It is tempting to seek refuge in the words of former Supreme Court justice Potter Stewart, who, when asked to define pornography famously said, “I shall not today attempt to define it, but I know it when I see it.” In the case of sustainable development, a more modest claim might be, “I am not sure what it is, but I am quite sure what it is not.” Or we could attempt to browbeat anyone who persists in pressing for a definition by taunting, “If you are still asking for a definition, you are asking the wrong question.” Finally, when exasperation has become unbearable, perhaps we should blurt out the naked truth: “Sustainable development is what we want, stupid!”
The problem is that delving into the meaning of sustainable development opens several Pandora’s boxes. If wisdom comes from grappling with the imponderables that emerge, and if failure to tidy up the mess and refasten lids is not too discouraging, then this chapter might prove useful as it explores how we define our goals and how we measure progress toward achieving them.
The most famous definition of sustainable development is from the report of the United Nations World Commission on Environment and Development (WCED), better known as the Brundtland Commission, after its chair. According to the report, published under the title Our Common Future by Oxford University Press in 1987, “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” This definition has been criticized from every conceivable angle. It has been ridiculed as so vague that it says nothing. As the philosopher Luc Ferry quipped, “Who would like to be a proponent of an untenable development!” When reworded as sustainable growth and interpreted broadly to anticipate new technologies and permit full substitution of produced capital for natural capital, many environmentalists regard it as a license to continue to kill the planet, and some propose the goal of a steady state economy instead. When defined more strictly as requiring that stocks of different major categories of natural capital must not be permitted to decline, it is criticized by business leaders and economists as imposing unreasonable and unnecessary restrictions. But by beginning with a definition, we have started at the endpoint of efforts to take environmental issues into account when defining economic goals, so it will be helpful to return to the beginning.
Attempts to measure the value of economic activity in the aggregate only date back to 1934, when the U.S. Commerce Department began reporting statistics on what it called the net product of the national economy. The national income and product accounts were only systematized during World War II, when the government needed to know how much output was being produced for defense and what this left over for the rest of the economy. After the war, the U.S. government compared its statistical efforts with those of the British and Canadian governments, and the League of Nations convened an international conference on national income accounting as one of its last acts. We have been living ever since in a world where something called gross national product (GNP), or more recently gross domestic product (GDP), has been the principle number associated with national economies.1
Some people who despair of problems that inevitably arise when we try to measure something meaningful but complicated—such as how valuable our collective efforts during a year really were, or how much progress we made as a result—point out the advantages of keeping things simple. We could easily measure the dollar value of all recorded market exchanges during a year. But measuring the dollar value of recorded commercial activity would not be terribly meaningful for a number of reasons, which is why this is not where matters were left.
The first problem is called “double counting.” When an auto company buys a ton of steel in March and sells the car it used the steel to make in September, we will count the dollar value of the steel production twice if we sum the dollar value of all sales during the year. As long as we remember that we have simply measured the dollar value of all recorded commercial activity and exercise caution about attributing much importance to the result, there is no harm done. But many economists with higher expectations felt little would be accomplished by performing this exercise, and from the beginning procedures were adopted to eliminate double counting and to measure only the dollar value of all recorded market exchanges of final goods and services.
The next problem was that not only do relative prices change but also prices often rise on average. In order not to deceive ourselves that production is growing when only prices are rising, procedures were adopted to convert nominal, or current GDP (for current prices) into what is called real GDP. However, the word real should not be misconstrued as “material or physical.” Like current GDP, real GDP is a value, not a material category, and is measured in dollars. To control for price inflation, the prices from what is called a base year are chosen to evaluate output in a series of years. Because the choice of base year is inherently arbitrary and because relative prices differ from year to year, estimates of real GDP will differ somewhat depending on which base year is chosen. This means the process of converting current to real GDP is inherently imperfect. However, since this difficulty has nothing to do with the problems discussed below, we will assume henceforth that when we refer to GDP we are always talking about real GDP, and we will ignore the fact that methodology dictates that there will inevitably be a margin of error surrounding our estimates of its rate of growth.
