Module 5: Sustainability

1. Module 5: Sustainability definition, the three pillars of sustainability, human capital natural capital man-made capital Measure of SD weak or strong sustainability, the relation with capital and interest rate = non renewable and renewable

2. definition How would you define sustainable development? Many different definitions or different views Bruntland report definition: dvpm that meets the needs of present generations without compromising the ability of future generations to meet their own needs” (Our common future, 1987) Formulation: improving the sum of total capital What is capital?

3. the three pillars of sustainability, Capital is what constitute the base of sustainability. We have human capital, natural capital and man-made capital Agreement is reached that the sum should not decrease, but disagreement exists on the specific role of natural capital.... ....can man-made capital be a substitute of natural capital? Or rather they are complements? Weak sustainability view versus strong sustainability view. Critical natural capital cannot be substituted (at least everybody agrees on it).....but on the base of what we define the critical capital?

4. Measure of SD How to measure it.....(the concept of measurement is already implying commensurability) human capital: measured by instruction and education received (Pearce, Blueprint) natural capital: measured in money terms (Pearce, Bluprint; Costanza et al.in “Science”) man-made capital: measured in moeny terms (Pearce, Blueprint) As a result we consider the value of capital over time and its change and we have:Genuine Savings = Savings – Km depr – Kn depr – Kh net change Result: some developing countries have been considered less sustainable than some western countries. For example Japan has high level of GS because Savings are high and there is no more nature left. When incorporating trade, this measure is slightly corrected Comment: very partial measurement.

5. weak or strong sustainability, strong or weak comparability of values “Weak sustainability” preception only focuses on the sum as a whole “Strong sustainability” also focuses on the 1) non-decreasing of natural capital and 2) the weak comparability of values The arguments reduce to two points: 1)  motorway +  forest = sustainable: man-made capital can substitute for natural capital  motorway +  forest = unsustainable: man-made capital is complementar to natural capital 2) Man-made capital is measured in money value but natural capital cannot be measured in money value. Strong comparability is not accepted Why? Reduccionism: not acceptance of the measurement methodology Critical value of natural capital: without the Ozone layer life on earth would not be possible Monocriterion: life is defenately something more complex than money, and the compensation of externalities. In synthesis, complementarity (1) implies weak comparability (different capital are incommensurable between them) (2) and multicriteria valuation is proposed as the way to operationalize sustainability

6. the relation with capital and interest rate = non renewable and renewable If we accept that natural capital cannot be substituted by man-made capital (because incommensurable), then any depletion of natural capital can be seen, as a metaphore with business, as bad business. “differently from real wealth, subject to the laws of thermodynamics, debt in money (that is financial wealth or, as Soddy called it, “virtual wealth”, does not dacay entropically with the time but, as the opposite, it grows according to the law of compound interest. Frederick Soddy, nobel prize winner for chemistry and ecological economist. Cartesian Economics, 1922