hong kong sustainable development

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A “Hong Kong” model of sustainable development Lawrence Wai Chung Lai, Kwong Wing Chau, Daniel Chi Wing Ho and Frank T. Lorne Department of Real Estate and Construction, University of Hong Kong, Hong Kong, People’s Republic of China Abstract Purpose – The purpose of this paper is to discuss a Coasian interpretation of a model of sustainable development for Hong Kong that incorporates three segments, namely economy, society, and environment. Design/methodology/approach – The approach is analytical, using concepts of property rights informed by Coasian neo-institutional economics and Yu’s ideas on the Schumpeterian process in innovation. Findings – First, the sustainable development criteria must be non-dictatorial, decentralized, and compatible with market economics. The emphasis is contractarian rather than legislative or administrative. Second, the essence of segment cooperation is to create a win-win situation rather than an “integrated” rent seeking game, which will likely result in more values being created. Third, the requirement that it be progressive over time implies that programs and policies that are duplicative need to be avoided, and innovations are to be encouraged. Fourth, the requirement of satisfying only two aspects of the three segments of cooperation implies a less stringent standard of making stepwise improvements, and thus makes entrepreneurial efforts more likely. Last, the three segments of cooperation, if practiced simultaneously and improved over time, can achieve most, if not all, the principles in the Rio Declaration without aiming at a specific principle in the Declaration. Research limitations/implications – This paper should focus on a “win-win” rather than a mutually exploitative approach to public participation in sustainable development promotion. Practical implications – This paper should assist policymakers and politicians in understanding how sustainable development may be conceptually modelled. Originality/value – The paper is the first paper that defines for Hong Kong a model of sustainable development on the basis of Coasian economics, and contrasts it with other proposed models. Keywords Sustainable development, Hong kong Paper type Conceptual paper Introduction Inspired by the design of a logo adopted by the Council for Sustainable Development (CSD), the purpose of this paper is to articulate a trinitarian “Hong Kong” model of sustainable development that can satisfy certain objectives of sustainable development in the long run without infringing upon the political, economic, and social constraints of Hong Kong as a polity in China. Although the term “sustainable development,” as popularly understood, was first defined in the report Our Common Future (“Brundtland Report”) by the United Nations’ (UN) World Commission on Environment and Development (1987) (the Brundtland definition), the first authoritative official set of UN principles of sustainable development that represents the consensus reached by a large number of The current issue and full text archive of this journal is available at www.emeraldinsight.com/0263-7472.htm A model of sustainable development 251 Received May 2005 Accepted December 2005 Property Management Vol. 24 No. 3, 2006 pp. 251-271 q Emerald Group Publishing Limited 0263-7472 DOI 10.1108/02637470610660147

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Page 1: Hong Kong Sustainable Development

A “Hong Kong” model ofsustainable development

Lawrence Wai Chung Lai, Kwong Wing Chau, Daniel Chi Wing Hoand Frank T. Lorne

Department of Real Estate and Construction, University of Hong Kong,Hong Kong, People’s Republic of China

Abstract

Purpose – The purpose of this paper is to discuss a Coasian interpretation of a model of sustainabledevelopment for Hong Kong that incorporates three segments, namely economy, society, andenvironment.

Design/methodology/approach – The approach is analytical, using concepts of property rightsinformed by Coasian neo-institutional economics and Yu’s ideas on the Schumpeterian process ininnovation.

Findings – First, the sustainable development criteria must be non-dictatorial, decentralized, andcompatible with market economics. The emphasis is contractarian rather than legislative oradministrative. Second, the essence of segment cooperation is to create a win-win situation rather thanan “integrated” rent seeking game, which will likely result in more values being created. Third, therequirement that it be progressive over time implies that programs and policies that are duplicativeneed to be avoided, and innovations are to be encouraged. Fourth, the requirement of satisfying onlytwo aspects of the three segments of cooperation implies a less stringent standard of making stepwiseimprovements, and thus makes entrepreneurial efforts more likely. Last, the three segments ofcooperation, if practiced simultaneously and improved over time, can achieve most, if not all, theprinciples in the Rio Declaration without aiming at a specific principle in the Declaration.

Research limitations/implications – This paper should focus on a “win-win” rather than amutually exploitative approach to public participation in sustainable development promotion.

Practical implications – This paper should assist policymakers and politicians in understandinghow sustainable development may be conceptually modelled.

Originality/value – The paper is the first paper that defines for Hong Kong a model of sustainabledevelopment on the basis of Coasian economics, and contrasts it with other proposed models.

Keywords Sustainable development, Hong kong

Paper type Conceptual paper

IntroductionInspired by the design of a logo adopted by the Council for Sustainable Development(CSD), the purpose of this paper is to articulate a trinitarian “Hong Kong” model ofsustainable development that can satisfy certain objectives of sustainable developmentin the long run without infringing upon the political, economic, and social constraintsof Hong Kong as a polity in China.

Although the term “sustainable development,” as popularly understood, was firstdefined in the report Our Common Future (“Brundtland Report”) by the UnitedNations’ (UN) World Commission on Environment and Development (1987)(the Brundtland definition), the first authoritative official set of UN principles ofsustainable development that represents the consensus reached by a large number of

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0263-7472.htm

A model ofsustainable

development

251

Received May 2005Accepted December 2005

Property ManagementVol. 24 No. 3, 2006

pp. 251-271q Emerald Group Publishing Limited

0263-7472DOI 10.1108/02637470610660147

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nations originated from the Rio Declaration made during the UN Earth Summit of 1992(The United Nations Department of Economic and Social Affairs (DESA), 1992).

Since, then, many countries and local regions have adopted various versions ofsustainable development that each believe can most accurately capture the spirit of theRio Declaration, which was so sufficiently broad that indigenous efforts to definesustainable development were not only permitted, but encouraged:

States have, in accordance with the Charter of the United Nations and the principles ofinternational law, the sovereign right to exploit their own resources pursuant to their ownenvironmental and developmental policies, and the responsibility to ensure that activitieswithin their jurisdiction or control do not cause damage to the environment of other States orof areas beyond the limits of national jurisdiction (Rio Principle 2).

