The challenge of sustainability: Is integrating environment and economy enough?

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<ul><li><p>Policy Sciences 25: 401-408, 1992. 9 1992 Kluwer Academic Publishers. Printed in the Netherlands. </p><p>Book review essay </p><p>The challenge of sustainability: Is integrating environment and economy enough? </p><p>DAVID B. BROOKS Director, Environment Program, International Development Research Centre. Box 8500, Ottawa, Ontario, Canada KI G 3H9 </p><p>Jim MacNeill, Pieter Winsemius and Taizo Yakushiji, Beyond Interdepend- ence: The Meshing of the World's Economy and the Earth's Ecology. New York: Oxford University Press, 1991. 159 pp. </p><p>Robert Goodland, Herman Daly, Salah E1 Serafy and Bernard von Droste, eds., Environmentally Sustainable Economic Development: Building on Bruntland. Paris: UNESCO, 1991. 100 pp. </p><p>Donella H. Meadows, Dennis L. Meadows, and Jorgen Randers, Beyond the Limits: Global Collapse or a Sustainable Future. London: Earthscan Pub- lishers, 1992. 300 pp. </p><p>Beyond Interdependence is in many ways a follow-up to Our Common Future (1987), the report of the World Commission on Environment and Develop- ment, better known as the Brundtland Commission. For one thing, the senior author, Jim MacNeill, was Secretary General to the Brundtland Commission. A note at the end of the book states that he was 'the principal architect and main author' of that report. Given the need for consensus among 24 commis- sioners, it is only reasonable to believe that MacNeill is able to say things here that could not be said in the published report. </p><p>Beyond Interdependence is a follow-up to the Brundtland Report in other ways as well - in its emphasis on equity; on the need to stay well within eco- logical limits; in its support for national actions and international agreements. However, it is most importantly a follow-up to Brundtland in its continued emphasis on the integration of environment and economy, which, I would argue, is something less than sustainable development. In all of these facts but particularly the last, Beyond Interdependence can usefully be compared with two other recent works: Goodland et al., eds., Buidling on Brundtland; and Meadows et al., Beyond the Limits. </p></li><li><p>402 </p><p>Integrating environment and economy </p><p>The need to integrate environment and economy follows directly from Brundtland's shift from economic activities affecting the environment (the externality model) to the environment affecting economic activities (the car- rying capacity model). Economists have known for a century that human activities could alter the environment. That literature is as old as studies of the British coal pits, and the theory was outlined by Pigou in the early years of this century. What economists and many others neglected to notice was that the environment sets limits on the economy, and that, as our activities con- tinued to degrade the environment, those limits were coming closer and closer. Of course, the canse-and-effect relationship is interactive, not uni- directional, but the shift in emphasis suggested by Brundtland demands new perspectives and new policies. </p><p>Beyond Interdependence is a solid introduction not just to the need, but also to the means, for integrating environmental and economic policy deci- sions. Although short, the book is not a primer, and goes well beyond earlier efforts such as Canada's National Task Force on Environment and Economy (1987). Readers will learn how and where physical flows interact with monetary flows, and why neither can be given absolute precedence as neo- classical economists, on the one hand, and deep ecologists, on the other, would have it. Tables and figures compiled by Ted Parson, a Canadian com- pleting a PhD in political science at Harvard, do much to enhance and rein- force the text. </p><p>The book is notable for stressing that, if environment and economy are not necessarily in conflict, neither are they always or everywhere complementary. The authors deserve credit in today's neo-conservative world for stating that government intervention is needed where ecological values are intangible or realizable only in the long term. Always balanced, however, the authors con- demn the many government interventions that work to deplete resources or degrade the environment and, in all too many cases, promote only the inter- ests of a small group. Such ill-advised interventions are by no means restricted to Amazonia! As they point out, the market is a powerful instrument, but it can drive development along sustainable or unsustainable paths: 'Whether it does one or the other is not a function of an "invisible hand" but of man- made policy' (p. 33). </p><p>The authors also offer sensible clues to progress. For example, they advise readers to keep an eye on government budgets as the surest indication of how environment is faring. And they provide some useful concepts. They refer to the 'shadow ecologies' of richer nations to reflect the impact of their con- sumpfion on the nations that produce the natural resources that those rich nations