Ecological Economics 34 2000 285 – 292
COMMENTARY
Economic specialization versus ecological diversification: the trade policy implications of taking the ecosystem approach
seriously
Fred P. Gale
School of Go6ernment, Uni6ersity of Tasmania, Tasmania,
7250
Australia Received 19 January 1999; accepted 23 March 2000
Abstract
The author contrasts the economic principle of specialization found in trade theory with the ecological principle of diversification that underlies the ecosystem approach to natural resource use. He argues that current ecosystem
decline is a consequence of the over-extension of the principle of specialization from the factory setting to nature. When the specialization principle is applied wholeheartedly to natural systems to speed up their delivery of desired
commercial products it leads to ecosystem simplification, loss of integrity and stress. This occurs, for example, in modern approaches to forest management, when clearcutting and replanting with genetically modified seeds occurs
with heavy inputs of fertilizers, herbicides and pesticides. What is required is a re-balancing of the application of the principle of specialization with the principle of diversification, as occurs when forests are managed according to an
ecosystem-based approach. This re-balancing occurs at the level of production, however, not at the level of trade. Consequently, the focus of environmental reform must be production policy, not trade policy. © 2000 Elsevier
Science B.V. All rights reserved.
Keywords
:
Trade; Specialization; Diversification; Economics; Ecology; Production www.elsevier.comlocateecolecon
1. Introduction
From a historical perspective, the trade and environment debate is relatively recent. Although
some work was done in the 1970s Baumol and Oates, 1977, the flurry of recent activity received
its major impetus from the simultaneous negotia- tion of two major international trade agreements:
the North American Free Trade Agreement NAFTA between Canada, Mexico and the
USA, and the Uruguay Round of the General Agreement on Tariffs and Trade, the latter result-
ing in the formation of the World Trade Organi- zation WTO. The background, negotiation and
implementation of these agreements stimulated a heated debate that shows every indication of esca-
Tel.: + 61-3-6226-2329; fax: + 61-3-6224-0973. 0921-800900 - see front matter © 2000 Elsevier Science B.V. All rights reserved.
PII: S 0 9 2 1 - 8 0 0 9 0 0 0 0 1 8 1 - 6
lating between those who view freer trade as an essential condition of sustainable development
and those who regard it as that concept’s ultimate sell-out Esty, 1994; Anderson et al., 1995; Gale,
1997, 2000.
Trade promoters, backed by the discipline of neo-classical economics, have pushed for freer
trade to stimulate economic growth and develop- ment. They fear that the environment will be used
as a new, powerful rationale to justify another round of ‘green’ protectionism, strangling the
globalization process and recreating the sub-opti- mal, nationalized, closed trading systems of the
past. Protectionist policies are fundamentally wrong headed, they argue, because trade is a
second-best
policy to
achieve environmental
goals, and cannot substitute for needed domestic measures Bhagwati, 1993.
Conversely, environmentalists are deeply con- cerned about the impact of trade on natural
ecosystems and its potential to accelerate biodi- versity loss through habitat destruction and
degradation. Since the purpose of open trade arrangements is to promote economic growth and
because current growth patterns are damaging global, national and local ecosystems, environ-
mentalists argue that growth is not desirable and that the policies that promote it should be op-
posed Daly, 1993. The environmental movement is split, however, over what their precise objec-
tives should be with regard to global trade ar- rangements. Some advocate a policy of national
self-sufficiency a form of eco-autarky that envis- ages the production within a country’s own bor-
ders of the vast majority of a society’s much reduced consumption of goods and services
Daly and Cobb, 1994. Others argue for better regulation of international trade relations via such
policies as the internationalization of the polluter pays principle; the use of full-cost accounting,
eco-certification and labelling, and life-cycle anal- ysis; and the admission of process and production
methods to discriminate between otherwise like products Esty, 1994; Repetto, 1994.
In this paper, I do not examine the trade and environment debate trade per se. Its purpose in-
stead is to elucidate the tension that exists be- tween two principles: one central to ecology; the
other to economics. My goal is to draw attention to a fundamental tension between the economic
principle of specialization that lies at the heart of trade theory and the ecological principle of diver-
sification embedded in the ecosystem approach to nature. I argue that a central requirement in
making international and national trade relations sustainable lies in reconciling these two principles
so that the motor of economic growth — special- ization — drives the engine of development at a
speed and in a direction compatible with the central mechanism of ecosystem health and stabil-
ity — diversification.
2. The ecosystem approach
