MPA Program ATPS
Spring 2010
Dzieza/Geri/Gould
How do YOU define
“sustainability?”
Defined, explored…
“We do not inherit the earth from our
ancestors. We borrow it from our
children.”
Haida Proverb
Sustainable development “meets the needs
of the present without compromising the
ability of future generations to meet their
own needs.”
- 1987, World Commission on Environment and
Development (a.k.a the Brundtland Commission)
Another try….
“using, developing and protecting resources
in a manner that enables people to meet
current needs and provides that future
generations can also meet future needs,
from the joint perspective of
environmental, economic and community
objectives.”
- “The People of the State of Oregon”
Chapter 918 of Oregon Laws 2001
Other definitions….
 Newton, Business Ethics …. “…seven generations away, a path
chosen still seems to be the correct one.” (p. 81); “the ability to
continue a profitable practice indefinitely without having an
environmental limit suddenly appear to end it.” (p. 144)
 UNESCO: “Every generation should leave water, air and soil
resources as pure and unpolluted as when it came on earth.”
 “Every generation should leave undiminished all the species
of animals it found existing on earth.”
 Robert Solow (and others): “Preserving the capacity of
future generations to be at least as well off as this generation.”
Why the concern?
 Unsustainable environmental and social trends:
HIPPO
 Habitat destruction
 Invasive species
 Pollution
 Population. More people means more of the other
HIPPO effects.
 Over harvesting
Per capita CO2 emissions, by country
and population
“Waste” is extensive
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3% of the Btu value of coal becomes usable light
5% of a palm oil plant gets used to make detergent
8% of the sugars in barley are fermented to make beer
0.2% of the coffee plant becomes coffee we drink
~60% of the materials used become waste before they
enter the economy
 Civilization relies on energy: 200 mboe per day; energy
systems (oil, natural gas, coal, nuclear) are vast, unequal,
unstable
 Since we started using fossil fuels, we have released 400
billion tons of carbon into the biosphere
But….
 How can anyone be against “sustainability”?
 In order to make sense of the concept, we need to
understand our implicit and explicit assumptions
 How might we as humans value the natural world?
 How might we define values inherent in nature?
 Where does economics fit in?
 What are the implications for environmental policy?
Policy/Value continuum for
Earth’s resources
 Unlimited Exploitation – monetary values, profit
 Wise use – we also value externalities, costs and
benefits borne by and generated for others
 Conservation – value in non-market uses, e.g.,
recreation
 Preservation – value in keeping things natural, nonuse…..may want wilderness even if you don’t use it
To what extent do we value Nature?
 Assigning rights to animals – animals have rights
independent of human values
 Assigning rights to ecosystems – whole ecosystems
have rights
 Community holism – humans as just another part of
the ecosystem, mutuality between humans and other
ecosystem elements
 Deep ecology – living by natural laws, reduce
populations. Humans as an uncontrollable cancer on
the planet
What??!!
 Some of these preferences leave humans out of the
equation
 Is there a “best” preference?
 Do policy analysts/entrepreneurs make these
preferences explicit?
Should “man” have….
 “…dominion over all the earth.”? (Genesis 1)
 The “anthropocentric” philosophical tradition can be
traced back to the Bible and beyond….through Francis
Bacon, J.S. Mill, Jeremy Bentham, Adam Smith to
economist Julian Simon and many others
 It’s our duty to develop the earth
 Value of nature and its products is based on their
usefulness to humans
The Nature-first ethic
 …also has a distinguished if less well known pedigree
 English regulated polluting industry
 Thoreau; John Muir
 US and creation of national parks
 Aldo Leopold; Rachel Carson
 James Lovelock’s Gaia Hypothesis
Policy analysis for environmental
decisions
 Clarity about likely policy outputs and outcomes
 Assessments based on scientific evidence
 Estimates of costs and benefits
 Likely implementation problems
 Economic analysis
 Intergenerational analysis
 Explicit discussion/analysis of values is often omitted
What values do we emphasize?
 US tends to be pragmatic: we assess ideas, hypotheses
based on what we believe will be their practical
consequences
 We are also a relatively instrumental society.
