Transcript Historical Development of Environmental Economics

2.Sustainable Development
Development that meets the needs of
the present without compromising the
ability of future generations to meets
their own needs (WCED, 1987)
The basis of this SD definition both
intergenerational equity and
intragenaritonal equity.
The conditions of sustainability
Fundamentaly, how do we compasate the future for damage
that our activities to day might cause? The answer is
through the transfer of capital bequest (human, physical,
natural capital)
• Weak Sustainability (Transfer of an aggregate capital
stock no less than one that exist now), Based on a very
strong assumtion, perfect subtitutability between of
different forms of capital
• Strong sustainability (The assumsi perfect of
subtitutability between of form af capital is not valid to
make. The assets are critical natural capital and since
they are not easily subtitutability, if at all, the SS rule
requires that we protect them.
TEST FOR WEAK SUSTAINABLE
DEVELOPMENT
• An economic
sustainable if it saves
more than depreciation
on its human made and
natural capital
• Y denotes that the
values are expressed
as a percentage of GDP
• S/Y taken from WB
• Dm/Y taken from UN
System of National
Accounts.
• Z ≥ S/Y-Dm/Y-Dn/Y
(Z must be greater or
equal to zero for
sustainability)
Country
Gross
saving
(S/Y)
Depreciat
ion of
human
made
capital
Dm/Y
Depreciati
on of
natural
capital
(Dn/Y)
Sustai
nabilit
y
indicat
or (Z)
Finlad
28
15
2
+11
Germany
26
12
4
+10
Japan
33
14
2
+17
UK
18
12
6?
0?
USA
18
12
4
+2
Save Minimum Standards approach to sustainability
Irreversible
systemSt
wide
instability
effects
Damage
costs
Sm
Sde
St
Sustaiability
Imperatives:
SS
Market
forces,
Resouce
subtitutions
WS
Sm
Increasing irreversibility of
damge and possible
ecosytem-wide instability
Sde
Minimal damage
reversible
effects
Sustainable Development: Operational principles
A number of ruler for the sustainable utilization
of natural capital stock can now be outlined:
 Market and interventions failures to resources pricing and property right
should be corrected
 Maintenance of the regenerative capacity of renewable natural capital
 Tecnological changes
 RNC should be exploited, but rate equal to the creation of RNC subtitutes
The overall scale of economic activity must be limited so that it remains
within carrying capacity of the remaining natural capital. Given the
uncertainties present, a precautionary approach
should be adopted with a built-in safety margin