For any burgeoning new concept that can claim any significance, the stepwisedevelopment of the concept is indicative of a serious endeavour behind it. If one looksinto the origin of the term “sustainable development” and its Brundtland definitionmade in 1987, the Rio Declaration is merely a statement of intention. Both before andafter the announcement of the Rio principles, there have been substantial academicwork and concept elaboration across various disciplines centring on the themeembedded in sustainable development. An example of a frequently cited milestone isthe work of Daly and Cobb (1989).

As a matter of government administration, sustainable development in Hong Konghas an ancestry of a drive to environmental protection during the mid-1980s, in whichthe Environmental Protection Department (EPD) was born. This fast growingdepartment (Lai and Fong, 2000, p. 28) was grouped with the Planning and LandsDepartments into the Planning, Environment and Lands Branch, which in turn becamethe Planning, Environment and Lands Bureau after Hong Kong’s return to China inJuly 1997. However, since 2000, the EPD was taken out of this bureau to be groupedwith food in 2000, and then with the Transport and Works Departments in 2002.The first major government study to foster sustainable development, “sustainabledevelopment for the 21st Century study” (SUSDEV 21), was commissioned in August1997 and completed in August 2000. The study was managed not by the EPD, but bythe Planning Department. Out of SUSDEV 21 came the creation that was directlyplaced under the Chief Executive – a Sustainable Development Unit (SDU) inApril 2001 to oversee an advisory CSD, established in March 2003. This comprisedappointed public and private members.

We can say that sustainable development in Hong Kong did not formally begin untilthe commissioning of a study on the subject, SUSDEV 21, although there had beenlaws, consultancies, and reports dealing with environmental issues prior to that study(Mottershead, 2004b, pp. 90-5). However, the term could be detected in an internalgovernment paper from as early as 1993. Then, few people appeared to know whatsustainable development was or what it meant. This posed opportunities, as well asdangers, for an appropriate institutional structure to emerge. The danger is greater inthe sense that many have stuck to their “deep green” interpretation of the Brundtlanddefinition and refused to accept its manifestation in the Rio Declaration[1]. Others, suchas Doyle (1998), condemned the Rio Declaration and the ensuing Agenda 21 outright asendorsement of a globalised capitalist market economy.

What is the current position of the Hong Kong Government and the widercommunity? A Hong Kong Declaration was made on February 26, 2004 in the Asia and

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Pacific Leadership Forum (Leadership Forum) convened by China and the UN (Asiaand Pacific Leadership Forum on Sustainable Development for Cities, 2004, para. 1).The leaders who participated in the Leadership Forum thereby announced to theworld:

We, the representatives of national and local governments, community groups, the scientificcommunity, professional institutions, business, and the United Nations and otherinternational agencies, having met at the Asia Leadership Forum on SustainableDevelopment for Cities, reaffirm our commitment to the goals, targets andrecommendations contained in Agenda 21, the Programme for the Further Implementationof Agenda 21 and the Johannesburg Plan of Implementation.

The Hong Kong Declaration specifies the following policy and action areas:. leadership and local governance;. economic growth and job creation;. planning a better environment for urban housing and land use;. meeting basic social services;. increasing mobility; and. tourism and cultural heritage.

Why a “Hong Kong” model?Physical scientists build models to shoot rockets to the moon. In the social sciences,attempts to make predictable outcomes have seldom been successful. The risks anduncertainties of a human system are so immensely complex, as experiments withcentralized planning economies in the last century have so miserably demonstrated.Models in the social sciences serve a different function, often as guidelines andplatforms for discussion on policymaking.

At best, models in the social sciences could merely be succinct and consistentdescriptions of some selected dimensions of a real world phenomenon. These modelsmay or may not be comprehensive, but they serve as an expository vehicle for amission statement, a means for planning, discussion, and revision; a methodology forcreating solutions for issues raised; a filing cabinet for interpreting emergingexperiences, beliefs, and values; or a summary of issues for comparative studies ofalternative systems of the world. Everyday, decision makers are bombarded bystreams of visual, auditory, and other sensory data that in themselves might not haveany inherent meaning, but models will provide decision makers a system of rationalityto make sense of what’s happening.

Undoubtedly, the term model may mean different things to different disciplines.In architecture, an actual scale model is used to represent a physical building structure.This model is a miniature of something conceived by the architect. However, asillustrated below, that need not always be the case.

Most people think architects should be designing and building models of physicalstructures as blueprints for construction. Those in marketing think of architecturalmodels as means to attract buyers. Yet, architecture is an aesthetic summary of thescientific, social, and economic infrastructure of a physical structure that serves afunction beyond marketing. Models can also be used as a platform for planners to buildsome consensus[2].

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The architect-planner partakes in the debate over social policies in relation tosustainable development through the idea of “green buildings,” which stressenvironmental friendly designs and a life cycle management of properly designedbuildings in terms of more efficient energy use, better noise abatement, and theconservation of elements of heritage and cultural values. However, as argued by Kohler(1999), this idea has become replaced by the much broader idea of sustainabledevelopment. This has had a great impact on the state of architectural research (Kohlerand Hassler, 2002), rendering it more multi-disciplinary and open to the views of othersin decision making.

A much older interest of architectural theorists on the human and cultural aspects ofdesign that goes beyond the functional needs of end-users can be traced back to whatFranklin (2001) refers to as “people-environment studies.” Lewis Mumford, author ofthe City in History (Mumford, 1961), is a case in point. But the shift in ideas of a highlyinfluential figure in this arena of inquiry, Amos Rapoport, is even more instructive.Rapoport (1969) originally held that socio-cultural factors shaped built forms.Developing this theme further, he held that environmental needs should support groupculture, values, and needs (Rapoport, 1977), and that a house needs to be interpreted aspart as a specific system of settings and ideas (Rapoport, 1985, 1990). However,Rapoport recently argued that “it is impossible to relate ‘culture’ (or ‘society’) orhousing (or any built environment), because these concepts are too broad, general andabstract.” However, “more specific and concrete variables derived from dismantling‘culture’” can relate to various aspects of housing (Rapoport, 2001, p. 145).

While a discussion on the human characteristics of housing may be controversial,the idea that a building has a life cycle or state of health similar to a human being hasgained consensus among researchers in regards to the “sick building syndrome”[3](Chan et al., 2004; Ho et al., 2004).