Something has instrumental value if and only if it has
value as a means to promote some ends.
 We value ends (goals) and means (ways to attain those
goals)
 The “grand narrative” of US public administration… to
create efficient and effective government….is firmly in
this tradition
What has intrinsic value for us?
 Something has intrinsic value (or non-instrumental
value) if and only if it has value regardless of whether
it is also useful as a means to promote other ends.
 We have a difficult time identifying what we value
intrinsically
 Do we value “nature” or “conservation” (ecosystems,
butterflies, my cat) in their own right, or because they
bring us identifiable and measurable benefits?
 Most arguments for environmental protection are
based on instrumental values.
Economics: Solow’s analysis
 Complex environmental issues have a long time frame
 What obligations do we have to future generations?
Distributional equity—between current/future
humans
 But: we know little about the technology that will be
available 100 years from now
 We will create a built environment with plant,
equipment, technological knowledge
 Resources are fungible to a large extent
 Can’t rely on “the market” as future generations aren’t
involved in current market transactions
Discount rates and time horizons
 Costs of a policy/project are usually incurred immediately
 But we have a clear time preference….as consumers we are
impatient and prefer immediate over postponed
consumption.
 We won’t trade $1 now for only $1 a year or more from
now—but want to be compensated for deferred
consumption. A dollar of cost/benefit generated in the
future is worth less
 As a result, streams of benefits and costs in the future are
usually discounted
 Real interest rates (adjusted for inflation) are historically
between 3-5%
Discount rates and present values
 A low discount rate reflects society’s concern for the
future, since future benefits will have a higher value
 Higher discount rates minimize future benefits and
suggest that current projects/expenditures foregone
(often private ones) have a higher value
 At a 5% discount rate, $1 to be received 25 years from
now is worth only 29 cents
 At a 1% discount rate, $1 to be received 25 years from
now is worth 77 cents
Present value of $1000
Years from Now 5 % disc. rate
3% disc. rate
1% disc. rate
5 $ 783.53
$ 862.61
$ 951.47
10 $ 613.91
$ 744.09
$ 905.29
20 $ 376.89
$ 553.68
$ 819.54
50 $ 87.20
$ 228.11
$ 608.04
100 $
7.60
$ 52.03
$ 369.71
210 $
0.04
$
$ 123.74
2.01
From an economist’s perspective…
 Thinking about sustainability means considering how
to value current consumption vs. saving for the future
 We can conserve renewable resources, using a
disciplined approach, for trees, soil, other biotic
resources…
 A sustained yield of these is possible, with strong
governance, ownership
 More difficult with “common pool” resources such as
ocean fish
 But how about non-renewable resources?
Solow’s critique
 “….when we use up something that is irreplaceable…. then
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we should be thinking about providing something of equal
value.” (Solow, 1991, p. 184)
Oil, natural gas, etc., should be invested, not consumed.
They can be converted into forms that provide benefits
over an extended period
These forms include built capital, knowledge, technology
Avoid consuming irreplaceable natural capital (e.g., oil)
that provides no future benefits
A process of substituting natural capital with built capital
and knowledge
His comparison
 UK: Consumed North Sea oil
 Norway: Invested its proceeds from North Sea oil
And a moral dilemma…
 Inequality is common, within and between countries
 The poor want current consumption, not investment
 Can we justify telling those now not consuming that
we need to deprive them to protect future generations?
 Are current high consumers willing to decrease their
consumption?
Solow’s definitions
 Weak Sustainability – preserving options for future
generations….
 “sustainability…is the obligation to preserve the
capacity to be well off…as well off as we.”
 Strong Sustainability– leaving resources undiminished
 Solow is skeptical that strong sustainability is either
possible or desirable
 But… Some functions of the environment cannot be
duplicated by humans, e.g., ozone layer, The Amazon
An Example
 Discounting and climate change: How do we compare
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present-day gains and losses with gains and losses a
hundred years in the future?
A very high carbon price will drastically cut global output,
imposing an immediate cost
Stern Report: rejects the idea of discounting future costs
and benefits when they are compared with present costs
and benefits.
