are:

1. PROMETHEE (Preference Ranking Organization Method for Enrichment Evaluation) 2. ELECTRE (Elimination and Choice Expressing Reality)

MAUT: MAUT, or Multi-Attribute Utility Theory (Keeney & Raiffa, 1976) adds another layer into the model, transforming scores at any level into utility functions (Huang et al., 2011). MAUT employ numerical scores to communicate the merit of one option in comparison to others on a single scale. It relies on the assumption that the decision-maker is rational, preferences do not change, and the decision-maker has perfect knowledge and is constant in their judgement. In this way, MAUT is the closest MCDA method to CBA. AHP (Analytic Hierarchy Process): Like MAUT, AHP or the Analytic Hierarchy Process is a compensatory optimization approach. However, AHP uses a quantitative comparison method that is based on pairwise comparisons of decision criteria rather than utility and weighting functions. All individual criteria must be paired against all others and the results compiled in matrix form (Kiker et al., 2005). AHP can function even with incomplete or inconsistent inputs, by using matrix algebra (involving either eigenvalue-based or similar calculation methods), to produce weights, overall scores, and measures of consistency. Like other MCDA approaches, AHP produces scores for each alternative; in some cases, it is theoretically possible for the alternatives to change order depending on how other aspects of the problem are structured, so these scores are not necessarily interpreted exactly the same as MAUT scores (Huang et al., 2011).

TOPSIS (Technique for Order Preference by Similarity) The TOPSIS family of methods compares a set of alternatives by identifying weights for each dimension, normalizing scores in each dimension and calculating a distance between each alternative and the ideal alternative (best on each dimension) and the negative ideal alternative (worst) across the weighted dimensions, using one of several possible distance measures (e.g., Euclidean distance). Finally, the ratio between the distance (separation) from the negative ideal and the sum distance from the ideal and negative ideal alternatives is calculated. This ratio is used to calculate alternatives. Benefits of TOPSIS include the facts that the only judgments required are weights, while relative distances depend on the weights and on the range of alternatives themselves, and the non-linear relationship between single dimension scores and distance ratios produces smoother tradeoffs (Huang et al., 2011).

Section 3: Central Considerations for an Ecological Economics Approach to Decision-Making

Ecological economists share the basic perspective that the human economy is embedded in nature and that economic processes are also natural processes, in the sense that they can be seen as biological, physical, and chemical transformations. Ecological economics argues that the economy has to be studied also, but not only, as a natural object, and that the economic processes should consequently also be conceptualized in terms usually used to describe processes in nature (Røpke, 2004; Spash, 2012). Moreover, in contrast with orthodox economics, ecological economists accept that economists must make explicit the normative assumptions underlying their treatment (or lack thereof) of the topic of distribution and justice; that is, economics is not a value-free, objective science. Building upon this basic description of ecological economics, in this section we develop a set of criteria which encompass some of the major tenets of this multidisciplinary approach. The criteria include ecological economics perspectives about the scale of the human endeavor in lights of what the planet can sustain for a very long term, ideas of justice, distribution, and the efficient allocation of resources. The ecological economics criteria constitute the lens through which CBA and MCDA will be evaluated in Section 4. The criteria are:

1. Strong versus weak sustainability 2. Sustainable scale 3. Uncertainty and complexity 4. Efficiency 5. The nature of the economic actor 6. The importance of stakeholders 7. Justice and distribution 8. Time preferences and intergenerational justice 9. Considerations of the non-human world

In the remainder of this section, we situate ecological economics with regard to each of these criteria. Where appropriate, we contrast ecological economics with the perspective of orthodox (mainstream) economics, recognizing, of course, that neither ecological nor orthodox economics are monolithic in their ontological and epistemological stances.

3.1 Strong versus Weak Sustainability Ecological economics is fundamentally concerned about the sustainability of the human endeavor over long periods of time (i.e. multiple generations). This focus is motivated by concerns that orthodox economics does not adequately address resource scarcity, “externalities” such as pollution and biodiversity loss, and the complex feedbacks inherent to the functioning of the earth system, all of which suggest that there are absolute physical limits to economic activity both on the short- and the long-term. Ecological economists tend to favor “strong” over “weak” definitions of sustainability (Gowdy & Erickson, 2005). A weak definition of sustainability, in line with orthodox economic thinking, takes the premise that total net investment in all forms of capital needs to be above zero on the long-term (Neumayer, 2010). The forms of capital in this definition include natural capital (i.e. nature understood in a utilitarian sense), human capital, and human-made capital. This interpretation of sustainability is also referred to as the “substitutability paradigm,” as one form of capital can be substituted for another as long as the net sum of all capital is above zero. According to this definition, it is safe to assume that natural capital can be run down as long as enough human-made capital and human capital is built up in exchange (Neumayer, 2010). Solow (1974) further argues that, “Earlier generations are entitled to draw down the pool so long as they add to the stock of reproducible

capital” (p. 41). Basically this means that a rise in consumption power can compensate future generations for a decline in the stock of nonrenewable resources or an increase in the pollution stock (Neumayer, 2010). Conversely, “…the essence of strong sustainability is that it regards natural capital as fundamentally non-substitutable for other forms of capital” (Neumayer, 2010, p. 25). A central argument for strong sustainability is that natural resources and the environment more broadly constitute essential inputs in economic production and welfare and therefore cannot be completely replaced with manufactured or human capital (Van den Bergh, 2007). Human made-capital is itself made out of natural resources, with the help of human capital (which also consumes natural resources to sustain itself). Creation of the “substitute” requires more of the very thing that it is supposed to substitute for (Costanza & Daly, 1992). More broadly, viewing nature solely as an assemblage of natural resources is flawed as it ignores the life support functions provided by intact ecosystems and assumes perfect knowledge of the ways in which ecosystems produce goods and services. An additional argument for a strong sustainability stance draw upon notions of environmental integrity and the rights of nature (bioethics) (Van den Bergh, 2007). Finally, some argue that strong sustainability is necessary to avoid irreversible changes to natural ecosystems, the dynamics of which are not fully understood. In this context the terms stability, resilience, biodiversity and ecosystem health are often mentioned (Costanza, Norton, & Haskell, 1992). Arguments against the perfect substitutability of capital align closely with arguments about the incommensurability of values. In other words, just as natural capital is not easily substitutable for human-made capital in every dimension, it is similarly problematic to try to convert the many different aspects of a complex problem with normative dimensions into a single commensurate unit, e.g. dollars.

3.2 Sustainable Scale Inherent to a strong sustainability perspective is the view that environmental constraints exist at local, regional and global scales. In the Anthropocene, we are witnessing the transgression of biophysical boundaries locally and globally (Steffen et al., 2015). This demands a rethink of the way in which economists address absolute and relative scarcity. In orthodox economics, scarcity is theoretically addressed by internalizing externalities, increasing technological development, and allowing free, competitive markets to send correct price signals. However, in practice, externalities abound and certain economic activities continue to expand despite dire predictions about the consequences (Steffen et al., 2015). Market failure is the norm, rather than the exception. In orthodox economics, growth is viewed as a net increase in welfare, i.e. a solution to social and economic ills. However, economic growth is nearly always accompanied by an increase in the biophysical scale of the economy (i.e. material and energy throughput, from raw material inputs to waste outputs), which presents a threat to sustained ecosystem service production, critical natural capital (see Brand, 2009), and ecological resilience (Meadows, Randers, & Meadows, 2004). Throughput can be measured as an absolute physical value; however, more integral to management is, “the physical size of the economy relative to the ecosystem that contains and supports it” (Malghan, 2010, p. 2261). A sustainable scale of human development, according to ecological economists, is a level that does not degrade the carrying capacity of the environment over time, for both human society and non-human species (Daly, 1992). The extent of development is determined ultimately by ecological limits, institutional inventiveness, and the

state of technology (Daly, 1992). While market prices are useful at facilitating the efficient allocation of natural resources, they do an ineffective job at ensuring a sufficient degree of ecological sustainability, given the routine failure of the price mechanism (Lawn, 2001). Hence, ecological economists argue that sustainable scale needs to be addressed directly through policy intervention, rather than left solely to markets. The ecological economics perspective of a sustainable scale can be summarized by Daly’s (1990) operational principles of sustainable development:

1. Limit the human scale to a level which, if not optimal, is at least within the carrying capacity of the remaining natural capital and therefore sustainable;

2. Technological progress for sustainable development should be efficiency-increasing rather than throughput-increasing;

3. Renewable natural capital harvesting rates should not exceed regeneration rates; waste emissions should not exceed the renewable assimilative capacity of the environment; and

4. Non-renewable natural capital should be exploited, but up to a rate equal to the creation of renewable substitutes.

Achieving a sustainable scale of economic development relies on knowledge of spatio-temporal dynamics and the complex links and feedback loops between development and ecological factors (Jordan & Fortin, 2002). The process of determining the sustainable scale associated with economic activity in a particular ecosystem must integrate, at a minimum, earth system science, environmental monitoring, and management (Norton, Costanza, & Bishop, 1998).