Not only is there a human, cultural, or health aspect to architectural planning, physicalscience enters the planning process in many important ways. An extreme example of thatis the planning of an underground community close to Las Vegas, Nevada, in whicha community needed to be planned around the possibility of radioactive leakage from acontemplated nuclear dump. The development of communities necessarily encroachesupon the natural capital of the earth, and thus a scientific dimension of architecturalplanning is not only relevant to the civil engineering and mechanical aspects of buildings,but arguably involves many aspects of the physical and natural sciences.

If a model of sustainable development is to be designed or described, the approachin doing so will necessarily be interdisciplinary. But models are made for a variety ofreasons. The intent of the model must be kept in mind when thinking about the results.As tools for developing a constructive dialogue, as suggestions for perceptionformulation, and as symbolic gestures of a mission statement worthy of pursuit,models can indeed be seen as the architecture of institutions.

What will be a good starting point for thinking about a model of sustainabledevelopment for Hong Kong? It will be easy to use the Brundtland definition ofsustainable development. However, the concept in Brundtland’s statement is largelyinconsistent with the idea of a positive interest rate, and has hence been rejected bymany economists. Even generously interpreted, the zero interest rate condition canarguably exist only in the longest of long shots[4].

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Short of the “first best” (a term used by the economist to refer to the ideal), it istempting to think of sustainable development as merely consisting of a set of policiesdealing with various sectors of a system in some comprehensive manner. The type ofpolicy that falls under sustainable development may be that what is related to theenvironment, social welfare, health, economy, labour, housing, and real estatedevelopment. This way of perceiving sustainable development has the danger of beingtoo general. Indeed, it will be difficult to think of policies that are not considered a partof sustainable development.

Yet, it is not policies per se that contribute to the essence of sustainabledevelopment. First of all, there are existing policies that are relevant for fosteringcertain aspects of sustainable development already in operation. Presumably, anyprudent policy-maker would have taken external effects into consideration whenpolicies were originally designed. Rarely would any sector adopt a policy independentof consideration of other sectors. Second, any attempt to impose additional criteria onan existing policy framework has the danger of over-regulating. For a traditionally freemarket-based system such as Hong Kong’s, and one that is constitutionally designed tooperate as a “One Country, Two Systems” component of China, the danger ofover-regulation by policies inspired by sustainable development cannot beunderestimated (Friedman, 1962)[5].

Indeed, as pointed out in the introduction, every country and region of the world inprinciple could be free to define what it considers to be policies of sustainabledevelopment, as long as it does not encroach upon the jurisdiction of othersovereignties. The good side of this is that it leaves considerable flexibility in terms ofhow indigenous people can choose the lifestyle and system in which they want to livein the future. The risk is that this is, in essence, an invitation to new policies that, ifunconstrained, would lead to rent dissipation that, in the long run, may lead to asmaller, rather than a bigger, slice of the pie (Buchanan et al., 1980)[6].

In summary, a model can serve many purposes. Domestically, it can be used forpurposes of planning, as a platform of debate, and as a blueprint for future policies.It can also serve as an overall constraint on new policies to be adopted or developed.Generally speaking, the specification of a model should serve the purpose ofidentifying areas that create values (rents) rather than destroy values (rents).

Models can also serve an international discussion and marketing purpose, and as aproxy description of a system in comparison with other systems – an intellectualdimension on comparative studies. Over the years, many international conferenceshave been organized to allow countries to share their experiences with one another.Each country usually has its own paradigm of promoting sustainable development,capturing some, if not all, principles of the Rio Declaration. A model will also be usefulfor that purpose, acting as a vehicle to communicate for system comparisons, ratherthan merely adopting a new name for a set of old problems.

What is the “Hong Kong” model?Intellectually speaking, the Hong Kong model of sustainable development can beaddressed both descriptively and prescriptively. Before an attempt to do so is made,the remarks of scholars working in the area are duly recognized:

. . . Hong Kong [is] still struggling to operationalize the concept of sustainabledevelopment – more than 20 years after the term was first coined – [and] is actually in

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danger of locking itself into a dead end which others have already recognized andattempted to circumvent in a positive and pragmatic manner. This, I contend, has less to dowith any fundamental inability to comprehend the concept but rather more to do with asociety that is unwilling to redefine itself in accordance with the basic tenets ofsustainability. . . (Hills, 2004, p. 14).

No doubt what Hills had pointed out is true, but the phenomenon is arguably notunique to Hong Kong. Ask any citizen randomly in any major city of the world abouthis/her views on sustainable development, and the reaction is unlikely to be consistent.Sustainable development, as an ethical principle that citizens of the world shouldcollaboratively help formulate, is only an ideal; some might pity that it exists only infairy tales. Indeed, we contend that unless sustainable development principlesformulated are compatible with human nature in some fundamental ways, sustainabledevelopment as an ethical principle is unlikely to be widely accepted.

The Brundtland objective is difficult to achieve. Indeed, as Mottershead pointed out,the definition serves in many cases only as a catalyst[7]. For the purpose of searchingfor a concept of sustainable development that will be more compatible withneoclassical economics, some of our earlier research works have advocated a win-wincollaboration ethics as a foundation for pursuing sustainable development objectives(Yu et al., 2000; Lai and Lorne, 2003a, b; Chau et al., 2004). Methodologically speaking,it is a challenge to see if neoclassical economic concepts, with their underlyingassumption about human nature, could still be maintained if sustainable developmentethics and principles were adopted. This should be the research agenda of a broadernature that this paper will not go into, however[8].

The objectives in defining a workable concept of sustainable development in theform of a model are more modest. We ask:

(1) whether a self-definition is permitted under an international declaration ofsustainable development;

(2) whether there exists a bottom-up indigenous meaning of sustainabledevelopment that has the potential to win a general consensus;

(3) whether there exists a top-down meaning of sustainable development that issomewhat meaningful;

(4) whether (2) and (3) conflict with each other; and

(5) whether a resulting self-definition of sustainable development is indeedsustainable.

In the introduction, we already provided an affirmative answer to Question (1) basedon Rio Declaration 2. For Question (2), let us first review several positions proposed bysome NGOs and various professional coalitions in the area. Christine Loh of CivicExchange has long advocated a concept of Natural Capitalism[9]. In a foreword of thecollections of essays put together by Mottershead (2004a), sensitivity towards theconstraint of “One Country-Two Systems” pointed out in Section I was evident:

Natural capitalism should appeal to Hong Kong as it offers increased profit and anenvironmental solution . . . Hong Kong and South China would do well to adopt its principlesto develop a new form of capitalism that takes nature into account. Hong Kong would be anideal candidate because it presents a good example of an urban system with an unsustainablemetabolism. By examining such issues as its material resource consumption, land formation

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and building construction, waste generation, and energy usage, we can build a picture of thecity’s ravenous appetite and then see how consumption can be reduced dramatically butefficiency increased (Mottershead, 2004a, p. xxi, italics added).

