Ecological threshold and ecological economic threshold: Implications from an ecological economic model with adaptation

•The ecological economic threshold may exhibit a highly context-dependent and dynamic nature.•Market response to an external shock may be insufficient to maintain resiliency.•We could restore the system even after crossing ecological economic threshold.•Various transitional paths are possible to restore the system.•Adaptation may affect resilience in a non-negligible way.

This paper investigates ecological threshold and ecological economic threshold by developing an ecological economic model-an extension of a population-resource dynamics model developed by Brander and Taylor (1998). The model reflects three critical issues regarding an ecological economic system: system boundary, non-convexity, and adaptation. The paper elucidates six main findings: ecological economic threshold may come before ecological threshold; the ecological economic threshold may exhibit a highly context-dependent and dynamic nature, which suggests the precautionary principle; markets do not respond sufficiently to maintain resiliency under an external shock as prices do not reflect thresholds; the system can be restored by intervention, even after crossing the ecological economic threshold; various transitional paths are possible in restoring the system; and adaptation affects resilience to a somewhat significant effect which suggests the importance of better information and education. Because of the complexity of the model, I adopt a system dynamics approach for the development and analysis of the model.