The next problem was that not all goods sold during a calendar year were produced in the same calendar year. Since the goal of those creating the national income and product accounts was to measure something about the value of production during a year, procedures to correct for this problem were adopted as well. These procedures quickly made a third problem apparent. Some things that are produced are never exchanged in a market, which in turn creates two new problems. There may be no record that these goods or services were produced because there is no record of a market exchange, and there is no market-generated price to multiply them by in any case. From the beginning, attempts were made to correct for this problem, but only in some cases and not in other cases. For example, an estimate of the market value of food produced by farmers, but never sold because farmers consumed it themselves, was included in GDP. However, no attempt was made to estimate and include the value of housework performed by spouses, even though the same work performed by paid housekeepers was included in GDP. Illegal activity posed a similar problem. In this case, there was a market exchange and price, but it was not recorded, or at least the records were not accessible to government agents. Traditionally no adjustment is made for the production of illegal drugs, although presumably this leads to significant undermeasurement of GDP in countries like Bolivia (coca) and states like California (marijuana.)
Interestingly, a final correction that was made from the beginning reveals that there was always at least an implicit goal of trying to account for a certain kind of sustainability and distinguish progress from treading water. Part of what we produce each year simply replaces machines we wear out during the year. For example, if we produce a hundred drill presses but ten drill presses wear out through use, we are not a hundred drill presses better off at the end of the year than at the beginning: we are only ninety drill presses better off. In this case, no adjustment was made in how we calculate GDP. Instead, a second statistic called net domestic product (NDP) was created by subtracting from GDP an estimate of how much something called the “capital stock” had “depreciated” during the year. While the system of national income and product accounts has undergone several revisions, for the most part this is as far as modification of the dollar value of recorded commercial activity during a year has gone.
Ecological economists like Herman Daly have waged a thirty-year war to try to force the same treatment for natural capital as is used for produced capital when transforming GDP into NDP. Their argument is straightforward: If using up the stock of produced capital is not sustainable, then using up the stock of natural capital is also not sustainable. If net changes in the stock of produced capital are what merit inclusion in NDP, whether they are positive or negative, then net changes in the stock of natural capital merit inclusion in NDP as well. Just as we risk deceiving ourselves that we have progressed through our economic endeavors by more than we really have if we do not subtract depreciation of produced capital during a year, we risk deceiving ourselves how much we have progressed if we fail to subtract depreciation of natural capital as well. In other words, ecological economists argue that natural capital should be treated in the same way that produced capital has been traditionally treated. However, few agencies responsible for official estimates of NDP make this adjustment, although some, like the World Bank, have begrudgingly and belatedly conceded that they should attempt to take depreciation of natural capital into account.2
As soon as we admit that we are attempting to measure how much progress we made through our economic endeavors during a year, it becomes apparent that we should also account for the fact that when we produce economic goods and services we often produce as joint products economic bads, like pollution, as well. Of course, there usually is no market where the pollution sells for a negative price that we can use as a signal for how bad these joint products are. Nonetheless, ecological economists and environmentalists urge that we should do the best we can to estimate the damage from pollution and reduce NDP accordingly.
Finally, ecological economists also call for adjusting NDP for defensive expenditures. When the Exxon Valdez spilled oil off the coast of Alaska in March 1989, this was not a natural but an Exxon-made disaster. It was a joint product of transporting much of the oil consumed globally in large tankers that always pose a risk of a shipping accident. And when BP’s Deepwater Horizon underwater oil rig in the Gulf of Mexico blew up in April 2010, spilling roughly twenty times as many barrels of oil as spilled out of the Exxon Valdez, this was also not a natural disaster. It was a predictable consequence of permitting all the major oil companies to engage in deep-sea oil operations where the risk of an accident might be small, but is not insignificant, given the number of deep-sea rigs that are licensed and the difficulties of stopping a deep-sea leak when one occurs. Not only was no estimate of the noncommercial damaged caused by the Valdez spill subtracted from Alaskan GDP that year because we do not subtract for bads, but the defensive expenditures of paying people to wash otters, seals, and seabirds, and clean up beaches was added to Alaskan GDP, which ironically enjoyed quite a boom in 1989 as the result of the Valdez spill`! Similarly, statistics will record the defensive expenditures associated with the BP disaster in the gulf as a substantial increase in production for several coastal states and as an increase in U.S. GDP in 2010, thereby misleading us into thinking that the Great Recession slackened in 2010 more than it really did. Ecological economists argue that defensive expenditures against negative consequences of economic activities should be subtracted from NDP.
