Faculty Highlight: Steve Polasky
Tell us a bit about the Fesler-Lampert Chair and how you came to join the faculty at the University of Minnesota.
SP: The Fesler-Lampert Chair is an interdisciplinary position made possible by a generous donation from David Fesler, a 1950 graduate of the University who went on to a successful career in business and made numerous philanthropic contributions. The Fesler-Lampert Chair requires two or more departments to make a case for why their particular combination of disciplines is especially important for the advancement of knowledge. The prior holder of the Fesler-Lampert Chair combined computer science and cognitive science as the Fesler-Lampert Professor of Artificial Intelligence and Cognitive Science. When I was recruited to the University of Minnesota, the Department of Applied Economics and the Department of Ecology, Evolution & Behavior had won a university-wide competition by making the case that advances in sustainability and conservation required combining ecology and economics. This position was particularly appealing to me because I was working at the interface between economics and ecology and Minnesota had a stellar reputation in both fields.
You are well-known for your role in starting the Natural Capital Project. Could you tell us about the project? Can you tell us about your partnership with Chinese scientists to implement natural capital accounting in China?
SP: The Natural Capital Project is a partnership that brings together great academic institutions (Minnesota, Stanford, the Chinese Academy of Sciences, the Stockholm Resilience Center) with great conservation organizations (The Nature Conservancy and World Wildlife Fund). The idea of the partnership is to meld rigorous science with practitioners able to get science into practice to improve ecosystem management and outcomes for people and nature. The objective of the Natural Capital Project is to quantify the contributions that nature makes to human well-being (“ecosystem services”) and to bring these values into decision-making by governments, corporations, and households. The Natural Capital Project has created a free and open-source computer software package called InVEST (Integrated Valuations of Ecosystem Services and Tradeoff) that is now used around the world to analyze how decisions affect a range of ecosystem services.
As part of this work, the Natural Capital Project is currently working in China to develop a measure of Gross Ecosystem Product (GEP) that summarizes the value of ecosystem services in a single monetary metric. GEP is similar to Gross Domestic Product (GDP), a widely watched metric that summarizes economic performance in a single monetary metric. To support the development of GEP, we have worked to develop an integrated environmental-economic accounting system. The Chinese government is planning to use GEP to highlight ecological connections among regions, guide financial compensation from ecosystem service beneficiaries to regions supplying those services, inform conservation policy and serve as a government performance metric.
What is the role of economic research in interdisciplinary projects? What have you learned about the contributions economists can make in the policy arena?
Successfully addressing difficult social environmental issues requires blending insights from economics along with the natural sciences, cognitive and social sciences, engineering, law, and politics. Joining economics with other disciplines provides a powerful combination with which to analyze problems and provide policy solutions. While other disciplines, such as civil engineering and ecology, are essential for understanding the effects of investment in various types of infrastructure and ecosystem restoration, these disciplines alone cannot answer the question of whether such investments are worth making. That decision typically involves comparing the benefits of the investment relative to the cost. Economics can be extremely helpful for integrating the results of interdisciplinary research teams, comparing the net benefits of alternative investments, and communicating results to decision-makers. However, my experience is that not many economists are adept at working across disciplines. Not many universities train economists to do this kind of work nor is this kind of interdisciplinary solution-oriented work rewarded in much of the economics profession. I’m glad that the Department of Applied Economics, and the University of Minnesota more generally, has put a high priority on this kind of role for economics.
Please tell us about a policy issue you are working on and the research that supports your contributions.
Currently, I’m working with colleagues in the Natural Capital Project and the World Bank on a project to generate a “Natural Capital Index” for the World Bank. The World Bank recently pioneered a “Human Capital Index” that provides a report card on how well each country is doing in terms of investing in the health and education of its population. The Natural Capital Index aims to provide a report card on the degree to which each country is using its natural resources in a sustainable and efficient manner. The Bank intends to use the Natural Capital Index to evaluate potential loans and investments and to offer advice to national governments on how to improve ecosystem management and use of natural resources. This work builds on years of research on ecosystem service and natural resource modeling efforts. We deliberately constructed these models to require only readily available data. The increase in the availability of remote sensing data in recent years has allowed us to apply these models in all countries including developing countries without much of a local scientific base.
Please tell us about the classes you like to teach.
I enjoy teaching. Being with bright students talking about important and interesting issues is wonderful. If we could somehow get rid of grading, it would be heaven. I teach a broad range of classes that include everything from game theory in the graduate microeconomics theory sequence, to natural resource and environmental economics, to the core class for graduate students in the conservation science program, to interdisciplinary courses on sustainable science, and the science and policy of global environmental change. This coming semester I will be teaching two of my favorite courses: game theory, and global environmental change. In game theory, we start every class with a game. After describing the game, each student chooses a strategy that we combine with the strategy of one or more other students in the class to determine the student’s payoff. We then talk about the theory part of game theory, which describes how rational players should play the game to maximize their payoffs. The divergences between theory and the choices of the students often highlight important lessons about both human behavior and theory. Playing the game makes the theory come alive. The global environmental change course is a university Grand Challenge Class that I teach with ecologists Sarah Hobbie and Peter Reich. We tackle big questions including climate change, loss of biodiversity, nutrient cycles and pollution, water quality and water availability. I’ve learned a lot by teaching alongside two world-class ecologists. Finding potential solutions to global environmental problems, however, requires going beyond natural science. My role in the course is to explain potential policy approaches to address global environmental problems. For example, we discuss carbon taxes and carbon cap-and-trade to address climate change. We also discuss the challenge of addressing global environmental issues in a world of nation-states without effective international institutions. The class changes every year depending on what is happening in the news, whether it is the Paris Climate Agreement or the rise of nationalism as opposed to taking action on climate.
What are you working on with your Applied Economics colleagues and students? What do you plan to accomplish over the next five years?
My work focuses on integrating economics with ecology and other disciplines, so economic activity is efficient and sustainable, providing human well-being both now and in the future. In work published last year by a team of my graduate students and post-docs from Minnesota along with scientists at The Nature Conservancy, we showed ways to achieve a world in which people and nature thrive. We found ways to meet the increasing demands for food, water, energy, and material goods from an increasing human population with a higher standard of living out to 2050 that also reduces greenhouse gas emissions, preserves habitat for biodiversity and reduces threats to air quality and water availability. In contrast, continuing along a “business-as-usual” path increases environmental degradation and is not sustainable. The question that follows from this work is how to shift the trajectory of economic development from business-as-usual to a sustainable path. The answer to this question, I believe, will come from combining what we know about market economies, public policy, and human behavior, with understanding how human actions affect earth systems and how changes in earth systems affect human well-being. My central goal is to make it so environmental impacts are not an afterthought in economic and policy decisions but incorporated into decision-making from the start; that integrated ecological economic analysis becomes routine (“second nature”).