import. (One might add that the natural resource producing nations suffer the consequences of the manufactured products they export.) Finally, it is refreshing to read that some of these issues are not subject to better defini- tion through more research. As they say with reference to the question of how </p></li><li><p>403 </p><p>much ecological capital should be left for future generations, 'There is of course no definitive answer to this question and further research is not likely to provide one' (p. 46). </p><p>Beyond Interdependence does have some unexpected weaknesses. It con- tains appendices that would be more appropriate to a primer: a 'first genera- tion agenda' lists as indicative such broad issues as air pollution, water pollu- tion and chemicals; a parallel list on imperatives for sustainable development contains generalities of the nature of 'policies to reduce and enhance the resource base" It is also a bit disconcerting to see so many references to studies by McKinsey and Company, of which co-author Winsemius is a Director. </p><p>Of more importance is the unfortunately weak treatment of certain critical point where environment and economy meet in apparent conflict. For exam- ple, criteria for use of nonrenewable resources are vague. While not the place for a discussion of optimal rates of extraction, MacNeill, Winsemius and Yakushiji would have been well advised to cite the two criteria set out by Herman Daly (1991): (1) rates of use of nonrenewable resources should not exceed the rate at which sustainable renewable are developed; and (2) rates of emissions and disruption associated with extraction of nonrenewables should not exceed the assimilative capacity of the environment. </p><p>Similarly, the treatment of discounting in Beyond Interdependence only points to the adverse effects of high discount rates. This is a common com- plaint of environmentalists, but its repetition is of little help unless one finds a way to avoid the equally adverse effects of low discount rates, which have been used, among other thingsl to justify construction of many large dams with quite irreversible effects. Finally, Beyond Interdependence implies acceptance of the view that the way to avoid degradation of open access resources is to create a market. However, common property regimes can be both economically and environmentally sustainable, and, particularly in developing countries, preferable to the extension of markets (Berkes, 1989). </p><p>Despite these deficiencies, Beyond Interdependence responds very well to one of the two most important criticisms of the Brundtland Report: that the Report is not sufficiently explicit about policy. The criticism is partly fair and partly unfair. It is unfair because it ignores the nature of the Brundtland Com- mission, which was made up of politicians, not environmentalists; that is, by women and men familiar with the need for compromise and accommodation. Moreover, they produced a consensus document - and not just an East-West consensus, which is not so surprising these days, but also a much harder to achieve North-South consensus (cutting across rich nations and poor nations). </p><p>Nevertheless, it is fair to say that the absence of policy prescription in the Brundtland Report was a gap and it is that gap that Beyond Interdependence fills quite well. Certainly it provides much greater detail about the extent of our economic and ecological interdependence and, more specifically, about </p></li><li><p>404 </p><p>needed policies, programs and activities at all levels to recognize that inter- dependence. The book offers the further gain of dealing frankly with the fact that power structures are found throughout the world. It is all very true that governments are powerful, and anti-democratic ones unhappily so, and that neither have a very good environmental record. It is also very true that multi- national enterprises have tremendous power, and can go far toward deter- mining what consumers seem to demand in the marketplace. However, those structures are far from totally invincible. Beyond Interdependence points out that changes do occur, but that there exists no magic formula for overcoming the power, or even simply the inertia, of vested interests. </p><p>Beyond Interdependence is particularly notable in posing its national and international policy suggestions within a framework of equity - not so much intergenerational equity, which is presumed as a goal, but mainly international equity, the absence of which has probably done more to derail attempts at international agreement on environment than outright opposition. The book echoes the views in For Earth's Sake, a report by a Commission on Devel- oping Countries and Global Change (1992), that 'Southern thinking must be deafly integrated into the global agenda on envir0nment/development issues - an agenda that is now dominated by the North' (p. 13). (The main purpose of the Commission was to set out an agenda for research on social science dimensions of environment and development, something the members felt was both lagging behind research on natural science dimensions and most