Obviously, these adjustments require estimating procedures that can become quite elaborate and also contestable—as a plethora of alternative measures devised by different organizations and think tanks to make these and other adjustments attests.3 Part of the attraction of GDP and NDP as traditionally calculated was that calculations were straightforward, appeared to be noncontroversial, and were difficult for governments to fudge. As soon as everyone agreed to the practical necessity of using market prices, this effectively eliminated the most difficult and potentially contentious problem in the exercise—determining the relative values of different goods and services produced. Making adjustments, no matter how compelling the case to do so, where market prices are not readily available makes the procedure appear much more subjective. I say “appear” because accepting market prices as accurate indicators of the relative values of different goods and services is itself a subjective value judgment and very questionable.
Even if we could measure NDP perfectly, the rate of increase, or growth, of NDP would hardly be synonymous with economic progress, much less social progress. Unless NDP grows as fast as the population grows, the average person is not progressing. This problem is easily corrected by dividing NDP by population, which gives us average or per capita NDP. But while changes in a perfectly measured per capita NDP may tell us something about how much progress we are making with regard to the efficacy of our economic endeavors, they tell us nothing about whether or not the distribution of the burdens and benefits of our economic activities is becoming more or less fair. The most common measure of income inequality is the GINI coefficient, where perfect equality yields a value of zero and perfect inequality (one person has all the income or wealth) yields a value of one. Unless we care nothing about income distribution and any inequities that inequalities imply, presumably we should look at changes in the GINI coefficient as well as changes in per capita NDP when assessing a country’s economic progress. However, neither per capita NDP nor the GINI coefficient tells us anything about how economic decisions in a country are made. Per capita NDP and the GINI coefficient tell us something only about economic outcomes, not about economic decision-making procedures. So presumably we should also look at whether economic decisions are being made more or less democratically when assessing a country’s economic progress. In short, even when we are concerned only with economic progress, there is more than one dimension along which we can progress or regress. The growth rate of a perfectly measured per capita NDP can measure progress only along one of those dimensions, what we might call the efficacy dimension, not whether or not we are making progress in improving economic justice and economic democracy.
But suppose per capita NDP is growing at an impressive rate, the GINI coefficient is falling fast enough to satisfy us we are making excellent progress in reducing economic injustice, and popular participation in economic decision-making is increasing dramatically as well. That is, suppose we are making more than acceptable economic progress on all dimensions. It is still possible that something is very wrong with how the economy is progressing. We might be running down our stock of produced capital to the point where there will soon be no machines for future generations to work with. We might be using up natural resources at a pace that will cause the economy to grind to a halt in only a few years. We might be releasing wastes into the environment at a pace that will collapse one or more major ecosystems.
It is true that if per capita NDP is measured accurately, the depreciation of produced and natural capital and the damage from emissions will have been subtracted and accounted for. But that does not mean that the rate of growth of NDP is environmentally sustainable. It does not mean that we have not seriously compromised the ability of future generations to meet their needs. There is a remaining goal to be dealt with before we can judge to what degree we are making economic progress on all dimensions worthy of consideration. We have still failed to account for sustainability, and in the process we have failed to account for intergenerational equity.
When we added economic justice to efficacy and economic democracy as an important economic goal to be considered when asking if we are making economic progress, we only took intragenerational equity into account. The GINI coefficient only sheds light on whether the benefits of our collective economic activities are being distributed equitably among those of us who are alive today. We did not consider intergenerational equity at all. But the main thrust of the Brundtland definition of sustainable development is to insist that the legitimate interests of future generations are not compromised. Sustainability is about intergenerational equity. For economists who operate with an empty-world mind-set, this reduces to how much of what we produce is consumed and how much is saved and invested. For environmentalists and ecological economists, it also has to do with whether or not the biosphere is damaged during the year.