Discounting is unethical in this case because it
discriminates between present and future generations. It
imposes excessive burdens on future generations.
Immediate action is needed now to prevent catastrophe
Consequences….
 Assuming current technology, China, India, remainder
of the high growth developing would sacrifice
substantial growth and improvement in living
conditions
 New growth paths would need to be created for low
consumption societies
Nordhaus’ rejoinder:
 Discounting is necessary in order to find a reasonable
balance between present and future.
 Discounting is fair because a dollar generated through
economic growth, and saved by the present generation
becomes fifty-four dollars to be spent by our
descendants a hundred years later.
 Policy options: mitigation and adaptation.
 Having more wealth in the future will make adaptation
more affordable. How much costly mitigation is
essential now, given our lack of understanding of
natural systems?
What Types Of Solutions?
 Government Fiat/Regulation
 Market-based solutions
 Policy criteria: speed of implementation, extent of
compliance, overall effectiveness, incentives for
innovation and resilience, transition costs
 Example:
 Burn No More Coal—by government edict
 Vs.
 A High Carbon Tax
Regulatory vs. Market Solutions
 Problems with regulation
 Relatively static; world is dynamic
 We have difficulty anticipating all possible outcomes
of a policy, pro or con, so gaps in regulatory coverage
are almost inevitable
 …unintended consequences occur
 It’s very difficult to estimate costs and benefits of a
proposed policy ex ante
 Costs and benefits are allocated politically
Problem with markets
 They tend to favor those with resources
 May be subject to overshooting,
 Can be gamed
 Often don’t work when monopoly power….
 Externalities…
 Public goods….
 Common property resources (oceans, air) are at issue
 Long-term consequences are usually not considered.
Framework for Considering
Environmental Policy Proposals
 Values: Anthropocentric vs. Nature-centric
 Discount rate: Low vs. High
 Sustainability: Weak vs. Strong
 Preferred solution type: Regulatory vs. Market
 Allocation choice: Immediate consumption vs.
Investment
 Impacts on Inequality: Reduce current inequality or
mitigate future environmental harm by limiting
growth and ignoring inequality
How do we change our thinking, our
systems?
 Individual change
 Systemic change: scale and scope of change required
are daunting
 May inspire paralysis and inaction
New Thinking Is Needed..
 From
 To
 short-term thinking
 long-term thinking
 an economy outside of
 an economy
nature
 a linear flow of
resources
 fossil fuels
 scarcity emphasis
integrated with nature
 a systems flow of
resources
 solar-derived energy
 abundance emphasis
What Can We Do?
 Believe that change is possible
 Encourage higher density urban living
 Mass transit
 Apartments/condos, not houses
 Jobs near population centers
 Transition in our energy economy: end subsidies
 Economy/society move to a greater emphasis on
services, social interaction, less on material
consumption
What Can I Do?
 Save more; consume less
 Ride the bus
 Eat food grown locally
 Minimize plane travel
 Compact florescent lights, green power
 Insulate your house and keep heat low
 Recycle and use recycled products.
 Lobby for change
Workshop
 Form small groups.
 Pick an organization with which you work or
volunteer.
 Identify a sustainability challenge faced by that
organization.
 How can the organization mobilize to meet that
challenge?
Sources
 Bruner, Bill. Winter 08 lecture notes on sustainability
 Newton, Lisa (2005). Business Ethics and the Natural
Environment. New York: Wiley-Blackwell.
 Nordhaus, William (2008). A Question of Balance:
Weighing the Options on Global Warming Policies. New
Haven: Yale University
 Solow, Robert M. (2000). "Sustainability: An Economist's
Perspective." Lecture to the Marine Policy Center, Woods
Hole Oceanographic Institution, Woods Hole, MA, June 14,
1991. In Stavins, Robert, Ed. Economics of the Environment:
Selected Readings. 4th ed. New York, NY: W. W. Norton.
 Stern, Nicholas (2007). The Economics of Climate Change:
The Stern Review. Cambridge: Cambridge Univ. Press.