An Institutional Economics Framework to Explore Sustainable Production and Consumption

Abstract

Although policy actions are being taken by many governments around the world on sustainable development, the application of institutional economics to sustainable development is still in its infancy. In the literature, there are a wide range of institutional economics frameworks deployed to explore aspects of sustainable development, but the majority focus on common pool resources or social ecological systems, often with a high focus on extractive parts of the economy, not consumption and upstream provision choices that drive the extraction. The current paper presents an institutional economics framework to address sustainable production and consumption. The research draws on literature, experiential knowledge and theory to construct the framework. The resulting framework leads to an institutional economics understanding of embeddedness for exploring sustainable production and consumption; an extended and wider conceptualisation of value and resources in the light of sustainable production and consumption; An exploration of governance structures (markets and organisations) as value and values articulating institutions in the light of sustainable production and consumption. Less work is conducted at the level of institutional environment, but by exploring literature examples of changes advocated at this level by scholars, it becomes apparent that changes beyond property rights can be used to bring forth sustainable production and consumption. The paper concludes by setting out that an institutional economics approach to sustainable consumption and production entails a ‘cultural shift’ towards more sustainable consumption; innovation in governance structures (for both markets and firms) towards sustainable production (and consumption); alongside changes in the institutional environment (including law) to create a selection environment where sustainable production and consumption can flourish.