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Biophysical economics is characterized by a wide range of analysts from diverse fields who use basic ecological and thermodynamic principles to analyze the economic process. The history of biophysical thought is traced from the 18th-century Physiocrats to current empirical research, with emphasis on those individuals who contributed to the development of biophysical economic theory. Attention is also given to a critique of the neoclassical theory of natural resources from a biophysical perspective, and how recent empirical biophysical research highlights areas of neoclassical theory which could be improved by a more realistic and systematic treatment of natural resources.

Biophysical Economics

Biophysical economics is a basis for economic analysis that acknowledges, analyzes and uses the biological and physical (as opposed to social) properties, structures and processes of real economic systems as its conceptual base and fundamental model. It acknowledges that the basis for nearly all wealth is nature, and views most human economic activity as a means to increase (directly or indirectly) the exploitation of nature to generate more wealth. As such, it focuses on the structure and function of real economies from an energy and material perspective, but often considers the relation of this structure and function to human welfare and to the money (i.e. dollar) flows that tend to go in the opposite direction to energy (Odum 1972).

THE NEED FOR A NEW, BIOPHYSICAL-BASED PARADIGM IN ECONOMICS FOR THE SECOND HALF OF THE AGE OF OIL