3.3 Uncertainty and Complexity During this time of unprecedented pressure on the natural world, decision-makers often seek scientific judgement about how human activity will alter natural systems and vice versa. Although contemporary science has come a long way in its understanding of mechanisms in social and ecological systems, the dynamics of coupled socio-ecological systems are complex and, in some cases, poorly understood (Folke, Colding, & Berkes, 2003). This is partly due to a historic separation between natural and social sciences (Liu et al., 2007). A decision-making framework for the Anthropocene must account for these uncertainties in scientific knowledge, particularly with regard to the characteristics of complex systems. Complex systems theory states that socio-ecological systems are prone to non-linear processes and thresholds, feedbacks, legacy effects, and “ecological surprises” (Liu et al., 2007). These features of systems are incompatible with management that assumes static conditions or consistent linear change, with is often the case in orthodox economic analysis aimed at constrained optimization (Kriebel, 2001). Orthodox economists sometimes contend that current schemes for regulatory policy have built-in precautionary measures, such as safety factors used in risk assessments (Kriebel, 2001). The problem with this strategy is that it puts the burden of proof on scientists to understand the mechanisms of a system before decisions can be made to prevent impacts. Ecological economists argue that the pace of efforts to mitigate environmental degradation, such as climate change, habitat destruction, and resource depletion, is currently too slow, and in a rapidly developing world, environmental and health problems outpace the scientific community’s ability to identify and mitigate risk (ibid.). In short, a lack of scientific evidence does not justify inaction to prevent ecological degradation (Gollier & Treich, 2003).

In the face of uncertainty, ecological economists place a strong emphasis on avoiding key ecological thresholds. Thresholds are non-linear transitions in the functioning of coupled human-environmental systems and are intrinsic features of those systems often defined by a position along one or more control variables (Rockstrom et al., 2009). When a threshold is surpassed, an ecosystem passes into a different configuration which can result in the irreversible loss of critical natural capital and cause immense costs to society (Meadows et al., 2004; Brand, 2009). Due to the complex nature of ecosystems, it is generally impossible to know in advance where an ecological threshold is and what the exact consequences of crossing it will be until it happens (Farley, 2012). In orthodox economics, decision-making is based on estimates of marginal changes in economic cost and benefits. However, when a threshold is reached in a complex system, a very small change in economic activity can have extreme impacts (Farley, 2008). In the context of complex systems where the possibility of crossing a threshold exists, the use of marginal analysis is sometimes inappropriate. Given that ecological systems are complex and a high degree of uncertainty exists concerning the potential impact of human activities over them, ecological economists recommend the use of the precautionary principle in some instances to set human activities at a safe operating distance from ecological thresholds. The precautionary principle encourages the avoidance of risk before reasonable scientific information is available about it. Decisions must be made that take preventative action in the face of uncertainty and shift the burden of proof to the proponents of an activity (Raffensperger & Tickner, 1999). Characteristics of complex systems that call for the use of the precautionary principle are: feedbacks with long time horizons, stock externalities, possible irreversibilities (biophysical, socioeconomic, etc.), large uncertainties, and the potential for future scientific progress (Gollier & Treich, 2003). With the use of the precautionary principle, the objective of economic decision-making is to strive for a dynamic strategy that can adapt to changes in uncertainty and scientific progress over time. The cost of inaction is high and the cost of being wrong is high, and flexibility is needed in prevention efforts (ibid.).

3.4 Efficiency Efficiency in resource use for the purposes of welfare maximization is the central aim of orthodox economics, and has been embraced as an important normative goal in the operation of many public institutions. Through monetary valuation and free markets, we are supposed to be able to discern the most parsimonious use of resources to achieve desired outcomes (Robbins, 1932). In orthodox economics, social welfare has been conflated with efficiency, and thus the most efficient alternatives are deemed to be those that contribute the most to overall social welfare (Agle et al., 2008). Indeed, once an alternative has been labeled efficient, it becomes different to argue for other alternatives, despite the compelling social justice, environmental, or other reasons for preferring another choice (Bromley, 1990). Many argue that efficiency is a rational and indeed responsible goal for public institutions; if money is spent without without weighing the costs and benefits it will fail to maximize the amount that can be spent over time (Arrow et al., 2009). This, presumably, will lead to some social goals being short-changed due to limited funds (ibid.). Hence, approaches such as CBA, which enables analysts to compare the economic efficiency of alternatives, have arisen as a central part of the welfare economics toolkit.

As efficiency analysis has grown in importance, so have attempts to address its limitations. Because CBA rests on a welfare economics foundation, it brings with it assumptions of perfect competitive markets, no externalities, perfect information, and no transaction costs, among others. As externalities such as pollution have gained political traction, analysts have worked to devise ways to convert the effects of pollution and other externalities (viewshed impacts, recreational amenity impacts, public health impacts, natural capital degradation, etc.) into monetary values (a commensurable unit) for incorporation into efficiency analysis. This has met with limited success, challenging the notion that efficiency analysis is an adequate means for capturing the impact of alternative decisions on the many nonmarket aspects of social life. Ecological economists have taken pains to position efficiency as one of three central goals that must be tackled simultaneously, with concerns about just distribution and sustainable scale given equal importance in the structuring of economic activity (Daly, 1992). The ecological economics formulation of “efficient allocation,” like in the orthodox formulation, refers to achieving desired outcomes with minimal inputs. The critical difference is that rather than treat efficiency (in terms of net present value) as a monolithic criterion upon which to judge economic decisions, ecological economics expands the concept of efficiency and limits its primacy in economic decision-making based on insights from the other pillars (Common & Perrings, 1992). Ecological economists point out that efficiency can be measured in multiple dimensions relevant to economics, such as energy return on investment (Murphy & Hall, 2010), virtual water footprint, happiness (Hansjürgens, 2004), greenhouse gas emissions, etc. The most efficient solution measured using these alternate metrics may be different than that measured using exchange value, whether revealed or imputed.