But in one of her three articles, Mottershead (2004b) made a sweeping complaint thatthere had been an absence of international engagement, integration, partnerships,strategic direction, and research in Hong Kong on sustainable development[10]. Shealso faulted SUSDEV 21 for ignoring the Rio Declaration, but wrongly considered suchnotions to be private property and property values, a point to be taken up below.

After all, few local academics have ever fought for the protection of private propertyrights in Hong Kong, which is now supposedly guaranteed under “constitutionalcapitalism” (Lai, 2002). Mottershead (2004b, p. 104) asserted, with a footnote referenceto the work of Hanna et al. (1996), that such notions as property rights and propertyvalues “had long been discarded internationally in favour of a broader-basedperspective” in the sense that these notions were cherished by the stakeholders whoexpressed their views in SUSDEV 21. It would be unfair to say from this shortstatement that Mottershead, a common law professor, has a dismissive view of privateproperty rights for Basic Law-governed Hong Kong. As for sustainable development,this position can hardly be compatible with Rio Principle 2, “the right to development”or the concept of a “more efficient and equitable world economy” envisaged by Chapter2 of Agenda 21. Mottershead was, in fact, correct to say that a broader-basedperspective is required because there is a tendency among legal practitioners topromote environmental legislation as a means to allow judges to assign rights.

The idea of Natural Capitalism has, rightly or wrongly, characterized the earlyapproach used within academic circles in regard to sustainable developmentmovement in Hong Kong: one that it is piecemeal and issues oriented. This was amplyrevealed in the collection of essays put together in Mottershead’s study.

The said issues-oriented approach can also be seen among NGOs of the region.For example, the Conservancy Association adopted a mission statement:

. . . advocating appropriate policies, monitoring government action, promoting environmentaleducation, and taking a lead in community participation.

But an adopted version of sustainable development cannot be found (www.conservancy.org.hk/aboutCA/mainE.htm).

King’s (2004) article, titled “Sustainable development and civil society” inMottershead’s collection of essays, noted the following NGO activities:

Both Friends of the Earth (FoE) and the Conservancy Association (CA) have providedstrategic papers and ideas on sustainable development (CA’s Local Agenda 21, and FoE’s1996 vision for incorporating Sd government strategy, notably the Territorial DevelopmentStrategy), but have not been successful in achieving government support or endorsement ofthese strategies (Mottershead, 2001) . . . The Private Sector Committee on the Environment(now the Business Environment Council [BEC]) was established in 1989 by several largebusinesses and financial institutions in Hong Kong. These “hongs” wanted to show the publicthat they were willing to “clean up their act”. . . (italics added, Mottershead, pp. 258-9).

Exactly as described, the BEC has been active in recent years in providing variouseducational, as well as certification programs, to the business community and thepublic on the concept of sustainable development. It presented the following vision onits web site:

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That Hong Kong’s businesses can become a model for sustainable development in Asiathrough the integration of environmental and social responsibility into existing businesspractices (emphasis added).

The Hong Kong Sustainable Development Forum (HKSDF), established nine yearsafter the BEC in 1998, was similarly formed to coordinate efforts, raise awareness, and“to foster, to support and participate in consensus building . . . ” The sustainabledevelopment definition provided on the web site of the HKSDF stated the following:

Goal 1.Sustainable Development Generally

To bring our mission to fruition in Hong Kong, the HKSDF has endorsed and adopted alocalized version of the Goals of the US President’s Council on Sustainable Development(italics added, http://hksdf.org.hk/mission.htm#objectives).

Likewise, other NGOs (e.g. The Hong Kong Council of Social Services) basicallysupport a vision for promoting sustainable development in Hong Kong, butprovide no specific definition of it[11]. World Wildlife Fund Hong Kong (WWFHK)advocates conservation and a reversal of environment degradation, but has notprovided a specific definition for sustainable development.

One might wish to step back and ask: what is the ultimate objective of civilinvolvement? According to King (2004, p. 259):

. . . A fundamental part of sustainable development is aiming towards a single objective andactive interaction between all stakeholders and parties concerned so that all needs are takeninto account” (emphasis added).

It cannot be said that this methodology of approaching sustainable development isnecessarily a good idea. Indeed, neither the HKSAR (Sustainable DevelopmentUnit, Hong Kong Special Administrative Region, www.susdev.gov.hk/html/index.htm) nor many other regions of the world may wish to endorse a single objectiveof sustainable development to be their goal. Indeed, citing works of Hajer (1995),Dryzek (1997),and Hills (2004, pp. 15-21) proposed to view sustainable developmentas “an environmental discourse.” Facing what is called an “administrativerationalism” of Hong Kong, Hills believed that a pragmatic interim solution isrequired. Developing the theme mooted in Hills and Welford (2002), Hills arguedthat SUSDEV 21 and the CSD notion of a “balance” between economy, society, andenvironment should be replaced by the idea of “ecological modernisation” (EM) asa transition to sustainable development. Hong Kong, hence, should move awayfrom its long established laissez faire “development principles.” Characterised byHills (2004, p. 40) “as a weak form of sustainable development”[12], this approach“may well mirror current thinking within the Hong Kong EnvironmentalProtection Department” (Hills, 2004, p. 39). We agree with Hills as regards to theneed to be pragmatic about any proposal in respect of sustainability.

Hills suggested five reasons as to why EM is most suitable for Hong Kong:

(1) it does not call into question the continued existence of the capitalist system;

(2) “there is money in it for business,” as Dryzek (1997) and Hajer (1995) mentioned;

(3) ecological modernization says little about social justice and Third Worlddevelopment;

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(4) ecological modernization can provide a framework within which to developpartnerships between the public and private sectors (i.e. through cooperativeenvironmental governance); and

(5) EM is not concerned solely with industrial production, but with theenvironmental efficiency of the economy as a whole (the author claims that itis particularly suitable for problems related to Pearl River Delta’s integration).

