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

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  • Policy Sciences 25: 401-408, 1992. 9 1992 Kluwer Academic Publishers. Printed in the Netherlands.

    Book review essay

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

    DAVID B. BROOKS Director, Environment Program, International Development Research Centre. Box 8500, Ottawa, Ontario, Canada KI G 3H9

    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.

    Robert Goodland, Herman Daly, Salah E1 Serafy and Bernard von Droste, eds., Environmentally Sustainable Economic Development: Building on Bruntland. Paris: UNESCO, 1991. 100 pp.

    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.

    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.

    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.

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    Integrating environment and economy

    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.

    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.

    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).

    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

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    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).

    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.

    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.

    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).

    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).

    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

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    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.

    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.

    Sustainable development: Beyond integration

    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:

    - sustainable is different from sustained - development is different from growth.

    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.'

    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

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    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):

    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?

    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.

    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.

    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.

    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.

    Building on Brundtland and Beyond the Limits argue that the growth

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    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):

    First, all growth consumes resources and produces wastes, even Brundt- land's new type of growth .... Second, the size of the service sector relative to the production of goods has limits. Third, even many services are fairly throughput-intensive, such as tourism, universities and hospitals. Fourth, and highly significant, is that less throughput-intensive growth is 'highrtech', hence the places where there have to be more growth - tiny impoverished, developing-country economies - are less likely to be able to afford Brundt- land's new growth.

    In another essay, Trygve Haavelmo and Stein Hansen challenge directly the question of whether more growth can in fact alleviate poverty. In a world of limits, they argue, it becomes merely a more sophisticated form of the trickle- down theory of development. The assumptions required for the theory to operate are so strong as to preclude success: In his essay, Daly states that we have reached an historical turning point when the natural rather than human- made capital is the main limiting factor. A number of the essays, including those by Jan Tinbergen and Roefie Hueting, Brend von Droste and Peter Dogs6, and Robert Constanza argue that investment to protect natural capital is productive in the most traditional sense.

    This is radical stuff, apparently too radical for the World Bank. The essays originated in a series of Seminars at the World Bank, and, as one senior researcher told me at the time, it included so many Nobel Laureates that the Bank could not refuse to publish the book. But the Bank did refuse, and the book was published by UNESCO!

    Beyond the Limits is a mathematical demonstration of the forces described in BuiMing on Brundtland. While not essentially different in either conclu- sions or methods from the Meadows' earlier book, Limits to Growth (1972), this study is better documented and more careful in presenting the charts and graphs as scenarios, not predictions, that show the most likely general behavior of the world system assuming continuation of present policies on economic and population growth and of current rates of technological change.

    The most important development since its predecessor on limits to growth is the distinction in the new book between quantitative and structural changes. The former extend the limits so as to accommodate more economic growth and more people with less environmental disruption. The wider limits help, but the system still collapses, just somewhat later. In the view of Meadows, Meadows and Randers, only deliberate constraints on growth can work, and they depend upon structural change (pp. 191-192, emphasis in original):

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    In systems terms changing structure means changing the information links in a system: the content and timeliness of the data that actors in the system have to work with, and the goals, incentives, costs and feedbacks that moti- vate or constrain behavior.... In time a system with a new information structure can socially and physically transform itself. It can develop new institutions, new rules, new buildings, people trained for new functions. That transformation can be natural, evolutionary, and peaceful.

    If the more radical views are correct, and there is much to suggest they are, the economics-ecology-equity conflict among generations over time is pres- sing, but the conflict among nations at the present time is even more so. Two implications follow almost inevitably:

    One: If we are going to have sustainable development, we cannot have continued economic growth throughout the world. Two: Equity therefore requires that richer nations cut back on their economic growth, which means their production and consumption, in order to allow poorer nations to reach at least modest levels of develop- ment.