critically in need of Third World perspectives.) The Commission's emphasis on cultural integrity, indigenous knowledge, institutions and knowledge sys- tems fits well with the emphasis of MacNeill, Winsemius and Yakushiji on how physical flows of pollutants and financial flows of capital work to put most of the burden unfairly on the South. </p><p>Sustainable development: Beyond integration </p><p>The second major criticism of the Brundfland Report is that it simply gives us traditional economic growth in a sugar-coated pill. Just as with the criticism about lack of policy, this charge is partly fair and partly unfair. Brundtland cannot be faulted if people appropriate and even change its words. But words have specific meanings, and the Commission chose carefully: </p><p>- sustainable is different from sustained - development is different from growth. </p><p>Growth is a matter of quantity and monetary standard of living; development, of potential and quality of life. From this perspective, sustainable growth is an oxymoron but sustainable development is not. Our Common Future deals with this problem by presuming a shift in the goals of the economy from quantity to quality, and from 'wants' to 'needs.' </p><p>Unfortunately, the Brundtland Report did not go very far in clarifying how quality differs from quantity, nor how to distinguish needs from wants. And it </p></li><li><p>405 </p><p>did urge a three percent per capita annual increase in incomes. Beyond Inter- dependence seems to agree. It suggests that such growth will be required to satisfy the demands of developing countries and more people on earth, but expresses concern about the implications (p. 5): </p><p>Is there, in fact, any way to multiply economic activity a further five to ten times, without it undermining itself and compromising the future com- pletely? Can growth on these orders of magnitude be managed on a basis that is sustainable? </p><p>While the authors of Beyond Interdependence never answer their own ques- tions explicitly, the implicit answer appears to be 'yes.' And that is what I and the authors of the books noted above would question. More specifically, we would question whether the integration of economic and environmental poli- cies, as delineated by MacNeill, Winsemius and Yakushiji, will be sufficient to achieve sustainable development. More likely, we would suggest that integra- tion is a necessary but not sufficient condition for sustainable development. </p><p>Sustainable development means that the environment imposes very real contraints on the economic system - just as real for trees as for people, just as true for renewable resources as for nonrenewable. In technical terms, the issue is not the circular flow of income but the linear flow of natural resource services as limited by depletion/degradation (entropy) in terms of depleting sources and disposing of wastes. These limits can be offset in part by tech- nology, but never completely. They can also, and more importantly, be offset by greater efficiency and recycling, but again never completely. </p><p>Sustainable development poses an enormous challenge to management of the economy, and this is equally true for socialists as for capitalists and even for greens. To now, economics has focused on the best ways to allocate resources - how to make the most out of whatever is available. However, economics has singularly failed to find ways to define how much stuff there should be; it cannot define the optimum size for an economy. Still, today the largest possible economy is assumed to be the best economy. </p><p>But this is not true! In the absence of limitations on the physical volume of materials (i.e., natural resources) flowing through the system, the economy will run into problems of supply at one end, or disposal at the other (even putting to one side aesthetics, open space, etc.). Limitations on use of resources imply limitations on economic growth, or at a minimum on the physical components of economic growth, which in turn means that we have to cut back on many dimensions of consumption. Beyond Interdependence argues for limitations on population growth, but only for efficiency in eco- nomic growth. Sustainable development depends on limitations on both the size of the population and the scale of the economy (as well as efficiency in the use and equity in the distribution of resources). In other words, sustain- able development is less a microeconomic than a macroeconomic concept. </p><p>Building on Brundtland and Beyond the Limits argue that the growth </p></li><li><p>406 </p><p>proposed in Our Common Future - and implicitly endorsed in Beyond Inter- dependence - is simply not possible, and likely compromises not just eco- logical stability but international equity as well. The prescriptions of Brundt- land, endorsed and extended by MacNeill, Winsemius and Yakushiji, are important but ultimately insufficient. As stated by Goodland in his essay in Building on Brundtland (p. 24): </p><p>First, all growth consumes resources and produces wastes, even Brundt- land'...</p></li></ul>

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