A macroeconomics inspired interpretation of the terrestrial water cycle’s role in social well-being and climate stability

Abstract

The article applies macroeconomic concepts to the interpretation of complex natural processes and, in doing so, helps to sharpen our understanding of the terrestrial water cycle. For economists, it describes climate-forming natural processes in a manner consistent with the fundamentals of the mainstream economic approach. For non-economists, parallels from a more finite observation period can be applied conceptually to identify dynamics over much longer and therefore more elusive natural occurrences, especially considering the role of forests and how recurring land conversion over a millennium have shaped the earth’s surface and impact climate stability. The set of “supporting ecosystem services” highlighted by the Millennium Ecosystem Assessment (MEA) coincides with the ground phase of the terrestrial water cycle, taking the concept beyond an ecosystem service and identifying it as a crucial element of a planetary service as well. Ecosystem and planetary services differ like microeconomic and macroeconomic perspectives do. Terrestrial water cycle intensity is a macroeconomic frontier within an ecosystem-based wellbeing production frontier in the same way that long term growth potential is a frontier of the economic value creation of a country. The water cycle intensity of a geographical area may well be related to a rainfall multiplier that measures the ability of continental ecosystems to increase the amount of precipitation over land through re-transpiration and re-deposition of the water content in the air arriving from the oceans. Building upon the MEA’s association of social wellbeing with ecosystem features, the rainfall multiplier serves as a physical measure for the natural basis of wellbeing creation.