    Conclusions

    Beyond Interdependence, along with each of the other books, appeared after publication of Our Common Future but before the Earth Summit in Rio. It was a time to be optimistic, and each book is optimistic, if cautiously so. Cer- tainly the impact of the Brundtland Report has been enormous, perhaps not beyond the dreams of the members of the Commission, but certainly beyond their expectations. The impact of the Earth Summit has been much smaller, certainly well short of the dreams of those involved though perhaps within their expectations.

    If the Brundtland Report and the books reviewed in this essay show the potential, the Earth Summit shows the limits. What have been called the 'inner limits' of interests, institutions, and politics turn out to be far more important than the 'outer limits' of ecology and even economics. The next steps are going to be difficult, and books such as Beyond Interdependence are needed to indicate when, where and how to take such steps. There may even- tually be a 'Mark II framework convention for climate change, forestry and biodiversity' (p. 115-116), but along the way there will be many more national actions, bi- or tri-national agreements, and Montreal Protocols. In the words of MacNeill, Winsemius and Yakushiji (p. 117), ~ Grand Global Bargain could be the sum of 1,000 small bargains.' Even if, in my view and the views of Goodland et al. and Meadows et al., Beyond Interdependence is inadequate to get us onto a fully sustainable path, there is little if anything in its recom- mendations that would be inappropriate in our search for that path.

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    How can we go beyond integration of environment and economy? A number of authors have begun to make suggestions (e.g., Ekins, 1987; Brooks, 1991; Durning, 1992; Harrison, 1992). Certainly, one can agree with MacNeill, Winsemius and Yakushiji that we need not spend any more time defining 'sustainable development.' (By 1990, there were already some 40 definitions in the literature.) The definition provided by the Brundtland Report is good enough for working purposes. What is needed now is not more discussion about sustainable development but more experimentation with it. We must try different development strategies, and keep trying until the best fit is found for particular times, particular places and particular peoples. Some policies will get us closer; others will turn out to be inefficient, destruc- tive, or inequitable. But the experiments must continue until each community finds a set that works economically, ecologically and politically. In the words of Rabbi Tarphon, who lived nearly two millennia ago and contributed to the Talmud, 'It is not up to us to complete the task, but neither are we free to refrain from getting started on it.'

    References

    Berkes, Fikret (i989). Common Property Resources: Ecology and Community-Based Sustain- able Development. London: Belhaven Press.

    Brooks, David B. (1991). 'Four years later: An evaluation of our common future" The Human Economy Newletter 12: 4; reprinted as 'Sur les traces de Mme Brundtland' in Le Devoir, 3 and 4jnin 1992.

    Canada (1987). Report of the National Task Force on Environment and Economy. Downsview, Ontario: Canadian Council of Resource and Environmental Ministers.

    Commission on Developing Countries and Global Change (1992). For Earth's Sake. Ottawa: International Development Research Centre.

    Daly, Herman (1991). 'Institutions for a steady-state economy" in his Steady State Economics. Washington, DC: Island Press.

    Durning, Alan (1992). How Much is Enough? The Consumer Society and the Future of the Earth. New York: W. W. Norton & Company.

    Ekins, Paul (1987). The Living Economy: A New Economics in the Making. London: Routledge & Kegan Paul.

    Goodland, Robert, Herman Daly, Salah E1 Serafy and Bernard von Droste, eds. (1991). Envi- ronmentally Sustainable Economic Development: Building on Brundtland. Paris: UNESCO.

    Harrison, Paul (1992). The Third Revolution: Environment, Population and a Sustainable World. London: I. B. Tauris & Company in association with Pengui n Books Ltd. and The World Wide Fund for Nature.

    Meadows, Doneila H., Dennis L. Meadows, Jorgen Randers and W. W. Behrens (1972). The Limits to Growth. New York: Universe Books.

    Meadows, Donella H., Dennis L. Meadows and Jorgen Randers (1992). Beyond the Limits: Global Collapse or a Sustainable Future. London: Earthscan Publishers.

    World Commission on Environment and Development (1987). Our Common Future. Oxford: Oxford University Press.