An Economic Perspective on Industrial Ecology

Industrial ecology aims to identify how the environmental performance of industrial systems can be improved. Key analytical tools of industrial ecology include material flow analysis, which tracks flows of materials from source to sink, and life cycle assessment, which quantifies the environmental impacts of a product across all stages of its life cycle. Although industrial ecology is considered to be a multidisciplinary field that includes the social sciences, economic analysis has not been fully incorporated into the industrial ecology literature and vice versa. Thus, both industrial ecology and economics would likely benefit from closer collaboration. The main objectives of this article are: (1) to introduce key concepts and techniques of analysis in industrial ecology; (2) to identify important developments at the intersection of industrial ecology and economics; and (3) to suggest areas for future collaboration and integration of the two disciplines. We argue that economists can play an important role in expanding and deepening industrial ecology and addressing the current gaps in the literature, thus improving the ability of industrial ecology to reach its full potential as a policy-supporting tool.