3.5 The Nature of the Economic Actor Orthodox economics is built around a simplified notion of economic man, or homo economicus, echoing seventeenth century Hobbesian philosophy. Hobbes envisioned the security and material comfort of the individual as the universal language of the universe, where the actions of individuals are “governed by the calculation of benefit and costs” (Dixon & Wilson, 2008). It is Hobbes’ homo economicus – driven by its desires and aversions (self-interest), and “its capacity to reason strategically” (rationality) that informs orthodox economics (ibid.). It assumes that actors are “perfect calculators” that can make complex mathematical comparisons of alternatives, comparing each to a set of complete, endogenous preferences. Homo economicus is intentionally depicted as a selfish, rational utility maximizer and a model of the economic actor that embodies a particular set of cultural values (Becker, 2006). Findings from experimental economics and behavioral psychology challenge the notion of the rational economic actor as a selfish discounter and utility maximizer. Gintis (2000) reports on laboratory results which contradict the neoclassical axioms of homo economicus. First, the economic actor does not normally discount the future at a higher rate than the present. Second, in many instances the economic actor behaves as a strong reciprocator, belying the strong social nature of humans. For example, the most common strategical propensity for individuals is to cooperate, maintain or increase the cooperation, and retaliate against non-cooperative free-riders, even though there is no gain from such retaliation. Furthermore, under uncertainty the individual does not always make rational decisions, since they tend to heuristically reduce the complexities of choice-making. Individuals often prefer their present condition over any other alternative (i.e. status quo bias), making them much more loss averse than homo economicus. Ecological economics has embraced the experimental critique of homo economicus, emphasizing the social nature of humans (Gowdy, 2007; Gowdy & Krall, 2013). Some have suggested that an ecological economy requires a shift in thinking, toward a “broader analytical framework [that]

would bring attention from people as consumers to their roles as citizens and participants in community” (Becker, 2006, p.108). In addition to the revised relationships of the economic actor with itself and with the community, Becker (2006) proposes a homo ecologicus which represents an economic actor who has: sympathy with and respect for nature; creativity sourced from nature; and, personal encounters and experiences with nature. Similarly, Ingebrigtsen and Jakobsen (2009) describe “ecological man”, who is, “aware of the interrelatedness between economy and nature” and is cognizant of the consequences of his/her actions, searching for happiness and well-being beyond the acquisition of wealth (p.2798). Ecological economists view the “economic” aspects of human behavior as situated within a more complex, social, and cooperative individual that is motivated by far more than self-interest, rejecting the reductionist notion of homo economicus as an adequate model of human behavior.

3.6 The Importance of Stakeholders In orthodox economics, stakeholders are those who have defined economic interests in the issues at hand. These stakeholders are assumed to behave according to the model of homo economicus, as elaborated in the preceding sub-section. Their motivations and interests are not questioned; they are assumed to maximize their personal utility through the market transactions they make, with money serving as their means (homo economicus requires this). While stakeholders are typically a narrowly-defined group, much recent discussion on properly functioning markets involves the internalization of externalized (often environmental) costs (Jenkins, 1999). This entails a necessarily broader identification of those who receive the benefits and bear the costs of certain activities. Still, the orthodox economics treatment of stakeholders is likely to remain strictly hierarchical based on the size of one’s economic stake, sticking to the principles of monetary commensurability and compensation and the elicitation of stakeholder preferences in market terms. Because ecological economics rejects the perfect substitutability of different forms of capital, rejects the validity of value monism, and places an importance on considerations of justice, the field more broadly defines stakeholders and takes a critical approach to their incorporation into decision-making processes. Ecological economics frequently makes reference to the participation principle, which places importance on involving those affected in the design and implementation of policies and decisions (Costanza et al., 1999). A monetary stake, however loosely construed, is not the only means by which one can be considered a stakeholder. The other key insight of ecological economics with regard to stakeholders is that they hold a variety of values which cannot always be condensed or elicited in monetary terms (Martinez-Alier et al., 1998). This means, for example, that traditional economic tools such as willingness-to-pay may be poorly suited to understanding how people value nature because they do not have regular experience making those kinds of valuations (Hansjürgens, 2004).

3.7 Justice and Distribution Orthodox economics, despite claims to be an impartial science, is founded on a utilitarian ethics. Utilitarianism can be described simply as a consequentialist ethical framework which holds that the best moral decision is the one that maximizes total utility (Adler & Posner, 1999). Utility and utilitarianism have a rich philosophical history, with many thinkers struggling (and failing) to define utility in a manner that would allow for the rational quantification and interpersonal comparison needed to just which of several alternative choices would yield the most overall utility. In modern economic theory and practice, because of the near impossibility of resolving this challenge, the notion of utility has shifted towards a perverted, simplified form (Warke, 2000).

There are no units of measurement that can quantify utility, since it is an abstract conception, so any quantification of, “aggregate happiness under classical utilitarianism is inherently ambiguous” (Warke, 2000, p.389) and any accompanying sets of preferences fuzzy. Thus, in practice, economists accept that preferences revealed in market exchange reflect a rational individual’s attempts to maximize his or her personal utility. A homo economicus will maximize the utility available for purchase with his or her available funds. The quantity of funds available to each individual is a distribution issue, and thus outside the scope of (orthodox) economic consideration. Because interpersonal comparisons of utility are not possible, growth in the overall quantity of funds is taken to approximate growth in total utility, notwithstanding some recognition in theory of the diminishing marginal utility of money. This simplification of the classical notion of utility neglects the many ways in which utility may be enhanced or supported through non-market interactions. As such, it also neglects the ways in which market activity may hinder non-market means for achieving utility. Conversely, ecological economics regards distribution as a central economic concern despite accepting that questions of justice and distribution are normative by nature. Ecological economists are concerned with distributive justice (both within and between generations and, to some, species) as well as procedural justice, although authors emphasize different concerns and theories of justice. For Daly and Farley (2004), the underlying logic is that no generation can claim more moral justification to natural resources than any other. Padilla (2002) mentions that, with regard to intragenerational justice, the global free market has left many countries with much less power, resources, and higher degree of pollution, without a means for global compensation to remedy historical inequities. “Rich countries have created their prosperity through an appropriation and unsustainable use of global resources” (Padilla, 2002, p.73). Padilla (2002) argues that rich countries should pay the costs of abating climate change. Unlike orthodox economics, which has an implicit foundation in a single broad moral theory (utilitarianism), but refrains from pronouncing on questions of distributive justice, ecological economics accepts that economics is a moral science and yet is not rooted in a single moral theory that shapes its normative content.

3.8 Time Preferences and Intergenerational Justice The notion of time preference is important in economics. The decisions made today will incur costs borne in the near-term for the sake of benefits that may accrue now or in the future. In evaluating such tradeoffs economists typically use a discount rate to “discount” future streams of costs and benefits. The discount rate accounts for the time value of money, which reflects individuals’ relative willingness to take an immediate payout in lieu of some later, larger payout. This is due, in part, to the opportunity cost of money, which in practical terms reflects the amount that “could have been earned” had an alternative investment choice been made over the same time horizon (Arrow et al., 2013). Contemporary government practice in the United States is to use a fixed discount rate, although the specific rate varies somewhat arbitrarily depending on the agency and application (Arrow et al., 2013). An alternative that has been proposed is to use a hyperbolic or declining discount rate. The reasoning is various: humans demonstrate a time preference for money that is not stable over time, instead exhibiting a “systematic tendency to discount the near future at a higher rate than the distant future” (Gintis, 2000, p. 313); a declining discount rate can more accurately reflect uncertainty regarding the value of long-term costs and benefits, e.g. due to variation in the interest rate (Arrow et al., 2013; Weitzman, 1998). The important point is that a lower discount rate applied

to future costs and benefits would “discount” the future less, thus increasing the likelihood that an investment in long-term sustainability would be deemed economically efficient or rational. Ecological economists have criticized constant-rate discounting, preferring a declining or hyperbolic discount rate if and when discounting flows of costs and benefits. Some authors go further, questioning the apparent premise underlying the debate about which discount rate to use, which implies that once the right number is chosen, the right answer will be given (Vatn & Bromley, 1994; Ackerman and Heinzerling, 2002). To these authors, this conflates a complex moral and political decision about intergenerational justice with a discrete technical decision. Sustainability is fundamentally about considering the kind of world we would like our grandchildren (and their grandchildren) to experience; it is about living and acting as if we are part of previous and future generations (Bromley, 2007). In this more radical critique, a means is needed to enable a voice to emerge that reflects a much longer time horizon, guiding policy and investment on behalf of humanity, rather than on behalf of the assumed time preference of private self-interested individuals. Thus, ecological economic decision-making must consider the temporal dimension or how the impacts of decisions carry over to the future and are shaped by the past.

