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 16: Transition to Sustainability: Some Preliminary Conclusions

Valentina Bosetti and Carlo Carraro

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

Extract

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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