8.3 Scale Limits, Sustainability Rules and Substitutability

 

 

8.3 Scale Limits, Sustainability Rules and Substitutability

What measures can we use to assess whether economic development has reached the sustainable limits?

On this question mainstream economists and ecological economists tend to disagree and have developed what have been termed alternative “weak” and “strong” sustainability criteria.

The weak sustainability criteria held by neo-classical economists believes that future generations will be richer because of economic growth and that all that is required is that the “bequest package” of all kinds of capital from one generation to the next is not, in aggregate, smaller. In this point of view it is perfectly justifiable to run down “natural capital” resources as long as adequate substitute human made capital resources are built up instead. To these economists what matters is the overall monetary value of the bequest package rather than what the portfolio of real assets underlying the financial package actually consists of. Future generations may not have all we have access to – but will have adequate or better substitutes.

By contrast strong sustainability rules suggest that minimum amounts of different types of capital (economic, ecological, social) should be independently maintained, in real physical and biological terms. Ecological economists insist that there are some natural resources which are essential inputs in economic production, consumption and welfare that cannot be substituted for physical and human capital, some environmental components are unique and some critical environmental processes may be irreversible – e.g. climate regulation. This gives rise to strong sustainability rules:

For a renewable resource – soil, water, forests, fish – the sustainable rate of use is not greater than the rate of regeneration of the resource (e.g. fish – not sustainable if more fish are caught than the rate of growth of the remaining fish population)

For a non renewable resource – fossil fuels, high grade mineral ores, fossil aquifers – the sustainable rate of use is not greater than the rate at which a renewable resource is substituted for it (e.g. an oil deposit can only be used at a rate at which some is set aside and invested in wind/solar/biomass so that when the oil is gone an equivalent energy stream is available to replace it).

For a pollutant - the sustainable rate of emission is no greater than the rate at which the pollutant can be recycled, absorbed or rendered harmless in a sink. (e.g. sewerage can be put in a water system no faster than bacteria and other organisms can absorb its nutrients without the aquatic ecosystem being overwhelmed and destabilised).