The Economics of Sustainable Development

The Economics of Sustainable Development

The Economics of Sustainable Development

The Economics of Sustainable Development

Synopsis

This book contains six essays based on presentations made at the 40th Annual Werner Sichel Economics Lecture Series sponsored by the Department of Economics, Western Michigan University, during the academic year 2003-3004. The Series was made possible through thefinancial support of the W.E. Upjohn Institute for Employment Research and Western Michigan University.

Excerpt

Sustainable development is the concept of a relationship between economic growth and the environment. The term was first used in 1987 by the World Commission on Environment and Development (also known as the Brundtland Commission for its chair, Gro Harlem Brundtland). In the commission’s report, “Our Common Future,” it defined sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (World Commission on Environment and Development 1987). Although the term has been around for almost two decades, differing interpretations have kept it from being a useful guide for development policy. However, there is now progress in moving the concept toward a more productive exploration of the relationship between economic development and environmental quality. For example, the International Summit on Sustainable Development that convened in Johannesburg, South Africa, in September 2002 provides some promise along this line (Hayward 2003).

Sustainable development analysis differs from the standard economics of growth and development by incorporating natural resources as a form of natural capital, defined as the value of the existing stock of natural resources such as forests, fisheries, water, mineral deposits, and the environment in general. Natural capital provides goods and services to people, just as do financial capital, manufactured capital, and human capital, the last created by investments in education and health. The depletion of natural capital can be compensated for, in part, by invest-

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