To put Hill’s ideas in context, there is a need to note that EM is, in fact, atransformation of the term “Environmental Modernisation” (eM), which was coined byMichael Jacob of the Fabian Society (Jacob, 1999) and holds that a win-win approach isfeasible (Davoudi and Layard, 2001; Davoudi, 2001). eM (or EM) has, in fact, becomethe prevailing model for planning institutions in Europe (Batty, 2003, p. 76):

Ecological modernisation argues that economic growth is not the enemy of sustainabledevelopment; indeed economic growth is seen as necessary to achieve environmentalimprovements and sustainability.

EM has been referred to as “green capitalism” (Connelly and Smith, 1999, p. 58) andcriticised for supporting liberal market economies and existing government structuresand failing to resolve the fundamental problem of a society driven by “wants” ratherthan “needs” (Mottershead 2004c, p. 536). The means to attain win-win solutions,according to Hajer (1996, p. 249), is “technical and procedural innovations.”

While a “Hong Kong” model of sustainable development probably cannot beconclusively described, the theme it seeks could be most succinctly described by thelogo representing it, as adopted by the CSD. The logo is in the form of a circular ringconsisting of three segments labelled Economy, Environment, and Society (EES), witharrows pointing in a direction that, at best, capture more of a sense of relationshiprather than a sense of causality, and, at worst, reflect a lack of direction!

The logo might have had its origins in the SYSDEV 21 Final Report of 2000, inwhich sustainable development in Hong Kong entailed the following definition:

Sustainable development in Hong Kong balances social, economic and environmental needs,both for present and future generations, simultaneously achieving a vibrant economy, socialprogress and better environmental quality, locally, nationally and internationally, throughthe efforts of the community and the Government (SYSDEV 21 Final Report, para. 5.3.2)[13].

But apparently, the idea for the logo originated from the planner, as its three key wordsconstituted the “planner’s triangle” (Batty, 2003).

Broadly interpreted, the circular ring of EES with a directional arrow could be athree dimensional configuration with the arrow representing a progressive element oftime. That is to say, the aspiration to resolve the compatibility of EES in a regionshould be viewed as a continuous and trinitarian effort, with whoever or whichevercountry or region utilizing this model being required to do two things. First, a managerof sustainable development must pay attention to how the three areas of cooperationcan be pursued simultaneously. Second, the manager must also note that cooperation isto be repeated in different forms and in different projects over time[14].

Indeed, there may be different interpretations for the logo of SustainableDevelopment of Hong Kong that the CSD may hesitate to make explicit. However,an evasive political stand in this instance may generate false expectations in various

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directions that consume self-dissipating resources. At least three interpretations couldbe seen as plausible interpretative variations of the logo:

(1) that there should be a mechanistic balancing of the voices of the interest groupsrepresenting the environment, society, and economy;

(2) that there is a one-way circular flow of causation from one to the next in eitherdirection; or

(3) that the three components are going in different directions independently of anystatus quote starting point.

However, our proposed interpretation, as described in this paper, could arguably haveeconomic consequences more favourable than those of these three interpretations:

(1) Model (a), egalitarian pluralism in decision making as regards resource allocation,as one possible way to particularise Mottershead’s idea of “interconnectedness” or“integration of economic, social, and environmental considerations” (Mottershead2004c, p. 537), would not only lead to a fall in overall efficiency and the ability togenerate wealth, but in the limiting case, may lead to a rapid collapse in theenvironment (e.g. where the environment itself becomes a battleground).

(2) Model (b), a fatalist trap of lock in a cyclical succession of different emphasis interms of decisions made or outcome one at a time, which can be compared to theAristotelian cycle of “monarchy, democracy and tyranny” can only spiral down(rather than spiral up) in terms of the total level of satisfaction for all threecomponents;

(3) Model (c), a divorce of endeavours, is worse than (b) due to conflicts ofobjectives without any rule to resolve them. In other words, Model (c) isequivalent to no models at all, as any thing, say, idea, or entity, will be perceivedas consistent with the model as long as it mentions the magic words implied byE þ E þ S.

Indeed, sustainable development can be a journey, with the arrow denoting a circularspiral of projects created over time. The logo, therefore, must be seen as a twodimensional representation of something taking place over three dimensions. The threeelements of cooperation not only need to be practiced at the same time, but have to bedone better each time[15].

Although supportive of a developmental and human-centred approach andendorsing of the CSD idea of securing economic, social and environmental dimensions,the Hong Kong Declaration has many ambiguities and potential conflicts that need tobe resolved. The declaration urged for the implementation of actions “in a spirit ofpartnership” through “a participatory approach” (para. 6). The idea of partnershipsuggests the existence of win-win solutions. However, the idea of a participatoryapproach, “participatory processes,” (para.17) and “community involvement” (para. 20)may not always entail “a spirit of partnership.” The declaration also correctly pointedout that fighting corruption is a major link in governance (para. 8).

However, the idea of providing “favourable fiscal and financial incentives” (para.17)tends to produce an environment for arbitrary allocation of resources, and hence,opportunities for rent-seeking activities or “obstacles and constraints to progress”(para. 13). The most important issue is the lack of a clear model for organising various

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goals and objectives that pertain to the environment, economy, and society. As far aseconomic growth and job creation are concerned, the idea is “the adoption of advancedand appropriate technology” (para.15), but there is no reference to the possibility of aspontaneous emergence of innovations.

In order for the engine of sustainable development to get rolling, it may beimportant to emphasize a certain uniqueness and creativity of the system that isinherited from market economics. Such creativity is essential for tacklinglocation-specific sustainable development problems. As pointed out in the previoussection, sustainable development should not just be a set of old problems with newclothes. In order for the concept to be useful and significant, policies and programscoming out from sustainable development should increase total values in overlappinggenerations, benefiting both present and future generations.

There are reasons to believe this interpretation of the “Hong Kong” model ofsustainable development can increase values (rents) rather than dissipate values (rents):

. The sustainable development criteria are non-dictatorial, decentralized, andcompatible with market economics. The emphasis is contractarian rather thanlegislative or administrative.

. The essence of segment cooperation is to create a win-win situation rather thanan “integrated” rent seeking game, which will likely result in more values beingcreated.

. The requirement that it be progressive over time implies that programs andpolicies that are duplicative need to be avoided and innovations are to beencouraged.

. The requirement of satisfying only two aspects of the three segments ofcooperation implies a less stringent standard of making stepwise improvements,and thus makes entrepreneurial efforts more likely.

