Wells College Professor of Economics Kent A. Klitgaard wrote his first book "Energy and the Wealth of Nations: Understanding the Biophysical Economy," in collaboration with Charles A.S. Hall, professor of biology and ESF Foundation Distinguished Professor at SUNY College of Environmental Science and Forestry in Syracuse, N.Y.
"Energy and the Wealth of Nations" explores the relation between energy and the wealth explosion of the 20th century and questions the world's economic dependence on cheap oil and cheap debt. With the world entering on mass distinction and the second half of the age of oil, Hall and Klitgaard bring their disciplines of science and economics together in an endeavor to address what the new economic theory for a post-peak oil world will look like.
Klitgaard's interest in ecological economics stems from the 1969 Santa Barbara oil spill occurring just up the coast from where he grew up. Three years later he went to college and took his first college course in environmental economics and began to seriously study the impact of human activity upon the planet's system.
"When you look at the history of economics, it was developed in an era of cheap and readily available fossil fuels—the economic theory excluded the role of energy in production, consumption, and future opportunity," says Klitgaard. "We need to develop a new economic theory that looks beyond the cheap economics of oil and debt, and looks to environmental friendly energy sources."
Both authors recognize that the problem is not only that the world is operating on an out-dated non-energy inclusive theory, but also that the world's population has been growing exponentially since the 1930s, and since oil was founded as a cheap energy source to grow a lot more food to meet the demands of the population. The demand for oil is growing at 3-3 ½ percent each year, and the ability to meet this demand is decreasing and prices are fluctuating.
Since the peak of U.S. oil production in 1970, every time oil prices have spiked the economy has slumped into recession. The resulting economic downturn temporarily decreased demand, so prices have not climbed steadily upwards, but rising oil prices are not the only potential adverse consequence. Klitgaard says we have to develop some other economic solution to the world's energy consumption and how it impacts the environment because we're reaching a peak. Klitgaard notes if the world's CO2 concentration reaches 350 ppm there will be irreversible damages; the current CO2 concentration is already 390 ppm.
"I'm hoping students, professors, and other economists and environmentalists pass on the knowledge," says Klitgaard, referring to the need for a more scientific and unified approach to economics in an energy-constrained world. "The impact of energy on the world and its environment is reaching detrimental levels, and the future is going to be different from the past—it will likely be one of austerity and de-growth."
Kent A. Klitgaard earned his bachelor's degree from San Diego State University, and his master's and doctorate from the University of New Hampshire. He has been a professor of economics at Wells College since 1991 and also has taught economic courses at SUNY Oswego.