Sir John Hicks (1939) addressed this important issue over seventy years ago when he argued that national income should be defined as what a nation could consume during a year without impoverishing itself. Since Hicks operated with an empty-world mind-set, this meant restricting consumption sufficiently so as to leave a stock of produced capital at the end of the year that was as valuable as the stock had been at the beginning of the year—in effect, not committing the intergenerational sin of eating the seed corn. However, once we recognize the importance of natural capital and the fact that it has become scarce, this must be accounted for as well, along with any other forms of capital Hicks may not have considered. And once we realize that the biosphere also provides valuable services as a sink, we must consider whether or not its ability to process wastes has been impaired.
It is now common to talk of natural capital, produced capital, human capital, and social capital. Whether all these kinds of capital can be kept logically distinct from one another and from technology and whether it is possible to aggregate separate capitals in meaningful and consistent ways is an intriguing Pandora’s box, but not one we need open for our purposes. The central idea is that capital is anything that permits people to work more productively than they otherwise might. A hoe allows me to grow more corn than I could grow if I did not have one. An inch of topsoil allows me to grow more com than if I did not have it. Knowing the optimal depth to plant my com seeds allows me to grow more com than if I was uneducated and planted them too deep. And if my neighbor and I are socially primed to plant our gardens together, and if by working together we can plant them faster, with me making the holes and him following me and placing the com seeds in each hole, than if each of us plants our own garden separately, this will allow us to grow our com with less work.4 The central idea of sustainability as intergenerational equity is that we must leave a stock of productive assets for those who follow that is collectively as valuable as the one we had to work with, where the value of what is commonly called the capital stock refers to the degree to which it can enhance productivity.5 This requirement is known as weak sustainability, and it is the definition of sustainability that mainstream economists are most comfortable with.
Environmentalists and ecological economists are very suspicious of interpreting the Brundtland definition of sustainable development as simply complying with the condition of weak sustainability. They point out that weak sustainability allows for substitution of produced capital to make up for deterioration of natural capital without limit. Since their major argument is that this substitution is actually not possible in important regards, one could respond that if something proves to be impossible that will take care of matters itself, without need to abandon the condition of weak sustainability. But critics argue that the condition of weak sustainability is problematic and dangerous because it suggests that something can be done when we already know it cannot. These critics propose additional constrains to protect against this danger. What is defined as strong sustainability requires also leaving future generations a stock of natural capital that is at least as valuable as that we enjoy, and what is often called environmental sustainability further requires that the physical stocks of major categories of natural resources and sinks must be maintained.
Obviously the critical issue is substitutability. Weak sustainability permits substituting any individual component of the capital stock for any other individual component as long as the value of the overall capital stock is maintained. Strong sustainability permits full substitution within the category of produced capital, and also within the category of natural capital, provided the overall value of the produced capital stock is maintained and the overall value of the natural capital stock is maintained. There is now a large literature debating how realistic it is to assume that produced capital can adequately substitute for different components of natural capital, where differences of opinion between technological optimists and pessimists plays a central role. Economists are long accustomed to assuming that everything is infinitely substitutable for everything else at the margin, albeit with diminishing effects, of course. Ecologists generally begin with the opposite assumption that key components of natural systems are irreplaceable. Since in many cases attempts to substitute produced capital for natural capital are irreversible, and since our understanding of ecosystem complexity is often imperfect, many environmentalists argue that the precautionary principle should be applied: Do not assume some part of natural capital can be adequately replaced by produced capital until it has been proven beyond any reasonable doubt to be the case.
It is important to note that both weak and strong definitions of sustainability are defined in terms of the value of capital stocks, whether it be the overall capital stock or the overall stock of produced capital and the overall stock of natural capital, whereas environmental sustainability is defined in terms of physical stocks of particular natural resources.6 We should recognize that measuring and comparing the value of different components of the overall capital stock quickly runs into methodological as well as practical problems. Ecological economists suggest a functional definition of capital as a stock that yields a flow of goods or services. While natural capital sometimes produces a flow of services without aid from any other inputs—as when a natural sink can store and decompose waste—more often natural capital yields a flow of services only in conjunction with other inputs, like labor, produced capital, and human capital. So perhaps a better way to think of capital is as something that enhances human productivity. In that case, when we attempt to quantify the value of any individual component of the capital stock—whether it be natural, produced, or human capital—we would attempt to estimate how much more productive people could be if they had this component available to them, where productivity is defined as increases in the value of what people can produce.
