Toward Sustainable Development: An Ecological Economics Approach

Toward Sustainable Development: An Ecological Economics Approach......Page 2
Author......Page 4
Contents......Page 5
Acknowledgments......Page 19
Acronyms......Page 21
1.1 The aims and objectives of the book......Page 22
1.2 What is ecological economics?......Page 24
1.3 Epilogue......Page 28
I: An ecological economic view of the sustainable development concept......Page 29
2.1 An examination of a range of sustainable development concepts......Page 30
2.1.1 A brief look at the process that led to the establishment of the sustainable development concept......Page 31
2.1.2 An examination of a range of sustainable development definitions......Page 33
2.1.3 The perception of continuous growth as a sustainable development prerequisite......Page 36
2.1.4 Hicksian income and a constant stock of capital as a sustainable development condition......Page 37
2.1.5 Conclusion......Page 39
2.2 An ends-means spectrum as the theoretical foundation for a sustainable development concept......Page 40
2.2.1 The movement toward sustainable development as the ecological economic problem......Page 44
2.2.2 The interdependent relationship between sustainability and development......Page 45
3.1 Development: A qualitative rather than quantitative phenomenon......Page 47
3.1.1 Development requires intermediate ends to be appropriately ranked and the ultimate end to be appropriately conceived......Page 48
3.1.2 What is the ultimate end?......Page 50
3.1.3 Development requires the ultimate end to be updated suitably......Page 52
3.2 Establishing a development-based rule of right action......Page 53
3.2.1 Human existential balance demands an optimal stock of human-made capital......Page 55
3.2.2 A principle of limitation as a development-based rule of right action......Page 57
3.2.3 Development requires the maintenance of moral capital......Page 58
3.3 What is development? A summary......Page 59
4.1.1 Sustainability and the higher-order moral principle of intergenerational equity......Page 60
4.1.2 Sustainability as a development prerequisite......Page 61
4.1.3 What needs to be sustained?......Page 63
4.2 The instrumental source and sink functions of natural capital......Page 65
4.2.1 The complementarity of human-made and natural capital — how much natural capital is needed?......Page 66
4.2.2 Sustainability requires the maintenance of the ecosphere’s negentropic potential......Page 69
4.2.3.1 The source function......Page 72
4.2.3.2 The sink function......Page 75
4.2.4 Sustainability precepts to maintain the ecosphere’s source and sink functions......Page 77
4.3 The instrumental life-support function of natural capital......Page 78
4.3.1 Biodiversity and the life-support function of natural capital......Page 80
4.3.2 Implications of the need to preserve biodiversity......Page 82
4.4 The intrinsic value of natural capital......Page 83
4.4.1 An obligation to preserve the evolutionary process......Page 84
4.4.2 Implications of a biocentric stance......Page 86
4.5 What is sustainability? A summary......Page 87
5.1 Reconciling sustainability and development......Page 88
5.2 Justifying the concept of sustainable development......Page 90
II: Sustainable development, economic theory, and macro policy goals and instruments......Page 92
6.1 What is an optimal macroeconomic scale?......Page 93
6.1.1 Standard economics’ glittering anomaly......Page 94
6.1.2 The uncancelled benefits of economic activity......Page 95
6.1.4 Sustainable net benefits and an optimal macroeconomic scale......Page 97
6.1.5 Electing to operate at the maximum sustainable macroeconomic scale — when the maximum sustainable scale is the optimal scale......Page 100
6.2 Technological progress and an optimal macroeconomic scale......Page 101
6.2.1 Introducing the ecological economic efficiency (EEE) identity......Page 102
6.2.2 Impact of a beneficial shift of the uncancelled bene.ts (UB) curve......Page 103
6.2.3 Impact of a beneficial shift of the uncancelled cost (UC) curve......Page 105
6.2.4 Increasing efficiency — not always implying a larger optimal scale......Page 107
6.2.5 Efficiency-increasing and throughput-increasing technological progress......Page 109
6.2.6 The ecological economic efficiency identity — breaking the ecological economic problem into manageable yet interdependent subproblems......Page 110
6.3.1 Limits to the beneficial shift of the uncancelled benefits and uncancelled costs curves......Page 111
6.3.2 A sustainability buffer — allowing for uncontrollable fluctuations in the ecosphere’s long-run carrying capacity......Page 112
6.3.3 A biocentric versus egocentric optimum......Page 113
7.1 Standard versus ecological economic efficiency......Page 114
7.1.1 Recognising trade-offs that contribute to the movement toward sustainable development......Page 115
7.1.2 Ecological and standard economic efficiency......Page 117
7.2 Macro policy goals and instruments......Page 119
