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SUSTAINABLE DEVELOPMENT: ISSUESFROM TWO CANADIAN CONFERENCES

Marion G. WrobelEconomicsDivision

29 November1988

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SUSTAINABLE DEVELOPNENT: ISSUES FRON NOCANADIAN CONFERENCES

After the publication in 1987 of the World Conmiission onEnvironment and Development Report °OurCommon Future” (hereafter referredto as the Brundtland Report), the federal and provincial governments inCanada undertook to implement its broad recommendations. To date, the mostvisible result has been the establishment of tripartite roundtables throughwhich representatives of government, industry and non-governmentalorganizations can devise practical ways to put the concept of sustainabledevelopment into practice.

The Report of the National Task Force on Environment andEconomy, published in 1987, outlined the Canadian response to the Brundt-land Report and since then two important conferences on this topic havebeen held in Ontario. In June 1988, the Conservation Council of Ontario

sponsored a conference in Toronto to examine the role of the roundtables;in October, the Air Pollution Control Association met in Ottawa to discussthe concept of sustainable development.

This review will report on some of the major issues raisedbut left unresolved at both meetings. It will also discuss the implica-

tions of such issues for future environmental policy.

DEFINITION OF SUSTAINABLE DEVELOPNENT

The Brundtland Report refers to economic activity as being

“sustainable” if it meets U the needs of the present without compromis-ing the ability of future generations to meet their own needs.” Conferenceparticipants were generally rel uctant or unable to define precisely theterm Nsustainable development.0 This made it impossible to determine what

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we need to achieve sustainable development, how far we are from this goaland at what point ~ may have succeeded.

Those who support the findings of the Brundtland Reportbel i eve that the adverse envi ronmental consequences of economic activityshould not be ignored , but should be reduced or el iminated • This however,is, simply a re-affirmation of the long-standing belief of environ-mental Ists • Sustainabl e devel opment i s more than this , but unti 1 aworkable definition of the term is arrived at, just how much more cannot beknown.

LINITS TO GROWN?

The concept of sustainable development was advocated by manyconference participants as a significant departure from the traditionalconcept of Nlimits to growth” originally promoted by the Club of Rome.Sustainable development obviously places a constraint on the nature ofeconomic development, but many claim it does not put absolute limits oneconomic activity and growth in a global sense. This is why proponents ofsustainable development have been able to draw support from i ndustry andfrom nations and regions which do not currently enjoy much prosperity fromworld production.

Not everyone who supports the concept of sustainable devel-opment is in agreement with this view, however. One prominent opposingvoice referred to Nsustainable growthTM as a contradiction in terms, arguingthat the environment, operating dually as a source of raw material and as asink for our wastes, is already strained to its limits. According to thisview, if the envi ronment represents the most important and binding of allconstraints, then sustainable development does imply a strict limit togrowth; thus the Brundtland Report adds an environmental aspect to the Clubof Rome position.

Although few participants explicitly argued that sustainabledevelopment and limits to growth go hand-in-hand, many more suggested sucha conclusion in less obvious ways. They argued that we need a newdefinition of growth or that we must effect change in our behaviour

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and consumption patterns so as to reduce per capita consumption of energyand raw materials.

NEW ECONOMIC NEASURE

The generally accepted measure of economic well-being hasbeen the concept of Gross Domestic Product (GDP), which measures the amountof goods and services an economy produces. There was a general consensusat the conferences that such a measure ignores environmental conditions andthat the maximization of GDP may prevent the achievement of sustainabledevelopment. This flaw in the GDP is significant because GDP has beensuch an important means of evaluating the state of the economy and indetermining the direction that government economic policy should take.

The first obvious criticism of using GDP to measure economicsuccess is that it nowhere contains any gauge for environmental well-being. Even worse, some activities which add to GDP are undertaken solelyto offset the damaging effects of other activities which add to GDP; thati 5 , GDP may grow preci sely because the damaging effects of pol 1 utionrequire corrective action.

This criticism of GDP is legitimate to the extent that itrecognizes the GDP to be an incomplete measure of well-being. This,however, may indicate a fault in the way the environment is viewed, ratherthan a fault in use of the GDP measure. For example, if, in itscalculation of the GDP, Statistics Canada treated the environment as anenterprise like any other, producing a quantifiable stream of benefitsevery year, it could measure the impact of pollution on the output of this

enterprise. Such an adjustment to the GDP measure would not removeincentives to pollute, but it would provide a mechanism by whichgovernments could track the envi ronmental effects of thei r pol i ci es.

Existing economic measures were also criticized at theconferences on the grounds that they fail to take into account thedepletion of resources stocks through economic activity. For example, ourconsumption of petroleum products is measured as a benefit without takinginto account the resulting decline in our stock of wealth in the form of

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petroleum resources. It was argued that economic activity that reduces ourstock of wealth is erroneously labelled a net economic benefit. Thisargument confuses the concepts of stocks and fl ows and 1 cads to a speciousaccounti ng framework.

There is a direct link between the value of our stock ofnatural resources and the services they provide when consumed. It is onlybecause petroleum resources can be consumed that they constitute a valuableresource and the value of the stock is simply the discounted sum of thebenefits derived from the consumption of these resources, less anyextraction and processing costs. By definition, then, the benefit ofconsumption equals the decline in the value of the resource stock. Takinginto account the depletion of wealth through our consumption, as some wouldhave us do, will always lead us to believe that consumption adds nothing toour welfare and that limiting the growth of consumption would not requiremuch of a sacri fi cc • Such a conclusion , however , i s cl early erroneous.

THE ROLE OF GOVERNNENTREGULATION

Participants at both meetings left no doubt as to the needfor government i nvolvement i n protecting the envi ronment and promotingsustainable development . The offi ci al Canadian response to the Brundtl andReport, the creation of tripartite roundtables at which government,i ndustry and non-governmental envi ronmental organizations cooperate to findmeans to achieve sustainable development, shows that cooperation, ratherthan greater regulation, is viewed as the best road. Industry participantswere particularly strong proponents of this approach.

Although this cooperative approach might not entail anincrease in the degree of regulation, it would require a change in the formand nature of that regulation. Integrating economic and environmentaldecision-making, for many, means an integration of the two types ofregulation. There seemed to be a strong consensus that those who manage

economic resources should be closely involvS in managing envi ronmentalresources. It might therefore be logical to ask whether or not it isuseful to have a separate envi ronment department. Instead, should the

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departments dealing with agriculture, forestry, natural resources, etc.,al1 have strong envi ronmental di rectorates so that any contemplatedinitiatives are automatically assessed according to their effects on theenvi ronment?

It would be quite remarkable for an economy such as Canada’sto achieve, though the mechanisms of tripartite roundtables and coopera-tion, a major change in its level of consumption and implementation of aneconomic policy consistent with a strict limit on growth. Such a scenariowould requi re a major change in the degree of government intervention inprivate economic decisions. Those who view sustainable development asinvolving limits to growth generally considered such increased regulationas essential.

CONCLUDING RENMKS

The theme of sustainable development, as presented in theBrundtland Report, has wide support in Canada from all sectors. This themewill be put into place here, not by the authors of the report but by itssupporters in government, industry and the public. It appears, however,that the report will have little impact until a number of issues areresolved, with respect to both ends and means. Discussion at the twoconferences seems to suggest that such resolution is still somewhere in thefuture.