Weak versus Strong Sustainability

Weak versus Strong Sustainability

Exploring the Limits of Two Opposing Paradigms, Third Edition

Eric Neumayer

This insightful book explores the limits of the two opposing paradigms of sustainability in an accessible way. It examines the availability of natural resources for the production of consumption goods and services, and the environmental consequences of economic growth. The critical forms of natural capital in need of preservation given risk, uncertainty and ignorance about the future are also examined. The author provides a critical discussion of measures of sustainability. As indicators of weak sustainability, he analyses Genuine Savings and the Index of Sustainable Economic Welfare, also known as the Genuine Progress Indicator. Indicators of strong sustainability covered include ecological footprints, material flows, sustainability gaps and other measures, which combine the setting of environmental standards with monetary valuation.

Chapter 5: Measuring Weak Sustainability

Eric Neumayer

Subjects: environment, ecological economics, environmental geography, geography, human geography

Extract

In this chapter, I shall discuss whether weak sustainability can be measured in practice. Section 5.1.1 derives genuine savings (GS), a theoretically correct measure of WS, from a dynamic optimisation or optimal growth model. The model is for a closed economy and the following section discusses the necessary amendments for an open economy context. A number of problems in measuring WS in practice are put forward. The examination then turns to the World Bank's efforts at computing GS figures for most countries in the world. I argue that the dismal conclusions of the World Bank (2009a) about the unsustainability of developing countries crucially depend on its method for resource accounting. These conclusions are largely reversed if another method, namely the EI Serafy method, is used for computing natural capital depreciation due to resource depletion. Section 5.2 discusses the Index of Sustainable Econmic Welfare (lSEW), also known under the name Genuine Progress Indicator (GPI), as an alternative indicator of WS. I show that the results generated by the ISEW and GPI methodology depend on problematic assumptions and methodological errors. In sensitivity analyses it is shown that the dismal results of ISEW studies about decreasing 'sustainable economic welfare' in developed countries in the WS sense fail to uphold if more reasonable assumptions are taken and the methodological errors are corrected. Section 5.3 concludes. 5.1 GENUINE SAVINGS (GS) The purpose of this section is to show that genuine savings (GS) can be used as an indicator of WS. The term 'genuine' was introduced...

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