Sustainability: an economist’s perspective Introduction

Sustainability: an economist’s perspective What is Sustainability Over 60 definitions (see Pezzey 1989) WECD definition 1987p 43 (Gro Brundtland etal) “development that meets the needs of the present without compromising the ability of the future generarion to meet thir needs

Definition of SD continued Pearce and Warford’s definition (1993 p. 49): “development that secures increase in welfare of the current generation provided that welfare in the future does not decrease” Pearce and Turner’s Working Definition of Sustainable Development “Involves maximising the net benefits of economic development, subject to maintaining the service and quality of natural resources over time” (Pearce and Turner 1990,p.24)

Implications of the above working definition: –Renewable resources should be utilised at a rate equal to or less than their rate of natural regeneration. –Non renewable resources should be utilised in an optimal efficient manner, subject to: Resource substitution, especially with productive capital and reproducible capital. Technological availability and the likelihood of technological progress.

Conditions fro sustainability Maintaining a minimum population Reducing poverty Optimal depletion of non-renewable resources. Optimal depletion of renewable resources Preventing environmental degradation Improving energy efficiency

Optimal depletion of renewable resources Maintain constant stock Maximize service to that given stock Prevent rent dissipation Reduce externality

Preventing environmental degradation Damaging use dominates the non- damaging use and not vice versa Damaging use of the environment by an individual is rational in the absence of the following: –A social conscience –Informal community sanction –Formal legal sanction

Instruments for measurement for SD GDP NDP (GDP – depreciation of capital)

Problems with NDP Fails to take account the non-market benefits of growth Costs associated with growth is not separated out Does not take into account any amenity loss from production (quality of of water, quality of air, wildlife loss and reduction in open space)

New measure Net social welfare –NDP + Non market benefits – growth cost – amenity loss

Sustainability: an economist’s perspective Conclusion