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
Chapter 16: Transition to Sustainability: Some Preliminary Conclusions
Valentina Bosetti and Carlo Carraro There has been much debate among economists, and between economists and nearly everyone else, regarding the meaning of the frequently employed concept of ‘sustainability’. Many economists define sustainability as in the Brundtland Report (WCED, 1987), which identifies sustainable economic development as: development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Implicit in this definition are two basic concepts: intergenerational fairness and optimality. Sustainability is a question of intergenerational equity, asking about the fair or just distribution of productive capacity and welfare between the present and future generations. Optimality, or dynamic efficiency as in Stavins et al. (2002), on the other hand, is concerned with attaining the highest feasible level of social welfare over the long run. Therefore, contrary to some claims, sustainability is not only about intergenerational equity; rather, widely held views of sustainability encompass elements of both efficiency and distributional equity. This leaves room for the contribution of economic analysis, which can identify the mechanisms and policies that enhance the optimality of economic development. The search for an economic development path that is both optimal and sustainable has occupied economists as far back as Ramsey (1928). To show the importance of the role of economists and the linkage between intergenerational equity issues and optimality in the definition of sustainability, let us consider, as an example, the choice of the discount rate to be used to evaluate present and future needs (an issue recently...
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