3.9 Considerations of the Non-Human World There is a long history in orthodox economics of trying to account for forms of value additional to exchange value (i.e. the value reflected in the price of goods exchanged on free and competitive markets), with the goal of incorporating these values into an economic framework (with prices, quantities, etc.) that can be used to assess the efficiency of different choices. For example, Weisbrod (1964) argued that individuals may value an aspect of the non-human world even though they do not use it, for example, nature, just like art or historical sites, can have a highly emotional value absent any actual use. Additionally, Krutilla (1967) recognizes “option value,” based on the concept of option demand, a willingness to pay for retaining an option to use an area or facility that would be difficult or impossible to replace and for which no close substitute is available; such a demand may exist even though there is no current intention to use the area or facility in question and the option may never be exercised (Krutilla, 1967). Similarly, existence value has been defined by Aldred (1994) as the value assigned by an agent in addition to any expected changes in the welfare of the agent dependent on the good’s continued existence. Even though existence value does not reflect use or exchange value, it can still be calculated based on an agent’s willingness-to-pay for that environmental good to continue to exist, as the value is rooted in the instrumental way in which it increases an individual’s utility. Many methods have been developed to capture the preferences of individuals for non-market goods and services (whether stated or revealed) and to capture different aspects of value; these methods have been subjected to much criticism from within and outside economics (Lo & Spash, 2013). Despite this, these are still attempts to monetize complex aspects of nature. Ecological economics accepts that both the human and non-human world are subjects of moral consideration (Spash, 2012). This aligns with the idea shared by many cultures and individuals that nature has intrinsic value. Intrinsic value can be recognized as value which depends solely on the nature of the thing in question, rather than its use, exchange, or the labor required to obtain it (Attfield, 1998). If we recognize intrinsic value in the non-human world, the question remains of how to operationalize it in the context of economics and decision-making. Ecological economics recognizes the incommensurability of values, where the intrinsic value of nature may not be given a monetary value (its value is immeasurable) in some circumstances, and therefore should be incorporated in a decision-making framework as a separate criteria rather than utilizing problematic valuation mechanisms (Martinez-Alier et al., 1998). In practice, this

means that some some natural environments or places are not subject to tradeoffs in the eyes of particular stakeholders, no matter the price offered (e.g. sacred waterfalls to some tribes in the Amazon). Contingent valuation surveys have shown that preferences for many environmental features are lexicographic, meaning that they are not subject to tradeoffs (Gowdy & Erickson, 2005). If lexicographic preferences exist where stakeholders are unwilling to accept any tradeoffs for the loss of a good, service, or landscape, then contingent valuation methods are problematic, as no compensation would be sufficient for those stakeholders (Spash et al., 2000).

Section 4: An Ecological Economics Assessment of Major Decision-Making Frameworks Having defined a set of ecological economics criteria relevant to decision-making in the Anthropocene (see Section 3), in this section we assess whether cost-benefit analysis (CBA) and multi-criteria decision analysis (MCDA) are compatible with these criteria. If they are not, we investigate whether these methodologies can be altered in any way which would reconcile them with the ecological economics criteria. Wherever possible, we seek to distinguish between the two methodologies as conceptualized in theory versus applied in practice. It is important to differentiate theory and practice, as theory can be bolstered by assumptions that rarely hold in practice and practice is subject to real-world limitations such as budgets, data availability, politics, and decision timeframes.

4.1 Strong versus Weak Sustainability As described in Section 3, weak sustainability refers to no net decline in capital, meaning that natural capital can be run down as long as there is an equal or greater value worth of human-made or human capital to replace it. In a strong sustainability worldview, human-made capital cannot fully replace or substitute for natural capital, especially critical natural capital (Brand, 2009). This is often moderated to allow for capital substitution up to a specific threshold. Decision-making frameworks in which different sectors, actors, or dimensions can be impacted in different ways force one to take a stand on the issues of commensurability and compensability (Martinez-Alier et al., 1998). Both commensurability and compensability accept the existence of tradeoffs. Commensurability suggests that all the dimensions of different alternatives can be converted into a common unit, enabling optimization and facilitating compensation of losers by winners. The convention underlying the additive utility model utilized in CBA is completely compensatory and requires full commensurability of values, because CBA reduces all variables to monetary value discounted in time (net present value). In this framework, what is important is that the final net present monetary value (benefits minus costs) is positive, without concerning itself for which form of capital is being reduced or which is increasing - all relevant information is assumed to be contained in the price. This way, CBA allows for losses in one attribute to be compensated by gains in another, therefore allowing for natural capital to be substituted by human-made capital to achieve a “Potential Pareto Improvement.” Martinez-Alier et al. (1998) further discuss that compensation need not actually occur, following Kaldor and Hicks. By favoring compensability and requiring commensurability, CBA takes a weak sustainability approach, which is contradictory to the tenets of ecological economics. Multi-criteria decision analysis could fall in the same trap if a multiattribute utility theory approach is utilized, where tradeoffs between attributes or types of capital would be required (Martinez-Alier et al., 1998). But MCDA allows for the assessment of different variables independently, without requiring each variable to be converted into its equivalent exchange value based on often questionable methods. If a strong sustainability stance is taken, humans cannot degrade or

deplete any element of ecosystem structure faster than it can restore itself without eventually crossing some threshold beyond which that component of the structure is gone (Farley, 2012). This condition can be included into an MCDA. By assessing biophysical levels in their own “native” units rather than capital in its monetary exchange value, minimum safe levels of natural capital can be included as an analytical criteria, facilitating a decision in a non-compensability context.

4.2 Sustainable Scale The most important tenet of ecological economics to integrate into any decision-making framework is that of sustainable scale. Management decisions must not be made that undermine the ability of future generations and other species to survive and prosper on the planet (Daly, 1992). Decision-making frameworks must therefore include as assessment of the capacity of the ecoregion or system in question to bear the effects of human intervention. This will ensure that the scale of impact is contained to a level that is environmentally sustainable. This can take the form of carrying capacity estimate or a safe minimum standard estimate. Through these estimates, some total limit to material and energy throughput must be set (Daly, 1992). The use of biophysical assessments can indicate specifically how economic development impacts natural processes, and these assessments can be used to determine the maximum sustainable rate of resource throughput in a system (Lawn, 2001). Sustainable scale can only be incorporated into a CBA framework if the scalar limit is ex ante built into the prices for specific goods and services, i.e. by integrating the relevant biophysical limits through policy external to the CBA framework (e.g. a “cap”). Thus, CBA itself is not able to integrate biophysical limits directly into the decision-making framework absent a relevant price signal. Furthermore, CBA has an inherent growth bias, in that a positive net present value (as measured in dollars) is considered the indicator that an alternative is efficient in economic terms. Conversely, MCDA allows each relevant variable of a decision to be treated independently. Hence, sustainable scale limits (or safe minimum standards) can be built into the relevant dimensions of the decision alternatives. This essentially dictates that any alternative that risks transgressing local, regional, or global limits is not approved (Huang et al., 2011).

4.3 Uncertainty and Complexity Uncertainty and complexity theory challenge the ability of analysts to provide decision-makers with clear recommendations when comparing alternatives that have large, complicated, multi-dimensional scopes and integrated human and natural systems. This is especially problematic in the context of CBA, where multiple cost and benefit streams must be monetized and extrapolated into the future, in accordance with the lifecycle of the proposed alternatives. MCDA is more conducive to incorporating these principles into its practice, as it provides more opportunity for stakeholder input and deliberation without forcing all dimensions of a project into a strict quantitative, monist framework. Complex systems have nonlinear processes that conflict with the use of marginal analysis, the basis for welfare economics and, in turn, CBA (Farley, 2012). Additionally, joint production is common in ecosystems, with the scales and units of production varying in ways that are not always well understood by science and thus are not conducive to incremental analysis.