. The three segments of cooperation, if practiced simultaneously and improvedover time, can achieve most, if not all, the principles in the Rio Declarationwithout aiming at a specific principle in the Declaration.

Entrepreneurship has certainly been an emphasis evident in some of the literatureattached to the concept of sustainable development in Hong Kong. In the preface to aBEC publication titled Introducing the Hong Kong Business Guide to SustainableDevelopment, Sustainable Development Council Chair and then-Chief Secretary ofAdministration of the HKSAR, Donald Tsang, wrote:

Many entrepreneurs may feel uncertain about how to incorporate the important concept ofsustainability into their business operations in order to benefit their stakeholders, theirbusiness partners and their employees. . . (Business Environmental Council, 2004).

There is no question that much work remains to be done on implementing sustainabledevelopment as a general culture that also addresses business and social interests.A statement of intent is just the beginning. A model will help define the task. Ideally,Hong Kong would like to claim that all three aspects of cooperation (i.e. economic,environmental, and social) have been fulfilled equally well, and have made Hong Kongthe best in the world in this sense. Yet, it will be more modest, and perhaps morerealistic, to believe that certain aspects are being fulfilled better than others, and could

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hence be used as a showcase to the rest of the world, while other aspects can beimproved. Indeed, the model is so sufficiently general that even if all aspects arecurrently somewhat deficient, the model can still be used to evaluate that deficiency,and to re-express the will to improve the structure to a higher level in the next round ofthe circular journey of sustainable development.

In practice, the segment of cooperation that is more prominent for a region willlikely depend on the growth phase of the region. While there is currently no existingmethodology to evaluate such a functional relationship, all countries and regions of theworld are trying various ad hoc experiments to make them “better” places in which tolive. Yet, there will be a difference in the means various countries use to enact thiscooperation. It can be done by involuntary nationalization, explicit regulation, orexplicit law. They can also be furnished by voluntary contracting via a process ofconsultation and negotiation, with governments serving nothing more than asinformation platforms. The Hong Kong Sustainable Development model, broadlyinterpreted, has adopted the position that government should act as “an enabler for themarkets.” If so, market means of cooperative features are expected to evolve more thanthe regulatory types as futures unfold.

To be sure, this process will not come about easier than shooting rockets to themoon. Experiments, which include both policies and programs conducted at variousregional levels, can nevertheless be fitted into a general model, and with a will tocontinuously develop in the form of a spiral circular journey as asserted, globalexperience can be localized. There is a saying among practitioners in the area ofsustainable development: “Think Globally, but act Locally.” This type of thinking isconsistent with the spiral circular methodology where cumulative global experiencecan indeed be localized. Thus, the Hong Kong model of sustainable development, whiledeveloped for the primary purpose of serving local citizens, may also have the potentialto be developed into an international model. With respect to the Pearl River Deltaintegration objective recognized among policymakers and academics alike, as pointedout earlier, such a model of development might achieve a more pragmatic result.

Indeed, the Hong Kong model of sustainable development can be perceived asprescriptive rather than descriptive. Any region of the world with a market-basedsystem could embrace a similar basic principle. Entrepreneurial policies and programsmay be viewed as arising from a private-public cooperation that can be considered an“add-on” rather than a “displacement” for either a private or public function. It is onthis basis that the size of the pie can be expected to grow, not shrink. However, thistype of private-public cooperation requires ingenuities originating from the citizensand firms interested in the building of their community. To the extent that thisdirection of development is to be encouraged, human ingenuities require stimulus and,to some extent, coaching and education in order to put abstract wills into concreteprograms. Thus, the model is consistent with various educational and certificationprograms that are already ongoing in the region. It is also consistent with the generalconstitutional principle of “One Country Two Systems,” under which Hong Kong issupposed to operate.

The “Hong Kong” model as a Coasian model of sustainable developmentThe “Hong Kong” model of sustainable development is Coasian and may want to seekreference in terms of prior academic work done in this area. Elements of uniqueness

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and creativity are very much an important ingredient in any framework of sustainabledevelopment (Yu et al., 2000). Without these elements, it can be questioned whetherthere is indeed a role for the government to act in this arena, as private incentives in amarket environment would have provided for such sustainable programs already.Concepts of such development have been ongoing (Lai and Lorne, 2003a, b, 2006a, b).

A version of this concept is articulated as follows:. Negative externalities can be curtailed and even transformed into positive ones if

the parties involved are willing to experiment in a transformation of regularpractices and mindsets.

. The existence of entitlement or rights to natural resources is as important aprecondition for such an experimentation (Lai, 1993; Lai and Yu, 1995; Lai andLorne, 2003a, b, 2006a, b; Lai et al., 2005; Yu et al., 2000), as it is for thestructuring of a win-win contract (a set of reciprocal promises that are mutuallybeneficial) for the parties involved.

. The role of the state is to establish and protect resource entitlements andfacilitate voluntary negotiations among parties.

Central to the above idea is the Coasian notion that any externality can be captured as aresource (Coase, 1960). Moreover, it must be pointed out that there is always astochastic element involved in any externality as an opportunity to be explored bothtechnically and socially by engaging in Schumpeterian experiments (Yu et al., 2000) ofvarious sorts. Such experiments can only take place where the parties involved have animplicit awareness of cooperation and developing a “win-win” solution, rather than theneed to play a game of prisoner dilemma.

The model is surprisingly simple, and we can anticipate criticism from variousangles. Mathematical theorists of all persuasions would scoff at the use of the term“model” in describing the concept. We argue that mathematical modelling will not bepossible, at least not as a conscious choice, except that it would evolve stochastically asa positive spillover.

It is tempting to fit our concept in such a historical framework as that of the“macro-history” of historian Huang (1990, p. 265, 2004, p. 145). Huang’s idea is thathistory is the product of past efforts, and the present is the result of selfish and idealistbehaviour. It proceeds rationally in a teleological manner upward and outward, withprogress most efficiently driven by systems that are “mathematically manageable.”We hold that we do not need to fit the current proposed model into a historicalframework. Indeed, the very essence of sustainable development puts a very differentmeaning to the concept of time by going beyond the concept of mechanical time, andthus, history may not repeat itself!

