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Sense and Sustainability: Back from the Abyss

Sense and Sustainability: Back from the Abyss. Lee Endress and James Roumasset (w/ Kimberly Burnett) April 27, 2006. “Sustainable development”. Development that meets the needs of the present without compromising the ability of future generations to meet their own needs

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Sense and Sustainability: Back from the Abyss

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  1. Sense and Sustainability:Back from the Abyss Lee Endress and James Roumasset (w/ Kimberly Burnett) April 27, 2006

  2. “Sustainable development” • Development that meets the needs of the present without compromising the ability of future generations to meet their own needs (Brundtland Commission 1987) • If we do not nurture our people and our planet through sustainable development, we will deepen conflict and waste the very wonders that make our efforts worth doing (President Clinton 1993) • The less you know about it, the better it sounds (Robert Solow, 1993)

  3. Brundtland Vicious Circle

  4. NGOs and the Politicization of Sustainability

  5. The Chancellor’s Sustainability Stool Source: Tiles, “What is Distinctive about Sustainability Studies”

  6. Having the Right Sensibilities • Jack Johnson (double click to play) • Sensibility (def.) • Refined awareness and appreciation in matters of feeling. • The quality of being affected by changes in the environment. • “Unsustainable” as euphemism for Evil: SUV’s, greenhouse gases, eating beef, not recycling, income inequality, gender inequity, war, capitalism* *Underminescivil discourse based on the disciplined use of evidence and reason

  7. How art thou unsustainable? Let me count the ways • Unsustainable resource management • Unsustainable growth • Unsustainable development projects • Unsustainable consumption

  8. Unsustainable Resource Management F(X) MSY 1) Ignores harvest costs (too low) 2) Ignores transformation opportunities (too high) Even finding optimal steady state stock does not identify optimal approach path. MSY USY Sustainable LSY X

  9. Towards a Washington Consensus Unsustainable Growth • Growing GDP by excess depletion of natural • capital (Indonesia example, 4½ %) Unsustainable Development Projects • Brazilian ranches (lose-lose)

  10. Unsustainable Consumption • Strong sustainability (category mistake): • Weak sustainability: the sustainability criterion (Arrow, Daly, Erlich et al., 2004)

  11. Beyond What Not to Do: Towards a Positive Theory (Prior Attempts) • Hartwick Rule • Maximin • Opsustimal • World Bank (Alfred E. Newman/Bobby McFerrin approach)

  12. Weitzman/World Bank Utilitarianism Don’t worry. Technology will save the day! C(t) = 0 C* t T

  13. What, Me Worry?

  14. Hartwick Rule The Economy Result: Sustainability is feasible Hotelling extraction Investment rule

  15. Ex Post Marketing Ploy: Maximin C(t) t • Critiques: • Feasible only under stringent conditions • Holds economies hostage to initial conditions • Planner is infinitely averse to intergenerational inequality

  16. Sustainable Growth is Opsustimal Growth Maximize with • Excessive and arbitrary literalism • Misplaced constraintism; paucity of imagination • Can lead to ranking an empty set of consumption paths C(t) C* t

  17. Pure time preference • A positive utility discount rate is "ethically indefensible" and reveals "a weakness of the imagination." (Ramsey,1928) • “Implies … our telescopic faculty is defective.” (Pigou 1932) • “Pure time preference is a polite expression for the conquest of reason by passion.” (Harrod 1948) • Impartial Spectator (in solemn conclaves assembled): “We ought to act as if the social rate of time preference were zero.” (Rawls eschewed maxi-min with infinite horizon.) (Solow 1974) • “an ethical preference for neutrality as between the welfare of different generations” (Koopmans, 1965)

  18. Start Over • Essence of sustainability dialogue is a (normative) concern for intergenerational equity (Solow/Sen). A natural interpretation of int. equity is int. neutrality. • "Sustainable" is a property (Sen). It may or may not be a property of an optimal and intergenerationally equitable path.

  19. Positive Sustainability Material Consumption Genuine Savings Win-win efficiency Rent-seeking Environmental sensibilities Environmental Amenities

  20. Problem Statement ala Koopmans

  21. Extraction Cost Locus

  22. Maximum Sustainable Consumption ala Solow In steady state, =>

  23. Efficiency Conditions Application of the maximum principle to this optimal control problem yields the following two efficiency conditions:

  24. Golden Rule vs. Maximin C(t) C* t is redundant if sustained C feasible; otherwise constraint impossible is Rawlsian inferior (i.e. from original position)

  25. Planner’s Aversion to Intergenerational Inequality Higher inequality aversion implies slower growth

  26. Optimal Consumption Paths with Increasing Inequality Aversion

  27. Green Net National Product as a Welfare Approximation A linear approximation of U is:

  28. Next Steps • Overlapping generations • Stability analysis/multiple equilibria • Endogenous population growth • Endogenous technological change

  29. Economists Need Help! • Ecological linkages • Measurement! • Nonlinear dynamics

  30. Yin and Yang of Sustainable Development

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