One potential way to partially reconcile CBA with uncertainty and complexity is to run integrated assessment models with low discount rates and highly risk averse estimates of potential impacts (Farber, 2015). These changes made to the CBA framework decrease its potential to describe decisions that undermine socio-ecological resilience and sustainability as “efficient”, but would require decision-maker support to have analytical legitimacy. Scenario analysis and sensitivity/Monte Carlo analysis can also be used in a CBA framework to evaluate the impacts of uncertainty. Another approach that has been proposed is to use a declining discount rate to reflect uncertainty of distant cost and benefit streams (Arrow et al., 2013). These alternatives allow for some degree of uncertainty and complexity to be incorporated into the CBA, but would require dynamic updating of prices in an equilibrium framework to be realistically projected into the far future. This brings a host of additional assumptions, making it unclear how feasible this would be in practice. MCDA is fundamentally more conducive to incorporating issues of complexity and uncertainty in socio-ecological systems, and thus has been increasingly adopted over the last two decades for environmental management (Huang et al., 2011). As the complexity of a decision increases, it is more important that decision-makers incorporate multiple decision criteria in a systematic way. Because MCDA does not require values to be converted into monetary terms, it allows practitioners and stakeholders to compare alternative courses of action based on a diversity of factors (Huang et al., 2011). The information serves as a tool for the communication of complexity and increases the understanding of the system for natural resource managers and stakeholders (Ananda & Herath, 2009). Like in CBA, Monte Carlo analysis and other forms of sensitivity analysis, as well as scenario analysis, are possible in an MCDA framework. MCDA facilitates multi-objective decisions that consider tradeoffs in political, economic, and environmental dimensions. MCDA is better able to deal with long time horizons, uncertainties, risk, and complex value issues (Ananda & Herath, 2009). Because the dynamic nature of prices can be (partially) isolated from other dimensions, it makes it easier to evaluate risk and uncertainty (Alho, Kangas, & Kolehmainen, 1996; McDaniels, 1996). MCDA links naturally with adaptive management strategies. Adaptive management explicitly accepts the limited knowledge of managers and the fundamental uncertainty of any decision that is made. When using an adaptive management approach, managers select a set of decision alternatives which can then be dynamically tracked to better understand the medium to long term impacts of the decision on social and environmental systems (Linkov et al., 2006).

4.4 Efficiency Efficiency is absolutely central to the theory and practice of CBA. Regulatory bodies and public institutions make decisions that attempt to maximize social welfare by virtue of their economic efficiency and their Pareto-optimality. It is essential to choose the option which “grows the pie” of resources available to society, as measured in GDP. Although many orthodox economists argue that CBA is merely an objective tool to support a broader decision-making process (Bromley, 1990), this ignores broader social trends that have given orthodox economic reasoning a privileged position in policy and governance circles. Economic efficiency has become the key justification for many decisions regarding resource development and growth (Jollands, 2006). Jollands (2006) notes that there are many examples of what Janice Stein called the cult of efficiency in public decision-making, with no distribution arrangement being justifiable unless it is the most efficient one in economic terms. It appears that

analysis of efficiency has moved being “only a tool” for comparing one aspect of different choices to being de facto the only tool that is viewed as legitimate in decision-making. The pursuit of efficiency in CBA as it relates the environment has led to many attempts to better represent the value of nature in economic terms. Standard natural resource economics suggests that if we are to conduct economic analysis such as CBA, even the most imperfect measure of value is superior to no value at all (Tietenberg & Lewis, 2011). Measures of properly pricing both the benefits provided to humans by ecosystems and the costs to stakeholders are the key to the efficient treatment of the environment in decision-making. It has been suggested, for example, that markets fail to protect the natural environment because they do not properly account for externalized costs and other market imperfections (Cohen & Winn, 2007). Hence, CBA is entirely coherent with efficiency in the orthodox economic sense; however, because exchange value is used as the basis for assessing efficiency, other dimensions of efficiency are excluded from the analysis (e.g. water, energy, etc.). Because of the breadth of MCDA techniques (AHP, outranking, MAUT) and the variety of institutional contexts in which they have been applied, identifying a specific interpretation of efficiency that can be generalized across all applications is difficult. MCDA involves the formulation of criteria based on engagement with stakeholders, and so the different kinds of efficiency that are to be considered can vary based on the stakeholders selected and the way alternatives are developed (Huang et al., 2011). In some cases, narrow conceptions of alternatives and criteria can be developed in order to make the most economically efficient use of scarce resources like public funds (Chung & Lee, 2009). Other contexts, such as the Hermans et al. (2007) case study of watershed management in Vermont, use MCDA techniques that express the wide variety of values held by diverse stakeholders, including their various notions of environmental and economic efficiency. It is clear that functionally, MCDA has the capacity to incorporate multiple measures of efficiency into its workings, provided that the preference of stakeholders for particular “efficiencies” are expressed in the process. Analytic Hierarchy Process is a mature expression of MCDA which values rationality and seeks to express the most preferred option of a variety of stakeholders. This amalgamation of preferences and their expression in general but non-monetary terms has implications for how efficiency and rationality are actualized in the decision-making process. Central to Saaty’s (2008) understanding of AHP, a process which he developed, is that it is a rational process for reaching an ideal, utilitarian decision. While this commitment to decisions that maximize overall welfare without consideration of distribution is not essential to MCDA, it seems that welfare-maximization is presumed. MCDA has the capacity to incorporate a diverse array of efficiencies, and to position efficiency as an equal among multiple goals, which aligns closely with the ecological economics understanding of efficiency.

4.5 The Nature of the Economic Actor CBA is predicated on the assumption that rational actors work to maximize the utility of each decision they undertake and that utility maximizing decisions are presumed to be revealed in market transactions and other data or, if no such data exist, stated in survey methods (Gowdy, 2007; Spash, 2007). Preferences are assumed to be complete and fixed. These assumptions do not hold and clash with the richer understanding of human behavior embraced by ecological economists. Indeed, CBA is rooted in utilitarian philosophy, where “actions should be undertaken so as to maximize net benefits” (Kelman, 1981, p.34). However, evidence suggests that an increase in

income does not necessarily increase well-being, and that there is a diminishing marginal utility of income (Gowdy, 2007). Moreover, Adler and Posner (1999, p. 177) argue that although CBA practitioners assume that economic actors can “maximize the satisfaction of unrestricted preferences”, it is a rather difficult task since they are not fully informed and their decisions can be “distorted by circumstances”. Gowdy (2007) suggests that any measurements of well-being should be formed through “empirically-based subjective utility function[s] rather than consumption function[s]” (p.650). Research shows that market consumption does not fully determine well-being (Gowdy, 2007). Also, CBA assumes that the willingness to accept (WTA) is equal to the willingness to pay (WTP), i.e. there is no difference between how much someone would be required to pay “for giving up something […] and the price he would pay to gain something” (Kelman, 1981, p. 37). In that manner, losses are valued as much as gains. In reality, WTA surveys tend to generate much higher prices than WTP (Gowdy, 2007). People are loss-averse, so the individuals who lose from a decision will henceforth demand a higher compensation than the beneficiary’s willingness to pay. This entails a contradiction to the Pareto optimality framework, since CBA assumes, “people care about absolute income [and] not their relative income” (Gowdy, 2007, p.650). Additionally, CBA practitioners regard the preferences of the economic actor as stable and self-regarding (Gowdy, 2007; Spash, 2007). As a consequence, benefits and costs are independent and additive (ibid.). In other words, the framework views preferences as exogenous. Wegner and Pascual (2011: 15) argue that preferences are actually characterized otherwise: “endogeneity is a pervasive characteristic of preferences.” Preferences are rather informed by “the institutional context within which valuation takes place” (p.15). Dryzek and List (2003) have shown that deliberative democratic processes can be influential in shaping and forming preferences, especially with regard to complex topics to which people have had little previous exposure. Additionally, individuals may hold lexicographic preferences, which deny the commensurability of value between preferences (Wegner & Pascual, 2011). Gowdy (2007) argues that lexicographic preferences are prevalent. For example, “people may refuse to attach a monetary value to a landscape because they consider it to embody their relation to the past and future of their communities” (Wegner & Pascual, 2011, p.16). Despite the fact that CBA as currently theorized and practiced relies on a flawed model of the economic actor, some ecological economists, such as Gowdy (2007), do not want to throw out CBA, but fix it with realistic and science-based assumptions. The use of CBA is still advantageous for decision-makers since it is “internally consistent, founded on axioms of rational behavior” which hold in many circumstances (Tol, 2003, p.265). MCDA is, conversely, not built on a model of homo economicus, although it is still rooted in the elicitation of subjective preferences as input into decision-making. MCDA has a number of advantages over CBA with regard to the way in which it treats the economic actor. First, MCDA does not accept that market behavior and exchange value are the perfect source of information on relative preferences (Corstanje et al., 2012). MCDA allows for processes of deliberation, voting, or other methods (e.g. conjoint analysis) to elicit relative subjective priorities for different aspects of a decision (for example: Bouvier et al., 2007; Karjalainen et al., 2012; Liu et al., 2010). This can provide for a richer elicitation of preferences, particularly for aspects of a decision that do not pertain to regularly exchanged market goods and services. For example, a problem with WTP and WTA surveys for valuing nonmarket goods and services is that they ask people to price things they are not used to pricing, which introduces sources of error and bias (e.g. where a respondent's WTP/WTA will be bounded in part by their relative wealth). It is the “modeling of

