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12-b.
Sustainability & Natural Resource Management?
[Sustainable Economic Development,
Production/Consumption, & Local Communities]
Larry D. Sanders
(SPRING 2002)
Dept. of Ag Economics Oklahoma State University
1
INTRODUCTION
(ch. 13-14-15 Hackett)
 Purpose:
– to become aware of specific sustainability concepts
 Learning
Objectives. To understand/become aware
of:
1.To understand the keys to sustainable economic
development.
2. To understand key issues for production/consumption
in sustainable systems.
3. To understand key issues related to the economics of
sustainable local communities.
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Sustainable Economic Development
(ch. 13 Hackett)
 Broadens
the traditional view of economic development
to include social & environmental factors
 Traditional economic development:
–
–
–
–
focus on income growth (real per-capita income)
sometimes also addresses distributional issues
tends to favor large-scale projects
aid thru technical/financial assistance, & loans
 Sustainable
–
–
–
–
development:
income growth
education
environmental regulations
information access/empowerment
-- local needs-based
--family planning
-- ecotourism
3
Alternate Theories in Sustainable
Economic Development
Weak Form
 “Technological fix”; “5
capitals”; substitution ok
 Indicators
– Green GDP
– Genuine Savings
– Index of Sustainable
Economic Welfare
(ISEW)
– GPI
 Limitations--weak
on
protecting environment
Strong Form
 Natural capital is
unique; substitution
won’t work
 Indicators
– Carrying Capacity
– Biodiversity
– Ecological Footprint
 Limitations
– ignores new
technology &
substitution concept
4
Alternate Theories in Sustainable
Economic Development (continued)
Weak Form
 Arguments favoring
Strong Form
 Arguments favoring
– Less Costly in short-tomid-term
 Policy
– Uncertainty
– Irreversibility
– Scale (threshold
effects, etc.)
Implications
– counterbalancing effects
– environmental mitigation

Policy Implications
– safe minimum
standards
– preservation
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Measurement options for
Weak Form Sustainability
 Macroeconomics
(GNP, GDP)
 Green GDP (GDP less environmental expenses)
 Genuine Savings (considers capital investment less
regeneration rate & excess waste)
 ISEW (per-capita real consumption less social &
environmental factors, adjusted for future generations &
income inequality)
 Genuine Progress Indicator (GPI: real personal
consumption adjusted for income distribution, ecological
& social costs, household & volunteer work)
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Measurement options for
Strong Form Sustainability
 Carrying
Capacity (based
on Net Primary Product
(NPP)--vegetation
produced on given land
area)
 Ecological Footprint (EF-amount of land per capita
necessary to support
human consumption of
resources of food, energy,
timber, etc.)
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Case Studies show difficulty in comparing alternate
measurement schemes w/traditional development
 U.S. (& other rich developed countries)
– GDP continues to grow
– ISEW continues to decline
– GPI continues to decline

Less-Developed Countries (LDCs)
– many farmers become rural/urban laborers displaced
from land
– huge budgets lead to/encourage corruption
– weak oversight/penalties often result in
inefficiencies/failures/unintended consequences
– emphasis on export-oriented industry
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Sustainable Production & Consumption
(ch. 14 Hackett)
 Traditional
view:
– sustainable production is the
problem of LDCs
– sustainable consumption is the
problem of hi-income DCs
 Hackett’s
view:
– All countries are challenged
– US, Japan, Germany investing in
cleaner, more environmentallyfriendly technologies
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“Hard Path” vs. “Soft Path”
 “Hard
Path”
– dependence on nonrenewable fossil
fuels (& polluting energy/production
systems)
– regional/national energy grids
 “Soft
Path”
– government intervention to more
efficient energy, renewable & lesspolluting energy/production sources
– decentralized energy production (local
& home-based)
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Soft Path Alternative Energy Sources
 Solar
 Biomass
 Wind
 Hydrogen
 Methane
 Ocean
waves
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The Challenge for Sustainable
Production Technology
 Create
firm-level profit opportunities
 Provide similar goods/services or alternative that
fill similar needs
 Be not much more expensive than conventional
alternative
 Educate producers/consumers on need for change
 Maintain competitiveness in the market
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Product Life-cycle Analysis
 Evaluation
of environmental & natural
resource impacts of products/services
throughout lifecycle from extraction,
production, marketing/distribution, use &
disposal
 European method for waste management
policy
– responsibility for disposal of aluminum cans is
with the company that is selling the product in
aluminum cans (Coke, Pepsi, etc.)
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Government Intervention Options
 EPR
(Extended Producer
Responsibility) Programs
(life cycling)
 Tax/subsidize
 Eco-labelling
 Standards
 Fund
research/development
 Education
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Sustainable Local Communities
(ch. 15 Hackett)
 Ostrom’s
characteristics:
–
–
–
–
Inclusive
Democratic
Common vision
Efficient
monitoring/enforcement
– Adaptable to change
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Challenges for Local Communities
 Free
migration & trade lead to:
– export-based development, which leads to:
» population increases, unemployment, public financing at
risk, & exploitation of community & resources by firms
 Alternative:
– Small business (import-substitution development),
which leads to
» increased diversity of economy
» increased democracy
» decreased income leakage
» limits on public financing risk
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Other Issues for Locally Sustainble
Communities
 How
to “grow” stocks of
– natural capital
– human capital
– human-made capital
 Examples
of needs
– Education/training
– Telecommunications/new technology links
– Maintaining/enhancing noncommercial
amenities (parks, greenspace, arts, etc.)
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Selected Economic Instruments for
Sustainble Community Development
 Microlending
– very small-scale lending for low-income people w/o
collateral
– promotes empowerment, independence, entrepreneurial
creativity
 Import-substitution small businesses
– promote local small business to encourage local
production & sale of goods/services that substitute for
imports
– promotes stability/diversity & reduces income leakages
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Selected Economic Instruments for
Sustainble Community Development (cont.)
 Ecotourism
– promote locals to host/guide tourists for neighboring
unique ecosystem
– provides financial incentives to protect environment &
alternative to exploiting the environment in harmful
ways
 Land tenure rights
– secure land tenure & property rights
– recognize Common Property Rights
– reduces adverse impacts on common ground, &
encourages long term thinking w/r/t property use
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Sustainable Community Examples
 Torbel,
Switzerland
 Japanese Village Commons
 Spanish Irrigation Commons
 Maine & Brazil self-governed Fisheries
 Pahchayat Community Forests
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