Weak versus Strong Sustainability
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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.
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Appendix 4: The World Bank's Genuine Savings Accounting

Eric Neumayer

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Appendix 4 The World Bank's Genuine Savings Accounting The Vvorld Bank's genuine savings (GS) accounting is as follows: • Gross Domestic Saving = Gross Domestic Investment - Net Foreign Borrowing + Net Official Transfers [Net Foreign Borrowing + Net Official Transfers = Current Account Balance After Official Transfers] • Net Saving = Gross Domestic Saving - Depreciation of Man-made Capital • Genuine Saving = Net Saving - Resource Rents (Depletion of Natural Resources) - CO 2 Damage - Damage from suspended particulate matter In the traditional national accounts, current educational spending is considered as consumption. In the calculation of GS current educational spending is instead considered as an investment in human capital and therefore included in Gross Domestic Saving. The difference is relevant, since current expenditures make up more than 90 per cent of all educational expenditures (World Bank 1997, p. 34). All values are in current US$. Saving rates are defined as saving divided by gross national income which is measured at market prices. For the computation of natural resource rents the following items have been included: oil, natural gas, hard coal, brown coal, bauxite, copper, iron, lead, nickel, zinc, phosphate, tin, gold, silver and forests. Resource rents are computed as price minus average costs times production/harvest. The only pollutant considered so far for all countries are CO2 emissions, which are valued at US$20 per metric tonne of carbon. This value is taken from Fankhauser (1995) and is often regarded as a consensus estimate. CO 2 emissions are supposed to function as a proxy for...

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