Sustaining what for whom? Optimizing in the face of scarcity

What is sustainability? A non-declining capital stock – “weak” sustainability. A non-declining capital stock – “weak” sustainability. “Natural capital assets...should not decline through time.” Pearce – “strong” sustainability “Natural capital assets...should not decline through time.” Pearce – “strong” sustainability

Of the myriad definitions They are all trying to get at several things: facing limits facing limits meeting needs meeting needs equity equity avoiding disaster avoiding disaster

Toward what purpose? Avoid human emiseration resulting from irreversible damage to ecosystems. Avoid human emiseration resulting from irreversible damage to ecosystems. Implication: now and into the future Implication: now and into the future

Economics and sustainability All economics begins with one premise: Every action has an opportunity cost. Every action has an opportunity cost.Why? Scarcity is a given. Scarcity is a given.

Enter ecological economics Markets do many things well, but they do not recognize ultimate limits. 1 st and 2 nd Laws 1 st and 2 nd Laws Optimization at the margin ignores scale. Optimization at the margin ignores scale. The assumption of substitutability The assumption of substitutability

Achieving sustainability requires: Modifying economic models. Modifying economic models. Thinking in time scales to which we are not accustomed. Thinking in time scales to which we are not accustomed. Reconsidering whether GDP really measures beneficial change. Reconsidering whether GDP really measures beneficial change. Letting prices reflect real opportunity costs. Letting prices reflect real opportunity costs.