subjectivity” that strengthens MCDA (Wenstøp, 2005). Thus, MCDA is more conducive to an ecological economics worldview, although it is worth noting that the many variants of MCDA differ in their robustness in eliciting subjective preferences and structuring a decision analysis around them.

4.6 The Importance of Stakeholders In many readily apparent ways, the treatment of stakeholders in CBA is at odds with many of the principles advocated by ecological economists, particularly those around participation, justice, and the commensurability of values. Stakeholders are defined as those that have an economic interest in the decision at hand: actors that are economically better or worse off depending on how the project proceeds and how flows of environmental goods and services are effected (Hansjürgens, 2004). That this identification occurs hierarchically, without the inclusion of stakeholders in the setting of project boundaries or the development of alternatives, is in direct opposition to the participation principle suggested by Costanza et al. (1997). The hierarchical tone of CBA is also present in the way that preferences and values are expressed, relying on economists’ interpretations of market information, such as substitutable goods and services or the travel cost method, or the use of WTP surveys (Mitchell & Carson, 1989). These valuation methods are problematic not just in terms of structure but in terms of execution, with CBA epitomizing analyst-driven technocracy. Aggregating differing views and methods of valuation to arrive at the total economic value of an environmental good or service is problematic because of the differing ways stakeholders value the natural world (Grimble & Wellard, 1997). Traditional economists maintain that x number of dollars of an environmental good or service can be easily substituted by x number of dollars of something else, but from a participatory standpoint these are simply not their judgements to make (Martinez-Alier et al., 1998). Even the resolution of stakeholder interests in CBA is unsatisfactory: The Pareto criterion established by Vilfredo Pareto and subsequently modified by Kaldor and Hicks requires that it be possible for winners to compensate losers, so long as the end result is still a net benefit to society (Pearce, 1998). Pearce notes that the distributional questions surrounding these types of compensation remain somewhat unanswered (ibid.). Many environmental benefits are based on uncertain conditions with effects that occur over long periods of time. Biodiversity is one such condition which is not valued well in monetary terms, and which can degraded specifically because of the way that CBA incorporates stakeholders into the process (Pearce & Moran, 1994). Even those motivated to protect the environment can hold starkly contrasting values that are hopelessly lost within the CBA framework. Consider the well-documented and theorized conflicts over the protection of public lands between traditional western conservationists and the indigenous peoples in their respective countries (Stevens, 2014).

The problem of stakeholder representation is exacerbated in the context of public sector decision-making, where institutions are making decisions to represent a broad set of interests that may not have any clear economic stake in the orthodox sense (beyond their marginal contribution of tax dollars), but who hold a significant political stake in the decision. One of the central goals of MCDA techniques is to better understand and represent stakeholder interests in the decision-making process, and to do it without resorting to the unilateral conversion of preferences into monetary value. As Huang et al. (2011) note, “MCDA is used to discover and quantify decision maker and stakeholder considerations about various (mostly) non-monetary factors in order to compare alternative courses of action” (p. 3579). Analytic Hierarchy Process,

an offshoot of MCDA, was developed explicitly as a supposedly objective method to elicit and value fairly the preferences of all of the stakeholders involved in a decision (Saaty, 2008). Theoretically, MCDA techniques are superior to CBA in terms of satisfying the ecological economics criteria for a decision-making approach, and capable of rectifying many of the deficiencies found in CBA’s treatment of stakeholders. According to this method, it is not necessary to put values into monetary terms in order for them to be comparable. It is possible and indeed necessary to engage with stakeholders in a way that elicits their preferences and render them comparable in neutral terms. However, whether this actually occurs in practice is a more complicated matter. As has already been mentioned, today MCDA is employed in a variety of institutional contexts similar to those in which we might typically expect to find CBA used. Because these applications still involve the bounding of the project, the selection of relevant effects, and the identification of stakeholders at the outset, there is the possibility of certain values and stakeholders being sidelined. Macharis et al. (2012) noted that conventional organizational approaches to stakeholder selection can be biased towards those with a high likelihood towards cooperation with a project, which is an ethically suspect tendency from the perspective of public goods and public decision-making. In some cases, the problematic assumptions that underlie CBA are also present in MCDA. Differing applications of MCDA demonstrate how context-dependent the results are, and how well the process might satisfy the criteria of ecological economics with regard to stakeholders. Power dynamics are important. In a bureaucratic context, the formulation of alternatives with regard to an environmental resource like a river might be so narrow that the elicitation of stakeholder preferences does not give them a meaningful level of influence over the process. This appears to be the case when AHP was used to identify preferences for watershed management techniques in South Korea (Chung & Lee, 2009). But in the right contexts, MCDA can facilitate truly collective decisions by stakeholders in environmental issues as well. When a variety of stakeholders with disparate values regarding the treatment of the White River Watershed were brought together in Vermont, a fair and open facilitation process involving outranking was able to successfully develop and compare different scenarios (Hermans et al., 2007). From this, it seems clear that MCDA’s potential to fairly incorporate stakeholders with regard to the participation principle requires substantial time and resource commitments at the outset of a project.

4.7 Justice and Distribution As a welfarist tool, CBA is used to efficiently maximize aggregate utility and not to deal with “distributive questions, to which economic learning had nothing to contribute” (Adler & Posner, 1999, p.185). Any considerations about distribution are external to CBA; indeed, they are considered a topic for other disciplines to address and for politics to deliberate (Adler & Posner, 1999). The closest conception to justice in CBA is the Pareto principle which tries to maximize total utility, which is itself rooted in an anthropocentric, utilitarian conception of welfare. Even within this understanding of welfare, preferences do not reflect the “distributions that are systematically related to… actual welfare” (Adler & Posner, 1999, p.188). In this case, the fallacy of CBA can be depicted as its endowment dependence. In other words, due the avoidance of distribution questions in CBA, the practitioner evaluates rich (strongly endowed) and poor (weakly endowed) individuals as equal (Adler & Posner, 1999). The only way in which this is addressed in the context of CBA is outside the CBA framework itself, through “stakeholder analysis,” which is required by some jurisdictions to complement the CBA and clearly identify which parties win or lose as a result of different alternatives.

In the case of MCDA, questions of justice and distribution are addressed procedurally, through stakeholder engagement during the MCDA process, which can be designed to lead to more just, substantive outcomes. Thus, justice considerations can explicitly be built into the decision analysis framework, although this is not obligatory. As mentioned in Section 4.6, there is considerable room for MCDA to succeed or fail in its procedural execution, which will determine how legitimate and just the process and its outcomes are deemed in the eyes of the affected stakeholders.