Finally, now that we are aware that exhaustion of sinks for our wastes may be a greater threat to sustainability than exhaustion of natural resources, we must also design ways to incorporate this fact into definitions of weak, strong, and environmental sustainability. Since economists had already addressed sustainability in the form of maintaining the stock of capital, it was relatively straightforward to point out that produced capital was not the only form of capital and to challenge whether traditional assumptions about the substitutability of one kind of capital for another carried over to natural capital. But exhaustion of natural sinks may be even more difficult to quantify and incorporate than exhaustion of natural capital. Can the negative consequences of exhausting a natural sink really be reduced to losses in productive capabilities of future generations?
Just as progress with regard to the efficacy of our economic endeavors should not be confused with overall economic progress—which includes progress along other economic dimensions like intra- and intergenerational equity and more democratic decision-making procedures—economic progress should not be confused with social progress. The common habit of treating the growth of per capita NDP as an indicator of overall social progress for lack of an alternative, quantitative measure of progress has recently spawned efforts to create quantitative measures of social progress that are more meaningful.
Nobel Prize-winning economist Amartya Sen worked for years as a consultant to the United Nations, helping construct a summary index that would capture the extent that basic opportunities were available to people. The Human Development Index (HDI) first appeared in 1990 in the UN’s Human Development Report, an alternative to the World Bank’s World Development Report. The HDI is a weighted average of GDP per capita adjusted for purchasing power, income inequality, life expectancy, literacy, and average years of education. It does little to adjust for environmentalist concerns. Related indices, such as the gender development index (GDI), which measures gender disparities, and the gender empowerment index (GEM), have also appeared in the Human Development Report since 1995. The genuine progress indicator (GPI), developed by Redefining Progress, attempts to adjust for depreciation of natural capital, environmental damage, and defensive expenditures and also includes income distribution, literacy, and access to higher education. How one measures success can make a great difference. For example, Sri Lanka, Vietnam, and Cuba rank much higher on the UN’s HDI index than they do according to per capita GDP, and Canada, whose per capita GDP ranks it below many other developed countries, has the highest HDI index in the world due to low income inequality and high literacy and longevity.
Judging human progress by the rate of growth of per capita GDP is clearly misleading, and all who speak out against this common practice are well justified. It is misleading because economic progress is only one component of human progress. Life expectancy, health, literacy, education, political and civil rights, and a host of other concerns are all relevant to whether or not humans are “progressing.” It is misleading because what truly matters is what economic wherewithal permits people to do, not the wherewithal itself. And it is misleading for all the reasons explained above why growth of per capita GDP is an inaccurate measure of economic efficacy, much less overall economic progress. Measuring human progress by the rate of growth of per capita GDP obscures lack of progress in many important noneconomic areas, as well as lack of progress in achieving economic justice and democracy and preventing further environmental degradation. All these problems go unnoticed when human development is equated with mismeasured economic growth.7
But there are two possible responses to this misleading practice: (1) we could design a more comprehensive and inclusive indicator of social progress, or (2) we could insist that economic progress should not be equated with human progress or with the rate of growth of per capita GDP and instead measure human and economic progress along a number of different dimensions. These two alternative responses share a great deal in common. Both must point out why the standard practice of conflating social progress with the rate of growth of per capita GDP is misleading. Both responses must identify and develop ways to measure all the important components of human progress, including ways to perfect our estimate of per capita NDP that adequately account for environmental degradation. And legitimate debate in both cases concerns (1) whether or not to include a particular dimension, and (2) how best to define and measure progress along any particular dimension. In any attempt to design a comprehensive indicator of social progress, debate over appropriate weights for the different dimensions in the index is inevitable. However, avoiding debate over appropriate weights by forswearing any attempt to construct an overall index of social progress is bought at the expense of multiple and potentially conflicting judgments about how well humans are progressing.8