7.2.1 The erroneous belief that an efficient allocation solves the throughput problem......Page 121
7.2.2 Price-determined outcomes and price-influencing decisions — addressing the intermediate macro policy goals in the correct order......Page 125
8.1 What are the main determinants of relative prices?......Page 127
8.2.1 Low entropy resource prices......Page 129
8.2.1.1 Comparing the standard and ecological economic efficiency contexts......Page 130
8.2.1.2 Renewable versus nonrenewable resource reliance......Page 134
8.2.2 The relative prices of human-made capital......Page 135
8.2.2.1 Comparing the standard and ecological economic efficiency contexts.......Page 136
8.2.3 Relative price variations — often re.ecting disparate efficiency contexts......Page 137
9.1 What is a market and what is required for it to operate freely and effectively?......Page 139
9.1.1 Why do markets exist?......Page 140
9.1.2 The virtues of the market — a function of the market’s institutional setting......Page 141
9.2 The conventional view of the market......Page 142
9.2.1 The conventional free market view — falsely positing a conflict between freedom and authority......Page 143
9.2.2 The conventional free market view — falsely positing a natural economic order driven by individual self-interest......Page 144
9.3.1 The tendency for competition to be self-eliminating......Page 146
9.3.3 The tendency for the market to deplete its natural capital foundations......Page 147
9.3.4 The tendency for the market to fail......Page 148
9.4.1 Rejecting the economic imperialist and minimalist market positions......Page 149
9.4.2 The evolution of a more appropriate market domain......Page 150
III: Sustainable development and the co-evolutionary paradigm......Page 152
10.1 The need to assess the neoclassical paradigm’s atomistic-mechanistic foundations......Page 153
10.2.1 Characteristic features of the Newtonian world view......Page 155
10.2.2 The neoclassical economic paradigm as a product of the Newtonian world view......Page 157
10.3 The shortcomings of both the Newtonian world view and the neoclassical economic paradigm......Page 160
10.3.1 The inadequacies of the neoclassical economic paradigm......Page 161
10.3.2 Bridging the gap between theory and reality — the need for a paradigm shift......Page 163
11.1.1 What are the basic features of a co-evolutionary world view?......Page 164
11.1.2 The global system as one large evolutionary process......Page 168
11.2.1 Macro stability and micro chaos — opposing aspects of the principle of self-organisation......Page 170
11.2.2 The principle of co-evolutionary balance......Page 171
11.2.2.1 The very short term......Page 172
11.2.2.3 The medium-term......Page 173
11.2.2.4The long term......Page 174
11.2.3 The emergence of systemic instability and chaos through bifurcation......Page 175
11.2.4Rapidity and frequency of systemic chaos through bifurcation......Page 176
11.2.4.1 Implications......Page 177
11.2.5.1 Risk and uncertainty......Page 178
11.2.5.2 Closed and open ignorance......Page 179
11.2.5.3 Implications......Page 180
11.2.6 Feedback in co-evolutionary processes......Page 181
11.2.6.1 Implications......Page 183
11.2.7.1 Implications......Page 184
11.2.8 Institutions as the biological equivalent to the gene......Page 185
11.2.10 Path dependency in co-evolutionary processes......Page 186
11.2.10.1 Implications......Page 187
11.3 Concluding remarks......Page 188
12.1 The role of the market in the co-evolutionary process......Page 190
12.1.1.1 The economic macrogenotype......Page 191
12.1.1.2 The economic macrophenotype......Page 192
12.1.2.1 The price-influencing effect of phenotypic evolution......Page 193
12.1.2.2 The price-influencing effect of genotypic evolution......Page 194
12.1.3 A schematic representation of the co-evolutionary process......Page 195
12.2 The market as a co-evolutionary feedback mechanism......Page 197
12.2.1 Incorporating recursive feedback into the evolutionary economic schema......Page 198
12.2.2 The market as a negative feedback mechanism......Page 200
12.2.3 The market as a positive feedback mechanism......Page 201
12.3.1 Human responses to positive feedback effects......Page 203
12.3.2 Path-dependency implications for policy implementation......Page 206
12.3.3 Externalities from a co-evolutionary perspective......Page 208
12.4 Concluding remarks......Page 210
14.1 The need for national accounting reform......Page 219
13.1.1 The failure of policy — a failure to embrace the notion of an optimal macroeconomic scale......Page 212
13.1.2 Co-evolutionary explanations for the perceived growth imperative......Page 213
13.2 A framework for policy setting and national accounting reform......Page 215
14.2 Reform no.1: A strong sustainability measure of Hicksian income......Page 220
14.2.1 Establishing a strong sustainability measure of Hicksian income......Page 222
14.2.2 A previous attempt at a national measure of Hicksian income......Page 225
14.2.3 Problems with Hicksian income — the need for a sustainable net benefit index......Page 226