4.8 Time Preferences and Intergenerational Justice In both CBA and MCDA, it is essential that the analyst set a timeframe for the analysis. This is typically based on the expected lifetime of the various alternatives under study (based on depreciation/lifecycle estimates) or, in the case of policy analysis, specified in guidance documents or left to the analyst’s judgement. The timeframe helps set the bounds for the analysis, although in MCDA it is possible to include factors that address the far-distant future or lie outside the timeframe agreed for quantitative analysis. In CBA, rational economic actors are assumed to exhibit a strong present-bias in their time preference (Arrow et al., 2013). Thus, conventional practice is to apply a fixed discount rate to all costs and benefits incurred over the analysis period (ibid.). As mentioned in Section 3, this convention has been challenged based on evidence from experimental economics about time preferences of real humans, which are inconsistent, as well as the realization that uncertainty about future prices and market conditions makes it unreasonable to assume a constant rate over time. Hence, hyperbolic discounting and declining discount rates are beginning to be accepted. Similarly, some agencies allow for two discount rates to be used, based on whether the costs and benefits affect private consumption (household final consumption) or government consumption (e.g. the US Department of Housing and Urban Development). Thus, there is some flexibility in CBA, although a present-bias is inherent in any attempt to discount, even hyperbolically, due to the fact that the unit of analysis is marginal monetary (exchange) value. Hence, prices for nonrenewable goods may be low due to perceived abundance on the time horizons of present-biased market participants. There is no ready manner in CBA by which to incorporate a long-term sustainability perspective without making analytical leaps that are difficult to support within the CBA framework. In MCDA, present-bias takes a different form. For the economic dimensions of the alternatives, discounting methods used in CBA may be applied, whether fixed, declining, or variable (hyperbolic). When restricted to a narrowly framed economic analysis (e.g. actual market goods and services), discounting is less controversial as it fits market behavior fairly well and reflects the real opportunity cost of money. For social and environmental dimensions of the alternatives, each dimension may be reported in its unweighted “native” units, or weighted to enable summing and calculation of an optimum choice. The weighting factors are typically derived from surveys or through deliberation oriented toward consensus. The present-bias in MCDA is due to fact that weighting factors (or, alternatively, the final choice) derive from the particularly interests and values of those surveyed as part of or directly engaged with the decision-making process. This is more democratic than an analyst-driven process, but does not necessarily ensure that a long-term perspective is taken. One possible solution is to include representatives and/or criterion dedicated to the long-term perspective in the process; this is only a partial solution, but represents the best alternative we can envision.

4.9 Considerations of the Non-Human World

Based on a monistic, instrumental understanding of value, CBA requires that all variables relevant to a decision be reduced to their monetary value. In other words, the only dimensions of value that can be included in a CBA framework are those that can be expressed monetarily, implying that they are commensurable and thus subject to some degree of tradeoff and/or compensation. This includes notions of existence value, option value, etc. Hence, intrinsic value and other forms of lexicographic preferences acknowledged by ecological economists are excluded from a CBA framework; this manifests itself explicitly when protest bids in willingness to pay surveys are ignored because they do not fit within a monetary tradeoffs worldview (Spash, 2007). Furthermore, ecological economists accept that the non-human world can be construed as a subject of moral consideration (Spash, 2012). Hence, notions of value monism as espoused by CBA are incompatible with the ecological economics acceptance that nature is not at the sole dominion of humans, but can in fact be “wronged” due to human action. Most decision-making contexts have multiple dimensions that vary among the alternatives. Because of this, and especially if there are cultural and environmental dimensions to a decision, it is likely that problems related to the incommensurability of values will arise. This is one of the reasons why ecological economists tend to prefer MCDA over CBA: it allows for different dimensions of value to be assessed separately. Therefore, nature does not need to be quantified as a monetary value and can be a dimension assessed on the terms of the stakeholders involved in the decision. This emphasizes the normative dimensions of how humans relate to nature, which are lost in an analyst-driven CBA process. Guided by moral considerations of nature in its own right, minimum levels of environmental quality can be set as a criteria for the decision, regardless of its utilitarian value.

Section 5: An Ecological Economics Approach to Decision-Making In Section 4, we assessed the compatibility of cost-benefit analysis (CBA) and multi-criteria decision analysis (MCDA) with the ecological economics criteria established in Section 3. In this section, we review the results of the assessment in Section 4 and draw some overarching conclusions about public sector decision-making in the Anthropocene.

5.1 Is CBA Compatible with Ecological Economics Decision-Making Criteria? Our analysis in Section 4 suggests that, in its orthodox form, CBA is incompatible with nearly all of the ecological economics criteria established in Section 3. The fundamental incompatibility of CBA with an ecological economics perspective can be explained by looking at some recurring themes in the analysis of Section 4.

The incommensurability of values and implicit “substitutability” - CBA carries with it a simplified utilitarian conception of welfare that suggests that money can be used as a commensurable unit for analysis in a paradigm of “substitutability,” or tradeoffs. This concept of welfare is not universal, and while it may work in a market context, it does not carry over to other spheres of social life. In the normative world, some things truly are priceless, just as some actions are considered morally unacceptable. Euphemisms such as a “statistical life” gloss over the normative dimensions of some tradeoffs. Public institutions are implicitly tasked with a remit that is larger than private self-interest. They must represent the interests of stakeholders with a plurality of values. These values are often expressed outside a market context, and they may be incompatible. Given that ecological economics recognizes the plurality of human values (Spash, 2012), it is hard to resolve this issue. Furthermore, the theoretically shaky notion that some dollar amount of natural capital can be easily substituted with an equivalent dollar amount of human-made

capital, such as when a regulatory body requires resource-extraction firms to “restore” land after it has been developed, does not bear out satisfying results from a strong sustainability perspective in practice (Brand, 2009; Rooney et. al., 2011).

The use of exchange value as a basis for weighting - Exchange value is an appropriate means of weighting and enabling tradeoffs in the context of markets. But, given the predominance of externalities and the importance of nonmarket goods and services to human welfare, the utility of exchange value as a weighting scheme breaks down. Analytical gymnastics are required to put a price on many aspects of the world that matter greatly to the public but are never or rarely exchanged in markets (genetic diversity, a human life, a scenic view, a marginal increase in air pollution, a melting glacier). The results of these analyst-led efforts cannot be said to have any broad legitimacy. This implicitly favors the items in the cost and benefit columns that are readily exchanged in markets, as data are available and easy to use. In a real world of limited resources, this means the most difficult items to calculate are the most liable to be dropped from the equation.

A democracy deficit - Orthodox CBA is very much an analyst-driven exercise. The analytical heroics described above are the work of a few technicians. Because CBA collapses all dimensions of a problem into a single unit (exchange value), it creates a black box, masking important information. Weighting of different dimensions of a decision (i.e. monetary valuation), especially for nonmarket goods and services, is derived from data analysis and surveys. This stretches the assumption of exogenous, complete preferences to the breaking point, especially when talking about complex tradeoffs in a value plural environment. The narrow conception of stakeholders clashes with notions of participatory planning and democracy.

Systematic failure to address ecological decline - The CBA framework relies entirely on the price mechanism to reflect relative and absolute scarcity. Perfect markets are as utopian as the eco-fantasies many ecological economists are accused of desiring. The empirical decline in the health of nature, the extinction of species, warnings of tipping points; these are signs that prices are sluggish or unable to respond to the information science tells us about nature. This is especially true in light of the contemporary understanding of ecosystems as complex systems, which renders marginal analysis and constrained optimization very difficult or impossible. Additionally, while CBA can claim to merely reflect the current reality of prices and policies, it provides no means by which to critique or evaluate the status quo; as a lens for policy analysis, it is opaque. If prices are to change, policy intervention may be required to provide the “sustainable scale” limits ecological economics demands.