Neoclassical economists may also question whether the concept itself is merely asemantic variation of the Coasian original proposition of bargaining. Yet, it can beshown by examples and case studies that the bargaining parameters envisioned in theCoasian framework of sustainable development are significantly different from that ofthe original Coasian framework of bargaining (Lai and Lorne, 2006a, b). Mathematically,while the original Coasian framework of bargaining focuses on seeking the optimalequilibria of fixed dimensions, the Coasian framework of sustainable developmentfocuses on seeking adding dimensions to a previously existing framework ofinteractions. That, we repeat, is the essence of a Schumpeterian experiment.

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The Coasian framework of sustainable development really requires lawmakers togo beyond a mindset of finding solutions to problems by increasing the quantity ofrules, and thus “assigning rights and liabilities” as such. Besides, a legal frameworkthat has tradable property rights could be an important option, but that is notnecessarily the right solution in any scenario. Therefore, we agree entirely withMottershead that sustainable development may require going beyond the issue ofproperty rights per se.

The application of the Hong Kong modelWe hold that there can be a large variation of situations in which a win-win model canbe applied to Hong Kong’s situation, not so much as a descriptive statement of whathas happened, but rather as a prescriptive statement or speculation on what could havehappened among Hong Kong’s development episodes. Aside from the few examplesthat were described in previous studies, ongoing research in the Faculty ofArchitecture at the University of Hong Kong entailed a development of infrastructuremore conducive to the operation of the market principle.

Take, for example, the redevelopment of old neighbourhoods that the HKSARGovernment is currently contemplating. The case-by-case nature of this problem iseasily recognizable, and there is perhaps no uniform answer for the general question ofchoosing between the redevelopment of neighbourhoods in the old urban core vs newdevelopment in the new territories. Yet, there have been works done in the Faculty ofArchitecture at HKU, and perhaps some works conducted by NGOs, that we think maycontribute to decisions being made on this question. All, in one form or another, havecontributed to a win-win policy, as described by the model discussed in this paper.

A Centre of Excellence for Sustainable Development with seed money wasestablished at the University of Hong Kong in the late 1990s, with the Department ofReal Estate and Construction of the Faculty of Architecture playing a pioneering role.Recently, “sustainable cities” has become one of the multi-disciplinary strategicresearch themes prioritised by the university. Member departments and centres, whichinclude the Centre of Urban Planning and Environmental Management in the Facultyof Architecture, have been promoting sustainable development in the use of marineand land resources since the early 1990s. The Department of Real Estate andConstruction, for instance, helped edit a special issue of the journal AquacultureEconomics and Management in 2002 (Hodgkiss and Lai, 2003) in collaboration withecologists. It also made a contribution to the Encyclopaedia of Life Support Systems ofUNESCO (2004), developed a masters degree course “sustainable development andproperty rights,” and established a building classification scheme (BHHI)[16], whichwas prompted by a safety and health crisis in 2003 due to the outbreak of SARS.

The BHHI classifies buildings into different grades (A, B, C, and U) based on anindividual building’s level of achievement in safeguarding its health andenvironmental hygiene. The reliance on observable data ensures a high level ofobjectivity. Admittedly, the inspection of a building (estimated at HK$20,000 perbuilding) can be costly, but the department has also designed a win-win-win solutionthat benefits third parties (by reducing health risks), and neither the government norproperty owners need to pay for the assessment directly.

To be sure, such an evaluation exercise has been conducted in a decentralizedmanner, although sometimes it has involved the input of multiple professional bodies.

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For example, the BEC attempted a Hong Kong Building Environmental AssessmentMethod (HK-BEAM) in 1997. HKU, as well as other tertiary institutions, also attempteda similar assessment of evaluating local public goods that may handle environmentaland architectural enhancements in various ways.

ConclusionLand use planning in Hong Kong under constitutional capitalism is a matter of“planning by contract” predicated on a leasehold land system (Lai 1996, 1997a, b, c,1998a, b, 2002, 2004, 2005) in which private development rights are allocated by sale.As both land leases and capitalism are protected by the Basic Law, any model ofsustainable development for Hong Kong has to embrace these features. A “Hong Kong”model of sustainable development can (and should) be articulated for the purpose ofraising citizen awareness and an overall appreciation of the concept of sustainabledevelopment, and also to reduce transaction costs in policy development andconsultation in light of these constitutional constraints. For a Pearl River Deltaintegration initiative, it is believed that the model so articulated has a better chance ofgaining consensus for across-the-border decision-making processes.

The model proposed by the authors is not so much a description of or prescriptionfor what sustainable development would or should look like. Rather, what we proposeis more about governance and institutional structure that would be conducive tosustainable development. This is an attempted approach to a highly contested subject,about which there are so many different viewpoints and conflicting values. What ismore, it is a developing subject that will benefit from continued rethinking andinnovations. By defining the model in terms of institutional structure rather than theend result, the proposed model should help resolve some present conflicts, as well ascater to future innovations. In this way, the model itself is “sustainable” even in themidst of conflicting viewpoints, values, and interests as well as changing parameters.In this way, the model may hopefully improve the quality of the current debate onsustainable development and help suggest a solution that is, in a way, “out of the box.”

The Schumpeterian dimension of the model puts emphasis on innovation and newideas, rather than on confrontational politics, to resolve conflicts, with the market codeof “win-win” as the guiding principle. While the authors have not assigned a “subject”to the verb “win,” in the proposed model, any subject has to be one who has someproperty rights or entitlements, and thus could become a party to contract ornegotiation. This is not a claim to truth, but an invitation to debate, which, if wellsubstantiated with good arguments and data, would certainly raise the standards ofintellectual discourse on (and hence means to) sustainable development.

Notes

1. See Mawhinney (2002) for some definitions of this “deep green tradition.” See Beckerman(1992, 1995, 2003) for a complete opposition approach, which denies that sustainabledevelopment is meaningless. We hold that neither position is tenable, but space does notpermit a dedicated theoretical discussion here. Suffice it to say, as to be demonstrated in thispaper, sustainable development can be incorporated into a Coasian economic “model”informed by Schumpeterian reasoning. This model can deal with both the need forconservation and economic and social development. See Yu et al. (2000) and Lai and Lorne(2003a, b, 2006a, b) for an economic characterisation of the idea of sustainable development.

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2. In Vancouver, Canada, for example, sustainable development charretes are run byarchitectural guru Patrick Condon. The city of Vancouver and the greater region ofVancouver retained such architectural consultants as the Sheltair Group to perform similartasks.

