I'm not entirely sure if this would work, however, I think a viable solution would to simply stop respawns. Once a monster is dead, it's dead. Allow npc entities to 'breed' in certain conditions, which will replace the dead. This system could very well allow entire species to go extinct.

Take the analogy further with food production - poor agricultural practices should yield a plot of land infertile for a long time. Drought, diseases, and locusts should all be real problems for food production.

Also, character death should be permanent. Players may choose to have children, while alive, and this will serve as a "respawn" in the event of their death, but the character must care for and be able to financially support his children while he is alive.

Through these base principles a truly functioning economy should blossom if it is given enough freedom. However, this style isn't really an option for most games, so take it with a grain of salt.

Just my two cents.