What is Sustainability Is there a need to intervene to protect the environment, to reduce social cost and Vulnerability

1. What is Sustainability ? Is there a need to intervene to protect the environment, to reduce social cost and Vulnerability? That is, is there an efficiency and /or sustainable development problem?

2. What is sustainability? According to Wikipedia�s definition: Sustainability is a characteristic of a process or state that can be maintained at a certain level indefinitely. From an environmental stance, the term refers to the potential longevity of vital human ecological support systems, such as the planet�s climatic system, systems of agriculture, industry, forestry, and fisheries, and human communities in general and the various systems on which they depend. �Sustainability is a characteristic of a process or a state that can be maintained indefinitely.� (Singh ,1992).

3. Essentially Singh sees sustainability as a process or state that is not time definite or time constrained : Sustainability requires that a process has an inherent capacity to last over time. Let�s take for example fixed income earners who spend more than they earn and finance this via past saving or borrowing. At some point in time this process come to an end as saving may run out and access to further borrowing no longer exist. This process, overtime clearly becomes unsustainable. However, the process itself cannot be solely looked at one has to consider the bigger picture. That is, economic development in particular (how to improve one�s or to a large extent society�s well-being or quality of life) Sustainability becomes important when issues of ecology and the environment are imported into the development debate and when development covers not one but many generations.

4. By combining the concept of sustainability with economic development, the term Sustainable Development is derived. What is SD? �Development that meets the needs of the present generation without comprising the ability of future generations to meet their own needs. SD is not a fixed state of harmony, but rather a process of change in which the exploitation of resources, the direction of investment, the orientation of technological development and institutional change are made consistent with future as well as present needs.� (UNICED 1978)

5. Why is SD important ? According to Munasinghe (1993) �SD maximizes the net welfare of economic activities, while maintaining or increasing the stock of economic, ecological and sociocultural assets overtime�. Munasinghe further states that �SD will permit continuing improvements in the present quality of life at a lower intensity of resource use, thereby leaving behind for future generations an undiminished or even enhanced stock of natural resources and other assets.� Munasinghe�s approach to SD pays attention to intergenerational equity. It makes explicit a notion of development that spans across generation and also focuses on environmental issues. Secondly, he speaks to a process of change, as a opposed to some fixed state of harmony on which much neo-classical (equilibrium) economic analysis is based. Thirdly, he points out that resources are being exploited and not contributed to the development process.

6. Based on the above one can say that responsible resource use is the key implication of SD. Without present responsible approach in using resources they will become depleted easily, leaving no resources for future generations. Therefore, policy and decision making with respect to development must now be temporarily based. That is, SD should include development that do not compromise future development process (waste generation, excessive resource depletion etc.)

7. Objectives of Sustainable Development According to Munasinghe, Mohan ( World Bank Environmental Paper No.3 ,1993 ) SD has 3 main objectives economic, social and ecological.

8. According to Munasinghe in order to achieve SD there needs to be trade � offs or interaction between the respective objectives. Therefore the interaction between social and economic object (growth and social objectives ) has stimulated economic activities aimed at bring relief such as more employment and income redistribution. The interaction between growth and ecological objective identifies new ways of valuing and analyzing environmental resources. The interaction between social and the ecological objective gives rise to issues such as public participation and participation. However, the principles of SD can create a sustainability bias or a preference towards one objective. For example environmentalist may be solely concerned with ecological objectives (stabilizing the ecology), while government with social objectives (stabilize social and cultural systems) and economist concerned with economic objectives (increase economic asset base). Need to have interactive approach to SD. (can�t look at SD objective in isolation)

9. Nevertheless, not all individuals who support sustainable development see the environment to be the main concern. For example, Barbier et al, 1989 argues that SD is directly concerned with increasing the material of standard of living of the poor at the grassroots� levels. She stresses that the poor should have priority or greater access to social and economic goods such as education, health care, employment and shelter, since they have the option to choose short term economic benefits at the expense of the environment ( for example squatting).

10. Three levels of sustainability can be defined (O�Riordon 1995) According to Pearce and Atkinson (1998) different degrees of sustainability rests on the principle that it is society�s total asset base or wealth , that provides the capacity for individuals to improve there well-being. They further state that the stock of capital K (where K= Km +Kh+ Kn+ Ks) must not be negative or should decline. (natural capital (assets), man made capital (bridges), human- made capital (skills), and social capital (cooperation and social and institutional relationship). They assume that in order for K-stock of capital to be maintained (intergenerational equity/sustainability) trade offs among the other factors of capital is necessary. Very Weak Sustainability implies that the aggregate stock of capital assets are constant but substitutes can be found. While strong sustainability has no form of natural substitutes and suggests that natural capital is essential.

11. Is there a need to intervene to protect the environment to reduce cost or vulnerability? Yes, because environmental degradation creates some level of social costs where the social costs are greater than the private costs (creating negative externalities). Sustainable Development problems do not exist solely in third world countries, it is an international dilemma. Venice (Italy) (land ,water and air degradation) Flooding and environmental Challenge for Venice (Cambridge University Press) Venice is currently under 2 meters of flood water. Venice is sinking because pumps used to extract water from artesian basin and factories in Porto Marghera (industrial area). Also contributing to this is the global warming issue. The factories also emit heavy effluents which contribute to the decay of ancient historical buildings. Venice is faced with sewerage leaking problems.

12. Brazil � Deforestation Amazon rain forest The Amazon forest destroyed 11,200 square miles (1995 largest ever recorded). Destroying these trees through burning contributes to global warming, releasing about 370 million tons of greenhouse gases into the atmosphere every year. The rain forest cover 60% of Brazil. Experts say as much as 20% of its 1.6 million squares miles already has been destroyed by development, logging, and farming.