3. For definition, see Environmental Protection Agency (1991).

4. Those who studied and understood Irving Fisher’s Theory of Interest (Fisher, 1930) willreject the concept of sustainable development in the Brundtland sense altogether. However,Hirshleifer (1970) reviewed various schools of thought on interest rates and described thezero interest rate condition as a special case that occurs in the longest of long shots.

5. Sensitivities on this inherited constraint of the system can be found in various governmental,as well as non-governmental, discussions of the problems. The later endeavours, whichinclude discussions within academic circles, NGOs, casual conversations with citizens on thesubject, etc. will be further elaborated on in the next section.

6. Hong Kong traditionally operates pragmatically, and is not usually accustomed to such anabstract conceptual characterization of the problem. However, on some hotly debatedspecific policy issue, manifestations of this nature of the problem can be abundantly found.See Lai and Yeung (2004) and the related papers and positions articulated regarding theissue of preserving Victoria Harbour.

7. “The BCR (Bruntland) definition of sustainable development has, depending on the literaturereviewed, been the catalyst for somewhere between 200 and 500 other definitions around theworld” (Mottershead, 2004a, brackets added).

8. To some environmental activists who believe that the world is a zero-sum game, and that theresearch objective stated here should be laughed at, we only have to pose to them a simplearchitectural question: is it possible for a building to be constructed from the top floor?The question would have been equally laughed at as being anti-gravitational – that is, untila model has been built to show compatibility with the force of gravity.

9. According to a version prescribed by Ms. Loh, “Natural Capitalism” consists of the followingthree principles: (1) eliminating the concept of waste by re-designing the economy, wherebywaste is reduced or eliminated at the production stage; (2) shifting the structure of theeconomy from focusing on the processing of materials and the manufacture of things to thecreation of services, thereby discouraging the production of waste where no one isresponsible for it; and (3) reversing the destruction of the Earth with programmes forrestoration and investing in the Earth’s natural capital. The term may also be traced to abook by Hawkins et al. (1999).

10. Mottershead was apparently ignorant of the existence of doctoral theses on sustainabilitywritten on Hong Kong by Hong Kong students (Shulman and Shulman, 2001) or thepublications of her peers.

11. Christine Fang, Chief Executive of the HKCSS, is also a member of the Council of SustainableDevelopment of the HK Government. She spoke at the Seminar in 2001 on “The Role ofNGOs: Releasing Goodwill and Building Partnership for Action” – a position that isconsistent with the model described in this paper.

12. As opposed to “strong sustainability” (Daly, 1991; Rees, 1990, 1999), “weak sustainability”(Pearce et al., 1989; Pearce and Barbier, 2000) accepts the substitutability of resources.

13. This definition was heavily criticized by Mottershead (2004b, p. 103), who argued thatHong Kong should have adopted a definition achieved by the Brundtland Report. Note,however, the wording in the Digest of Meeting on April 1, 2003: the remark by the committeewas made under “Item 1 – Opening Remarks by the Chairman,” in which the wording of theparagraph was: “Having considered the need for a ‘tailor-made’ definition of ‘sustainabledevelopment’ for Hong Kong, members agreed to adopt initially the definition in the report of

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the World Commission on Development and Environment. A more pressing issue was howto promote and implement sustainable development in Hong Kong” (italics added).

14. Aside from the formal statement of SUSDEV 21, there are many examples in which thisinterpretation has been manifested. The BEC, in its printed guideline for businesses inHong Kong wanting to practice sustainable development, has emphasized the balance of thethree segments. Likewise, in various sustainable development related web sites, the implicitapproval of developing a win-win strategy between segments has been amply mentioned.For example, see A Symposium on “Creating a Win-win Situation for the Environment & theEconomy,” July 27, 2004, Sponsored by Ethics in Contemporary China in TransitionResearch Project, Governance in Asia Research Centre, The City University of Hong Kong.

15. Predictably, this interpretation of the meaning of sustainable development in Hong Kongwill be considered “inadequate” by environmental activists in the area. Indeed, activistsseemed to have a ravenous appetite (a la C. Loh) in that ALL existing sustainabledevelopment features in Hong Kong are rated as “INADEQUATE” (p. 137)!

16. Compared to the LEED green building certification process in the US, which is a governmentfunded project (managed by the US Green Building Council) that deals with the green designof private high rise buildings on a voluntary user-pay basis, BHHI is a university fundedprogramme that evaluates the health and hygiene of existing apartment buildings at nodirect cost to the community.

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Shulman, F.J. and Shulman, A.L. (2001), Doctoral Dissertations on Hong Kong 1900-1997: AnAnnotated Bibliography, Hong Kong University Press, Hong Kong.

The United Nations Department of Economic and Social Affairs (DESA) (1992), “Rio declarationon environment and development”, Report of the United Nations Conference onEnvironment and Development, June 3-14, available at: www.un.org/documents/ga/conf151/aconf15126-1annex1.htm

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Yu, B.T., Shaw, D., Fu, T.T. and Lai, L.W.C. (2000), “Property right approach to sustainabledevelopment”, Environmental Economics and Policy Studies, Vol. 3 No. 3, pp. 291-309.

Further reading

Ackoff, R.L. (1979), “The future of operation research is past”, Journal of the OperationalResearch Society, Vol. 30 No. 2, pp. 93-104.

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Barron, B. (2004), “An economics perspective on sustainability”, in Mottershead, T. (Ed.),Sustainable Development in Hong Kong, Hong Kong University Press, Hong Kong,pp. 175-98.

Davern, J.M. (1975), Architecture as a Home for Man: Essays for Architectural Record/LewisMumford, Architectural Record Book, New York, NY.

Lai, L.W.C., Lam, K.K.H., Lorne, F.T. and Wong, S.K. (2004), “Economics of gei wai shrimpculture in Hong Kong: from commercial aquaculture to bird production”, paper presentedat World Aquaculture Society Conference.

Layard, A., Davoudi, S. and Batty, S. (Eds) (2001), Planning for a Sustainable Future, Spon Press,London.

Mottershead, T. (2004), “International sustainable governance”, in Mottershead, T. (Ed.),Sustainable Development in Hong Kong, Chapter 4, Hong Kong University Press,Hong Kong, pp. 43-88.

Corresponding authorLawrence Wai Chung Lai can be contacted at: [email protected]

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