Modelling Sustainable Development

Modelling Sustainable Development

Transitions to a Sustainable Future

The Fondazione Eni Enrico Mattei series on Economics, the Environment and Sustainable Development

Edited by Valentina Bosetti, Reyer Gerlagh and Stefan P. Schleicher

This insightful book explores the issue of sustainable development in its more operative and applied sense. Although a great deal of research has addressed potential interpretations and definitions of sustainable development, much of this work is too abstract to offer policy-makers and researchers the feasible and effective guidelines they require. This book redresses the balance.

Chapter 1: Economic Models for Sustainable Development

Richard S.J. Tol

Subjects: economics and finance, environmental economics, environment, environmental economics


Richard S.J. Tol 1.1 INTRODUCTION This chapter is about how economic models can be used to advise policymakers on sustainable development. Van den Bergh and Hofkes (1998) and Moffat et al. (2001) devote whole books to this topic. In a single chapter, I cannot match them for detail. Instead, I highlight and classify the broad connections between sustainable development as a policy issue and economic models as tools for policy analysis. In Section 1.2, I first interpret sustainable development. This is to acquaint the reader with my view on this issue, and to help the reader interpret what I write later. In Section 1.3, I turn to the use of economic models – distinguishing between cost–benefit analysis and costeffectiveness analysis for setting targets, and policy implementation. Sections 1.2 and 1.3 focus on the environment. Section 1.4 extends the discussion by including all three pillars of sustainability: environmental quality, economic well-being and social cohesion. Section 1.5 concludes. 1.2 SUSTAINABILITY Sustainable development is development that meets the needs of the present generation without compromising the ability of future generations to meet their needs (WCED, 1987). It is hard to be against sustainable development. It spares future generations without compromising the present. There is no trade-off. You can have your cake and eat it. Sustainable development is like motherhood and apple pie. It is therefore no surprise that Brundtland’s magnificent definition took the world by storm. Coined in 1987, every nation and every large company in the world has supported sustainable development, at...

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