13. Caribbean- Caribbean countries rely heavily on natural resources (Trinidad and Tobago rely on oil ) Camille Lampart (the struggle for sustainable development) Argues that the Caribbean is vulnerable, in that, it is faced with periodic attack by natural phenomena : hurricanes, tropical storms, earthquakes, floods, drought, stress economic and ecological resources. She further argues that the Caribbean's fragile ecological- economic character makes the struggle for sustained development more difficult in the region.

14. Individuals must obey environmental constraints (to protect the environment. According to Pantin (1994) failure to the constrains such as : Utilizing renewable resources ( non-exhaustible) at rates less than or equal to natural rate of regeneration ( use resources efficiently, that is, they should be used at the replenishment rate) Non- renewable resources should be used efficiently and there should be some level of substitution between the non- renewable resources and technological processes in order to preserve the non-renewable resource. Waste should be generated at rates less than or equal to the assimilative capacity of the environment. (waste should not in excess of the environment�s natural capacity to intake

15. Pantin quotes that failure to maintain the natural assets, � will lead to a process of environmental degradation as the resource base is depleted, wastes accumulate and natural ecological processes are impaired.� (Pantin 1994) Pearce and Atkinson (1998) essentially argue that sustainability problems can be measured. Therefore in order to know if a problem exist one has to measure the dilemma.( Weak sustainability) They argue that different degrees of sustainability rest on the principle that it is the society�s total asset base or wealth provides the capacity for individuals to improve there well-being. K= Km +kH +KN +KS

16. Recommendations for sustainable development Policy Direction According to Camille Lampart Need information (educate the public, do constant research. She draws reference to Worrel et al (1990) extended Coarse Theorem (ability of perfect market systems to internalize externalities) to show that with more information consumers are aware of the delicate ecological system, and whose utility considers future generation need for resources as a result she claims that individuals will be willing to pay higher prices for good that are environmentally friendly. Project analysis- project assessment through environmental impact assessment Investment incentives policies Institutional building - environmental policies are scattered across ministries as a result she suggest that a national environmental policy should be put in place so as to help promote integrated planning across the public and private sector.

17. Other policies � sustainable development policies Legislate � to limit pollution (government can tax firm so as to try to make that their private costs equals their social costs) Imposes taxes TDP (Transferable discharge permits among the industry players Shadow pricing(- pricing a resource based on it�s opportunity costs ,that is the costs or benefit given up by not using the resource for it alternative use, or pricing a resource based on its marginal costs ( that is, the amount by which an additional unit of the activity increases total costs) Shadow pricing is an attempt to allocate the true economic value to a resource in situations where there might be distortions due to like monopoly practices. The goal of shadow pricing is efficiency. It tries to show the economic value of input and outputs (it puts a costs to these input and outputs so as to prevent excess usage or exhaustion). On the other hand shadow pricing is also socially oriented, in that, it take into account the fact that the income distribution between societal groups may be distorted in terms of overall national objectives ( Munasinghe 1993)

18. Other policies- SD theorist propose Greening the national accounts - SD considers that traditional national accounting practices and suggest that the systems should be modified to take into account environmental factors and so meet SD criteria. Traditional nation accounting practices do not consider The balance sheet do not fully include environmental and natural resources and so under -represent changes in total welfare. The cost of exploiting natural resources are not recorded, with natural resource based goods and their depletion being under-priced. Do not include the costs of environmental clean up, thus the costs inflate national income but not the price of the environmental damage, which ought conversely reduce it.

19. SD theorist suggest that environmentally adjusted national accounts would seek to overcome the above shortcoming through computation and measurement of environmental satellite accounts ( including environmental costs , benefits, natural resource assets) and the computation of an Environmentally- Adjusted Net Domestic Product (EPD) measure and other green accounts. SD theorists further states that 2 levels of adjustments are needed: A GDP adjusted for the effects of resource use and depletion (EDP1) Calculation of a n EDP2, that further accounts for the effects of harm done to the environment They sate that in cases where this approach was used , results showed that the national income figure were 5% - 10% lower

20. An example using Mexico ( million of PESOS) Million Index NDP 42080 100.0 Minus resource depletion: oil 1470 3.5 Timber 164 0.4 Land use change 764 1.8 Equals EDP1 39662 94.3 Minus environmental degradation: Soil erosion 449 1.1 Solid wastes 197 0.5 Ground water use 191 0.5 Water pollution 662 1.6 Air pollution 1656 3.9 38507 86.7

21. Environmental Resource Valuation (Munasinghe 1993) Methods of monetary valuation to determine the total economic value of a resource. TEV = UV + NUV Where TEV total economic value Where UV is use value :direct use, indirect use and optional use Where NUV is non-use value

22. In general Pantin (1994) outlines 5 lines of critique against SD He contends that SD Theorists have failed to identify measurable criteria for development ( he suggests 3 indicators that can be used to measure development � full employment, employment at socially acceptable wages, employment at socially acceptable quality of life) The second criteria is the disregard for differing degrees of Standard of living in different countries �small islands. He argue that advocates of SD should concentrate on intergeneration equity. Lack of power/control of multilateral organizations (IMF influencing the policy making of countries in the periphery. SD theorists ignore the fact that economic literature on sustainable development draws on earlier literature on environmental economics. He further state that it is inevitable not to link both and it should be acknowledge. Neo-Classical economic literature can�t be used to provide a theoretical framework for SD.