Sustainability and Sustainable Development: are These Concepts a Help or a Hindrance to Economics?

Abstract

The paper provides an overview of concepts of sustainability and sustainable development relevant to economics, discusses ways in which these have altered processes of economic evaluation and considers whether they have been a help or hindrance to economics. At least on the surface, there appears to be widespread support for the desirability of achieving sustainable development. This is reflected in international fora and policy decisions as welt as within Australian, e.g., by the agreement of Australian governments in 1993 to a National Strategy for Ecologically Sustainable Development. Concern about sustainability has led to demands for new forms of social accounting, mainly demands to modify or supplement standard national income accounting by natural resource and environmental accounting. Furthermore, traditional methods of project evaluation and social choice have come under increased scrutiny. It has been suggested that traditional social cost-benefit analysis should be constrained by safe minimum standards and by restrictions to ensure maintenance of natural resource and environmental stocks. While a wide range of modern economic analysis has been influenced by such developments, neoclassical growth theories and their stemming new growth theories show no influence. Despite the optimism of the World Bank, it is still unclear whether continuing global economic growth (on scales which most countries would like to achieve) is compatible with improved environmental quality and a long-term reduction in economic scarcity. Sustainable development and desired levels of economic growth globally could be incompatible.