Principles of Environmental Economics: Economics, Ecology and Public Policy

learning objectivesAfter reading this chapter you will be familiar with the following:

• the link between biophysical limits and economics of sustainable development;

• sustainable development as defined by the Brundtland Commission report;

• the problem of defining sustainable economic development;

• sustainability and the nature of the relationship between human and nature capital;

• trade-offs between intergenerational efficiency and equity;

• the Hartwick-Solow approach to sustainability;

• the ecological economic approach to sustainability;

• the safe minimum standard (SMS) approach to sustainability;

• sustainable national income account.

Issues of sustainability are ultimately issues of limits. If material economic growth is sustainable indefinitely by technology, then all the environmental problems can (in theory at least) be fixed technologically. Issues of fairness, equity and distribution (between sub-groups and generations of our species and between our species and others) are also issues of limits. We don’t have to worry so much about how an expanding pie is divided, but a constant or shrinking pie presents real problems. Finally, dealing with uncertainty about limits is the fundamental issue. If we are unsure about future limits then the prudent course is to assume they exist. One does not run blindly through a dark landscape that may

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