While efforts to construct a worthy quantitative index of social progress to substitute for per capita GDP are still in early stages, all efforts to date are seriously flawed. Sen and his collaborators at the UN included measures of health, education, and income distribution along with economic growth in their HDI, but the HDI ignores environmental issues and economic democracy as well. Those working at Redefining Progress have gone to greater lengths to try to account for environmental degradation as well as income distribution in their GPI, but it ignores education, health, and economic democracy. However, both indices are misleading indicators of overall social progress because of omitted dimensions. Other indices, such as the gender disparity index, the gender empowerment measure, and the right-wing Hoover Institute’s economic freedom index, all focus on measuring a single dimension of social progress. In the case of single-dimension indices such as these, the question is whether the definition of the goal and/or the method of measurement are appropriate. For example, anyone who has looked carefully at how the Hoover economic freedom index is constructed should recognize it for what it is—an ideological rather than a scientific tool and a case study in deceptive labeling. But the general problem with single-dimension indices is that even if they define and measure one goal well, it is only one dimension of human progress. The problem with indices that claim to be comprehensive is that even if particular dimensions are defined and measured appropriately, omitted dimensions render them useless, and challenging the weights used is always a logical rebuttal.
Those who seek to broaden the concept of sustainability to include not only economic and environmental sustainability but also what is now called social sustainability are motivated by the same concerns that drove people like Sen to broaden attention from a narrow measure of economic progress to a more inclusive measure of overall social progress. In the case of social sustainability, the focus is on communities and social networks, and the potentially destructive effects that particular kinds of economic activities may have on them. Just as environmentalists pointed out that replacement of produced capital does not prevent unsustainable depletion of natural capital, others are now pointing out that conducting ourselves in ways that may be economically and environmentally sustainable still may not sufficiently protect valuable social and cultural institutions and may therefore be socially unsustainable.
The idea of social sustainability quickly raises a question that was of little concern to most people with regard to environmental sustainability: Is preserving the social status quo always desirable? Environmentalists generally assume that the status quo in nature is much to be preferred to alterations we inflict.9 However, progressives in particular are not generally inclined to give all our existing social institutions the same benefit of the doubt. Traditionally, progressives are about social progress, not social stability. This may well make conceptualizing social sustainability more complicated than conceptualizing environmental sustainability, where protecting the status quo provides an easy target to shoot for.
A workable definition for sustainable development? If this chapter was good for nothing else, it should have served as a clear warning: “Be careful what you ask for. You might get it!”
Sustainable means repeatable. However, humans in the modern age have not been content with survival, or repeating the same activities, with the same results, year after year. We now generally aspire to more. We hope to progress, and we hope to progress along many dimensions. I think the word sustainable can best be used as a warning about dangers we must avoid during our quest to progress if we do not wish to compromise the prospects of those who will follow us in ways that cannot be justified. For our behavior to be sustainable for our species, we must operate under constraints as we struggle to progress.
If the prospects of the next generation depended only on how much seed corn they had to work with on average, the traditional economic concept of maintaining the seed stock would be a sufficient condition for intergenerational equity. When “seed stock” became hoes, plows, and tractors as well as seeds, the notion that as long as the capital stock as a whole equipped our descendants with the means to be as productive as we were, intergenerational equity was observed. But when we came to our senses and realized that the world was filling fast—that is, that per capita stocks of different components of natural capital were already scarce and shrinking fast—sufficient conditions for intergenerational equity became both more complicated and more stringent. In truth, methodological problems associated with aggregation of different components of the capital stock, as well as practical questions of substitutability, became troublesome issues as soon as hoes were added to seed corn. But these problems became acute as soon as we realized that the prospects of the next generation depend on how much natural capital they will have to work with as well as how much produced capital we will have left them. And since the environment also provides a variety of vital sink services that do not neatly fit the metaphor of capital as enhancer of human productivity, the problem of defining how development—that is, human progress—could simultaneously be sustainable—that is, not compromise the ability of future generations to continue to develop—became even more problematic. So …
• WHEREAS the natural environment provides valuable services both as the source of resources and as sinks to process wastes,
• WHEREAS the regenerative capacity of different components of the natural environment and ecosystems contained therein are limited,
• WHEREAS ecosystems are complex, contain self-reinforcing feedback dynamics that can accelerate their decline, and often have thresholds that are difficult for us to pinpoint,
• WHEREAS passing important environmental thresholds can be irreversible,
• WHEREAS some social institutions are similar to natural ecosystems in displaying valuable characteristics and responding unpredictably to intervention,
• WE, the present generation, now understand that while striving to meet our economic needs fairly, democratically, and efficiently, we must not impair the ability of future generations to meet their needs and continue to progress.
