Transcript Real wealth - The Emergy Society

Emergy and Ecological
Economics
Valuing Real Wealth
Thanks to Mark Brown, Matt Cohen, Howard Odum, et al.
Produced by Tom Abel
Money as Value
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When we buy
something,
energy and
materials flow in
counter-current
to money
$$
Money
Paid
Products
Paid For
Money as Value
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What do we value and
how?
Do we value the
potential energy in
streams using money?
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Nature provides
products and services
for “free”
Money is NOT paid for
those services
Only for the work of
the farmer who uses
that energy to spread
water on his crops
Money as Value
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The price of
something is
determined by:
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Scarcity
Human inputs
Perception
It does not (nor
perhaps should it)
reflect the work of
the environment
Money as Value
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Real wealth in an
economy is not
money
Real wealth is:
Food, shelter,
clothing, fuels,
minerals, forests,
fisheries, land,
buildings, art,
music,
information, etc.
Money as Value
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The ‘buying
power’ of money
(is your currency
‘strong’ or not)
depends on the
amount of real
wealth there is in
an economy
More real wealth,
more buying
power
Emergy Ecological Economics
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Some key words:
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Emergy
Transformity
Specific Emergy
Empower
Empower Density
Maximum Empower
Emergy Ecological Economics
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Energy…
The ability to cause work
Since all energy can be converted
100% to heat, it is convenient to
express energy in heat units…btu’s
calories, joules
Emergy Ecological Economics
There are many “forms” of energy….
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Sunlight…
Wind…
Geopotential energy of elevated
water…
Fuel…
Electricity…
Information...
Emergy Ecological Economics
Not all forms of energy are equivalent...
 sunlight ≠ wind ≠ fuels ≠ electricity
While they can all be converted to heat…one
cannot say that joules of one form of
energy are equal to joules of another
They differ in the work that went into
making them, and in their ability to cause
work...
Energy Quality
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Different energies are
different in ‘Quality’
Energy Quality is
related to…
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Concentration
Flexibility
Ease of transportation
Convertibility
Oil is highly concentrated
in the ground, it is flexible
in its many uses, it is
easy to transport by
pipeline or ship, and it
can be converted into
many forms of work
Energy Quality
Original ‘sources’
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And these are
related to the work
that was needed to
make the energy
object
Objects to the right
in a hierarchy
required all the work
to the left of it
That work
concentrated the
original ‘sources’ of
sunlight, deep heat,
and lunar gravity
It took all
of this, to
get the…
…highest
‘quality’
objects
Energy Quality
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‘Information’ is
the highest
quality energy in
human society
The concept of
quality required
a new concept of
energy, it
required
‘emergy’
Emergy
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Emergy: the energy that it took to make
any other form of energy, good, or
service
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Sometimes thought of as….
ENERGY MEMORY
EMPOWER = the flow of emergy per time
EMPOWER DENSITY = empower per area
Emergy
EMERGY - The energy (of one form) required
directly and indirectly to make something
Inp ut
Em e r g y
B
Inp ut
Em e r g y
A
Inp ut
Em e r g y
C
Out put Emergy = A + B + C
T r a nsf o r m a t io n
Pr o c e ss
Emergy
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Units of EMERGY...
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Solar emergy joules…
or Solar emjoules…
or “sej”
Hierarchy
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All systems are
organized as
hierarchies…
Many small
components
and fewer and
fewer larger
components
Hierarchy
Food chain…with each successive energy
transformation, there is less energy, but of
a higher quality
Hierarchy
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The 20th century energy food chain of technohumans…
Measuring ‘Quality’
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In a hierarchy there
are outputs from
each interaction of
emergy flows
The more emergy
that it takes to
make something
(per unit of output),
the higher the
quality of the
output
As we move to the
right in a hierarchy,
the interactions are
more intense and
the output quality is
higher
More intense,
Higher quality
Measuring ‘Quality’
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The amount of
emergy required to
produce a mass (1
gram) or energy (1
Joule) is an indication
of its quality
If the output is
emergy/Joule it is
called Transformity
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If the output is
emergy/gram it is
called Specific
Emergy
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Written Sej/J
Inp ut
Em e r g y
B
Inp ut
Em e r g y
A
Inp ut
Em e r g y
C
Out put Emergy = A + B + C
T r a nsf o r m a t io n
Pr o c e ss
Written Sej/g
We also use Sej/$
Output = Joules or grams
Measuring ‘Quality’
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A transformity
or specific
emergy value
for a product
allows us to
locate the
product in an
energy
transformation
hierarchy
B. Review of concepts and definitions ...
Measuring ‘Quality’
Solar transformities
Solar emjoules per
Joule
(sej/J)
Sunlight
Plant production
Wood
Coal
Oil
Electricity
Typical Solar Transformities
1
6,700
36,000
67,000
90,000
300,000
Emergy in a Country
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What can
money buy in a
country?
That depends
on the real
wealth
production of
the
environmental
processes on
the left
And they get
their emergy
from the Earth
inputs (sun,
tide, deep heat)
Earth inputs
Real-wealth
production
Money
Emergy in a Country
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Goods and services
of processing
The real wealth
product is sold
to pay for the
goods and
services of
processing
No money is
paid to the
environment
that did the
work of
production
Economic product
sold here
Emergy in a Country
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The ‘buying
power’ of the
money in your
economy is
measured by
dividing the
total emergy
use in the
economy by
the gross
domestic
product (GDP)
of the economy
Called the
emergy/money
ratio
Earth inputs
Real-wealth
production
Money
Emergy in a Country
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Divide total
emergy use
by gross
domestic
product
(GDP)
Emergy/Money Ratio… USA
A. Emergy Concepts and Principles…
Emergy in a Country
Total Emergy Use
= 1.0 E12 sej/dollar
Gross Domestic Product
So...