14.3.1 Nordhaus and Tobin’s measure of economic welfare......Page 227
14.3.2 Zolotas’s index of economic aspects of welfare......Page 228
14.3.3 Daly and Cobb’s index of sustainable economic welfare......Page 229
14.3.4 How useful is the index of sustainable economic welfare?......Page 230
14.3.5 Introducing the sustainable net benefit index......Page 232
14.3.6 Account no.1 — the uncancelled benefit account......Page 233
14.3.7 Account no.2 — the uncancelled cost account......Page 237
14.3.8 Calculating the sustainable net benefit index......Page 247
14.3.9 Cross-country comparison of the sustainable net benefit index and indexes of sustainable economic welfare......Page 248
14.4.1 Account no.3 — the human-made capital account......Page 250
14.4.2 Account no.4 — the throughput account......Page 252
14.4.3 Account no.5 — the natural capital stock account......Page 256
14.4.5 Ratio No.1 — the service efficiency of human-made capital......Page 260
14.4.6 Ratio no. 2 — the maintenance efficiency of human-made capital......Page 262
14.4.7 Ratio no. 3 — the growth efficiency of natural capital......Page 263
14.4.8 Ratio no. 4 — the exploitative efficiency of natural capital......Page 265
14.5 Reform no. 4: supplementary sustainable development indicators......Page 266
14.5.1 Supplementary development indicators......Page 269
14.5.2 Supplementary sustainability indicators......Page 274
14.5.3 Ranking the sustainable development performance of different countries......Page 278
15.1 Structure of the chapter......Page 280
15.2.1 Establishing a set of properly defined property rights......Page 281
15.2.1.1 Exclusivity......Page 282
15.2.2.1 The generation and dissemination of information and knowledge......Page 284
15.2.2.2 Removing unnecessary nonprice rules and regulations......Page 285
15.2.3 Establishing and maintaining the contestability status of markets......Page 286
15.2.3.2 Dealing with instances where sunk costs cannot be detached from the utilising firm......Page 287
15.2.3.3 Market deregulation and the privatisation of government instrumentalities......Page 288
15.2.4 Labour market and corporate reform......Page 289
15.2.5 Ameliorating externalities......Page 291
15.2.5.1 Internalising the user cost of nonrenewable resource depletion......Page 293
15.2.5.2 Environmental assurance bonds......Page 294
15.3.1 Minimum and maximum levels of income and wealth......Page 295
15.3.1.1 Determining minimum and maximum limits on income......Page 296
15.3.1.2 Determining maximum limits on wealth......Page 297
15.3.2 Financing a minimum income......Page 298
15.3.3.2 Profit-sharing arrangements......Page 300
15.4.1 Tradeable resource exaction permits......Page 301
15.4.3 Sustainable use of agricultural land......Page 304
15.4.4 Preservation and restoration of critical ecosystems......Page 305
15.4.5 Transferable birth licenses......Page 306
15.4.6 Immigration......Page 307
15.5.1 Minimising the depletion of moral capital through functional property rights and a corporate charter......Page 308
15.5.3 Re-embedding the macroeconomy into the social and ecological spheres......Page 309
15.6.1 The arguments for and against free international trade......Page 310
15.6.2 Policies to gain the sustainable net benefits of international trade......Page 314
15.6.2.1 Restoring comparative advantage by restricting the mobility of financial capital......Page 315
15.6.2.2 Facilitating efficiency-increasing rather than standardslowering competition......Page 317
15.7.1 Facilitating efficiency-increasing technological innovation......Page 319
15.7.2 Discounting......Page 320
15.7.3 Central bank control of a nation’s money supply......Page 322
15.7.4.1 Severing the GDP-employment link......Page 324
15.7.5 International consensus on sustainable development issues......Page 326
15.7.6 A timetable to gradually introduce sustainable development policies......Page 327
16.1 Why sustainable development requires moral growth......Page 330
16.1.1 Boulding’s three generalised systems of power......Page 331
16.1.2 Moral growth — an essential feature of the integrative system of power......Page 333
16.2.1 A moral consensus gained through the integrative power of the truth......Page 335
16.2.2 The integrative power of truth — created via a learning/teaching process......Page 336
16.2.3 The need for nondialectical institutions, organisations, and processes......Page 337
16.2.4 Conclusion......Page 340
V: Appendices......Page 341
A1.1 Introduction......Page 342
A1.2 Psychic income......Page 343
A1.3 Psychic outgo......Page 358
A2.1 Introduction......Page 372
A2.2 Sacrificed source function of natural capital......Page 373
A2.3 Sacrificed sink function of natural capital......Page 391
A2.4 Sacrificed life-support function of natural capital......Page 396
A3.2 Human-made producer and consumer goods......Page 400
A4.2 Nonrenewable resources......Page 411
A4.3 Renewable resources......Page 421
References......Page 434