Exploring the Limits of Two Opposing Paradigms, Third Edition
Chapter 3: Resources, the Environment and Economic Growth: Is Natural Capital Substitutable?
3. Resources, the Environment and Economic Growth: Is Natural Capital Substitutable? This chapter discusses a natural question that comes to the reader's mind after having been confronted with the two paradigms of sustainability: if they have so starkly differing assumptions about the substitutability of natural capital, how can we know which paradigm is 'correct'? I will argue that both paradigms ultimately rest on non-falsifiable beliefs about the future. There can therefore be no clear answer on whether natural capital is substitttable or not. Section 3.1 puts the discussion into context in giving a brief history of resource and environmental concern. Section 3.2 looks at natural capital as an input into the production of consumption goods. It suggests that the resource optimism of WS can be expressed in four propositions and critically assesses each one of them. It looks at: • • • • Substitution of a resource with other resources. The role of prices in overcoming resource constraints. Substitution of natural resources with man-made capital. The role of technical progress- in overcoming resource cmstraints. Then, Section 3.3 turns to environmental degradation. Section 3.3.1 looks at the substitutability of natural capital as a direct provider of utility and examines whether future generations can be compensated for long-term environmental degradation with increased consumption opportunities. Section 3.3.2 analyses the environmental consequences of economic growth. It presents the theoretical case for environmental optimism, which holds that economic growth is good for the environment, at least in the long run, and the theoretical case for environmental pessimism, which holds...
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