Every dollar spent in US economy has
“embodied” in it, 1 E 12 sej of emergy
Emergy in a Country
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Sometimes
economies add
money by
lending or by
printing more
money
If more money
is circulated for
the same
emergy then
this causes
inflation, and
the
emergy/money
ratio becomes
smaller
Emergy/Money Ratio… USA
Emergy in a Country
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Market values are poor
measures of real wealth
Market prices are
effected by scarcity
When environmental
resources are abundant
then prices are low
But this is when the net
contribution of real
wealth to the economy
is greatest and living
standards are highest
Living standards high
Optimism of 1950s
Emergy in a Country
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Market values are poor
measures of real wealth
When resources are
scarce the market puts
a higher ‘value’ on the
product (higher price)
But with less resource
there is a lower net
contribution of real
wealth to the economy
Market values are
inverse to real wealth
contributions
Emergy in a Country
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There are
better ways to
judge the
contribution of
a flow or
process to an
economy
Emergy indices
give valuable
information
Emergy in a Country
Emergy Indices
Index
How
Calculate
What is it for?
EYR – Emergy
Yield Ratio
(Net Emergy)
Y/F
Can the product drive other processes or even the whole
economy (use for fuel comparisons) – does it have a “net
emergy”?
ELR –
Environmental
Loading Ratio
(F+N)/R
How much pull or pressure is there on matching renewable
resources? (from the point of view of environmentalists)
Empower Density
U/Area
Another measure of development intensity (like ELR). This is
total emergy flow, divided by area—therefore, the
“density” of emergy flow
% Renew
R/(R+N+F)
How sustainable is a process? High percent means more
sustainable in the long run, when non-renewables are
depleted
EIR – Emergy
Investment
Ratio
F/(R+N)
How much had to be “invested” from the bigger scale to attract
(capture) the environmental resources? (from the point of
view of economic developers)
Emergy per Person
U/Person
This is a measure of personal wellbeing. Higher emergy per
person means the person is receiving a greater flow of real
wealth, or is able to do real work.
Emergy in a Country
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The net emergy yield
ratio (EYR) compares
the output against
the input
You must have a net
output greater than 1
The EYR indicates the
net contribution of a
process to the
economy beyond its
own operation
Emergy in a Country
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The emergy yield
ratio, also called net
emergy yield, is
very valuable for
evaluating and
comparing fuel
sources
Fuel sources must
support the rest of
the economy and so
their net yields must
be high (4-10)
Fuels are a stimulus
to the entire
economy
Emergy in a Country
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We looked before
at the sales of an
environmental
product
Now lets follow the
product as it is
processed into
some high-tech
good, or into
information
As raw materials
are processed and
transformed and
transformed again,
new inputs and
new money is
added
Sales of environmental
products
Emergy in a Country
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Eventually those raw
inputs might be
used in high-tech or
information centers,
located in the
centers of cities
Those new goods
have high
transformities
The convergence of
goods occurs within
a convergence of
space
Living in city centers
therefore requires
more money
Emergy in International Trade
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The general energy hierarchy found in all of nature and
in the economies of humanity is observed in the
relationships between nations
Some are rural, and some are mainly urban
Highly developed urban countries are centers in the
global hierarchy
Rural areas converge raw resources to towns and
receive goods and services in return
Small towns contribute to and receive from cities, and
these to and from larger cities, and so on
Goods and
services
Raw
resources
Emergy in International Trade
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Generally, a
country looses
wealth if it sells
environmental
raw products
This is because
the emergy of
nature’s work to
make those
environmental
products is high,
whereas the
money received
is only for some
services to
process them
Nature’s work
Money paid only
for services
Emergy in International Trade
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For finished,
high-tech,
manufactured
products the
prices are high,
so the emergy
of the money
paid is closer to
the emergy of
the products
sold
In general,
developed
nations tend to
receive more
emergy than
they give in
exchange
Urban
Less
emergy
Rural
More
emergy
per dollar
paid
Emergy in International Trade
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In 1985 the buying power of the US (2x1012
sej/$) dollar was four times that in rural resource
countries (8x1012 sej/$)
Japan receives 4
times more emergy
USA receives 4
times more emergy
Japan receives 16
times more emergy
Emergy in International Trade
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Benefit to developed
country:
1.
2.
(Within country) the
emergy of
environmental
products is higher
than that in the
money paid for the
processing services
(Between countries)
the emergy/money
ratio in rural
countries is higher
than the ratio in the
urban country
1) Emergy of
environmental
products is higher
than emergy in
money paid
More
emergy
(Rural)
(Urban)
2) Emergy / money
ratio is higher in
rural country, lower
in urban country
Emergy in International Trade
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When emergy trade is
unbalanced, the
difference can be
made up in
education, military, or
technology transfers,
evaluated for their
emergy contributions
This balances
exchange while still
allowing countries to
be at different levels
in the urban-rural
hierarchy
Maximum Empower
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During the selforganization process,
systems develop
structure that maximizes
useful empower
transformations
Not simply maximizing
intake, but maximizing
best use of emergy
Processes in a system
are useful if they
reinforce intake, and at
the optimum efficiency
Maximum Empower
Systems maximize empower by: 1) developing storages of high-quality
energy, 2) feeding back work from storages to increase inflows, 3)
recycling materials as needed, 4) organizing control mechanisms that keep
the system adapted and stable, 5) setting up exchanges for needed
materials, 6) Contributing work to the next larger system