Silence with regard to distribution - On its own, CBA has nothing to say about distribution and other justice considerations. It is implicitly biased toward the interests of the rich, due to their greater ability to pay. Absent a larger decision context, CBA views a solution as efficient that hurts the poor and benefits the rich, so long as compensation is theoretically possible.

The incompatibility of CBA with ecological economics is not intended to be a total indictment of CBA as a useful approach to decision-making. As Gowdy (2007) suggests, there is room for reform. The black box of CBA can, to an extent, be democratized when built into participatory planning processes, although its reliance on prices as a weighting factor is unresolvable. In a

depoliticized environment, CBA can be said to merely provide information on “market” economic efficiency; questions of justice, public goods, future generations, etc. are assumed to be addressed by others, within a context of enlightened governance. The use of CBA in the context of narrow business decisions may be appropriate; in a relatively “pure” market context the assumptions are much less problematic. But, as a tool for public sector decision-making in the “new” reality of the Anthropocene, CBA is highly questionable.

5.2 Is MCDA Compatible with Ecological Economics Decision-Making Criteria? Based on the analysis in Section 4, MCDA can be described as “provisionally” compatible with the ecological economics criteria elaborated in Section 3. Compared to CBA, MCDA’s diversity - its lack of standardization - is both a strength and a weakness. The provisional approval can be understood by looking at a recurring theme in Section 4.

The challenge of democracy in decision-making - The fundamental difference between CBA and MCDA lies in the use of monetary valuation as a means for achieving commensurability and thus identifying preferred alternatives. MCDA derives its weights from the community affected by the decision at-hand. There are many means to do this, which vary in their acceptability from an ecological economics perspective. Critically, this places particular responsibility on the analysts to structure a stakeholder engagement process in a way that enables reasonable, representative, and legitimate preferences to arise and shape the analysis. Insofar as this is achieved, MCDA can be said to align with the core views of ecological economics.

One of the biggest strengths of MCDA compared to CBA is it requires stakeholder involvement. That said, defining who is a stakeholder, how they participate, the specific “dimensions” of each alternative that will be compared, and the means for assigning weights are all questions the analyst must answer. If done well, MCDA can provide much more information to decision-makers as well as those affected by a decision, enabling legitimate decision-making that reflects the interest of the community that public institutions are intended to serve. Questions of justice, risk aversion, value tradeoffs, etc. can be brought to the fore, rather than “assumed” to be addressed by someone else. In this sense, MCDA can help public institutions make the decisions needed to navigate the challenges of the Anthropocene.

5.3 Discussion: Considerations for Decision-Making in the Anthropocene The problem with CBA is that, in the complexities of the real world, its consistency and rigor becomes more of a liability than an asset. The assumptions required to operationalize its neoclassical welfare economics foundations become less and less reasonable; its “black-box” simplification of a multi-faceted world into a single dimension makes it suspect. It becomes easy to accuse CBA analysts of serving the interests of the status quo, rather than acting as impartial technicians. At the very least, these technicians are guilty of economic imperialism; why must the entire world be assigned a price? That CBA has grown in prominence in parallel with the rise of neoliberalism lends credence to the suspicions. These are sociological, not economic, observations. What, then, must a public sector decision-making framework accomplish if it is to serve as a legitimate guide in facing the challenges of the Anthropocene? First, a review of common decision-making frameworks in light of ecological economics criteria calls into question the validity of technocrat/analyst-driven decision-making in public sector

institutions. Certainly, analysts are needed, but arcane imputations of exchange value for non-market goods denies the fact that the value of non-market goods is often socially constructed rather than pre-formed, complete, and unchangeable. It takes the assumptions of homo economicus and extends them to situations that were never even imagined at the time that the homo economicus model was deemed a useful abstraction. The emphasis thus should be on process - decision-making as a participatory exercise in informed democratic deliberation. This is not to say that every aspect of every decision need be democratically deliberated; certainly experts can provide firm advice and guidelines for making decisions (safe minimum standards, cause and effect, uncertainty) while also helping transform an expressed intent into meaningful standards for operation and execution. But CBA as practiced, even with the best efforts to fully capture “the true value of nature” is a case of “if all you have is a hammer, everything looks like a nail.” Because it demands analysis, data collection, etc. it has been embraced as a tool that empowers the analyst, the scientist, without any acknowledgement that is specifically disempowers those whose interests it is supposed to serve. The literature suggests that, contrary to the assumptions of orthodox economics, deliberation can provide a valuable opportunity for stakeholders to develop their understanding of the dimensions of a decision and “form preferences” about issues they previously had little exposure to (Dryzek and List, 2003; Baber and Bartlett, 2005). This also provides an opportunity for the political, normative dimensions of decisions to emerge, including questions of incommensurability, inter- and intragenerational justice, and “the public good.” In this sense, policy would be dictated by democratic deliberation, rather than by techno-economic fiat. Where MCDA succeeds is its refusal to deny the complexity of decisions for the sake of consistency and rigor, and its insistence that stakeholder voices be allowed to emerge. At a minimum, the decision-making approaches of public sector institutions should be procedurally just (and transparent). Second, sustainable thresholds - whether labeled critical natural capital (Brand, 2009), safe minimum standards (Oates, 2010), planetary boundaries (Steffen et al., 2015), or otherwise - must be the subject of considerable research and monitoring in this new epoch, the Anthropocene. The spatial and scalar dynamics of ecosystems are complex, and decision-makers may benefit from better information to support decision-making processes. If an alternative cannot meet sustainable scale criteria, it must be abandoned in favor of more environmentally or socially prudent investments (Goodland & Ledec, 1987). The success of CBA has derived, in part, from its false precision (“misplaced concreteness”). Clear guidance is needed to places bounds on the “substitutability” of human-created capital for natural capital. This includes expanding notions of efficiency to include resources for which the price mechanism is acknowledged to be a poor source of information. Complexity is no excuse to avoid action, but that action should be intentional rather than emergent. In some cases, a precautionary principle approach will be appropriate. Third, once a basic intention has been expressed (i.e a goal), there is no reason to deny cost-effectiveness analysis - which builds on many of the same concepts as CBA - a role in decision analysis. Cost-effectiveness analysis compares alternative means to achieving a desired state on the basis of their orthodox economic efficiency. Rather than try to determine whether an alternative should be pursued, even when the motivation for action is not economic, cost-effectiveness analysis applies an economic efficiency lens to decisions that have already been made but for which details remain to be determined (Farber, 2015). This can be very useful in many contexts.

Fourth and finally, “truths” about human behavior and values built in to orthodox decision-making tools such as CBA need to scrutinized critically to determine the extent to which they reflect empirical reality and can be considered broadly “universal.” To the extent that these truths are not empirically supported and universal, their use needs to be viewed with caution. Evidence suggest that “monetization” and policy designed to provide private incentives can perpetuate the ideology of self-regarding, selfish rationalism inherent to the orthodox model while simultaneously undermining other altruistic motivations for behavior (Bowles, 2008). It is not clear that this is socially desirable. Similarly, notions about the universality of present-bias have undermined longer-term perspectives that recent research suggests are much more widely held than orthodox economic theory and practice acknowledge (Gintis, 2000). Similarly, non-utilitarian conceptions of value abound; imposing a “tradeoffs” framework without providing a means for resolving normative conflicts is both arrogant and an exercise in power domination. In a globalizing world where a tremendous diversity of cultural beliefs and practices intermingle on a regular basis, it is imperative that the assumptions used in public institution decision-making approaches avoid, where possible, imposing a single understanding of human nature and value upon a much more complex and interesting reality. In the Anthropocene, as ecological economics has argued for decades, human diversity just might provide the ideas and normative models needed to transition the rich, fossil-fuel dependent societies that dominate world politics toward a more sustainable relationship of humans-in-nature.

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