• In particular, WE, the present generation, understand that intergenerational equity requires leaving future generations conditions at least as favorable as those we enjoy. These conditions include what have been commonly called produced capital, human capital, natural capital, ecosystem sink services, technical knowledge, and perhaps social capital as well.
• Since the degree to which different kinds of capital and sink services can or cannot be substituted for one another is uncertain and since some changes are irreversible, WE, the present generation, also understand that intergenerational equity requires us to apply the precautionary principle with regard to what is an adequate substitution for some favorable part of overall conditions that we allow to deteriorate. The burden of proof must lie with those among us who argue that a natural resource or sink service, or a valuable social institution that we permit to deteriorate on our watch, is fully and adequately substituted for by some other component of the inheritance we bequeath our heirs.
1. As we discover in Chapter 5, Simon Kuznets had nothing to do with what is commonly referred to as the environmental Kuznets curve. However, Kuznets did play a major role helping the Commerce Department design and organize the system of national income and product accounts, although he was always at pains to warn that GNP should not be taken as an indication of economic welfare. Note: GNP, which measures the value of production by businesses who are “nationals” of a country regardless of where the production is located, was replaced in the early 1990s by GDP, which measures the value of production that takes place within the territorial boundaries of a country.
2. Herman Daly served as chief environmental economist at the World Bank for years. Only after he resigned, largely in protest over the bank’s unwillingness to take depreciation of natural capital into account when evaluating projects for bank financing, did the World Bank relent on this point.
3. Alternative measures include the measure of economic welfare (MEW) (Nordhaus and Tobin 1972), the economic aspects of welfare (EAW) (Zoltas 1981), the index of sustainable economic welfare (ISEW) (Daly and Cobb 1989), and the GPI created by Redefining Progress in 1995 and available (along with an ecological footprint calculator) at www.myfootprint.org/en. The GPI differs from the others because it adjusts not only for environmental factors but also includes income distribution as well as some social categories.
4. Whether this is technology or social capital is just the kind of contentious issue we are sidestepping.
5. Costanza et al. (1997, 123) put it this way: “The main operational implication of Hicksian income is to keep capital intact. Our problem is that the category of capital we have endeavored to maintain intact is only human-created capital. The category ‘natural capital’ is left out, as is human capital.”
6. Presumably environmental sustainability permits substitution between individual components within each major category of natural capital, and presumably this judgment would have to be based on whether the value of the service provided by a category of natural capital was maintained.
7. For a recent summary of contributions from evolutionary, ecological, post-Keynesian, radical, and feminist economists attempting to broaden our understanding of development, see Greenwood and Holt (2010).
8. I am personally inclined toward the second approach for two reasons: (1) I do not believe debate over weights increases understanding of our progress or lack thereof; it merely diverts energy from where it could be more usefully applied—identifying important areas in which we need to progress and refining our ability to measure progress along each dimension; and (2) I fear a single index can serve as an excuse to justify deficiencies in some areas by overall gains according to the index, even though the advance in the overall index might have been possible to achieve without losses along some dimensions.
9. This has not always been the broad consensus. Nature our enemy, nature to be conquered, nature to be mastered and tamed were the consensus among nonindigenous, European cultures until very recently. And many people today look on bioengineering and other similar projects in a positive light as “nature improvements”—not to speak of all of us who plant and mow lawns and tend our flower gardens, even if we do not use chemical fertilizers or pesticides.