Sustaining what for Sustaining what for whom?whom?

Optimizing in the face of Optimizing in the face of scarcityscarcity

What is sustainability?What is sustainability?

• A non-declining capital stock – A non-declining capital stock – “weak” sustainability.“weak” sustainability.

• ““Natural capital assets...should not Natural capital assets...should not decline through time.” Pearce – decline through time.” Pearce – “strong” sustainability“strong” sustainability

Of the myriad definitionsOf the myriad definitions

They are all trying to get at several They are all trying to get at several things:things:

• facing limitsfacing limits

• meeting needsmeeting needs

• equityequity

• avoiding disasteravoiding disaster

Toward what purpose?Toward what purpose?

• Avoid human emiseration resulting Avoid human emiseration resulting from irreversible damage to from irreversible damage to ecosystems.ecosystems.

• Implication: now and Implication: now and into the futureinto the future

Economics and Economics and sustainabilitysustainability

All economics begins with one premise:All economics begins with one premise:

• Every action has an opportunity cost.Every action has an opportunity cost.

Why?Why?

• Scarcity is a given.Scarcity is a given.

Enter ecological economicsEnter ecological economics

Markets do many things well, but they Markets do many things well, but they do not recognize ultimate limits.do not recognize ultimate limits.

• 11stst and 2 and 2ndnd Laws Laws

• Optimization at the margin ignores Optimization at the margin ignores scale.scale.

• The assumption of substitutabilityThe assumption of substitutability

Achieving sustainability Achieving sustainability requires:requires:

• Modifying economic models.Modifying economic models.

• Thinking in time scales to which we Thinking in time scales to which we are not accustomed.are not accustomed.

• Reconsidering whether GDP really Reconsidering whether GDP really measures beneficial change.measures beneficial change.

• Letting prices reflect real opportunity Letting prices reflect real opportunity costs.costs.