12-b. Sustainability & Natural Resource Management? [ Sustainable Economic Development, Production/Consumption, &am

1. 12-b. Sustainability & Natural Resource Management?[Sustainable Economic Development, Production/Consumption, & Local Communities] Larry D. Sanders (SPRING 2002) Dept. of Ag Economics Oklahoma State University

2. INTRODUCTION(ch. 13-14-15 Hackett) • Purpose: • to become aware of specific sustainability concepts • Learning Objectives. To understand/become aware of: 1.To understand the keys to sustainable economic development. 2. To understand key issues for production/consumption in sustainable systems. 3. To understand key issues related to the economics of sustainable local communities.

3. Sustainable Economic Development (ch. 13 Hackett) • Broadens the traditional view of economic development to include social & environmental factors • Traditional economic development: • focus on income growth (real per-capita income) • sometimes also addresses distributional issues • tends to favor large-scale projects • aid thru technical/financial assistance, & loans • Sustainable development: • income growth -- local needs-based • education --family planning • environmental regulations -- ecotourism • information access/empowerment

4. Weak Form “Technological fix”; “5 capitals”; substitution ok Indicators Green GDP Genuine Savings Index of Sustainable Economic Welfare (ISEW) GPI Limitations--weak on protecting environment Strong Form Natural capital is unique; substitution won’t work Indicators Carrying Capacity Biodiversity Ecological Footprint Limitations ignores new technology & substitution concept Alternate Theories in Sustainable Economic Development

5. Weak Form Arguments favoring Less Costly in short-to-mid-term Policy Implications counterbalancing effects environmental mitigation Strong Form Arguments favoring Uncertainty Irreversibility Scale (threshold effects, etc.) Policy Implications safe minimum standards preservation Alternate Theories in Sustainable Economic Development (continued)

6. Measurement options for Weak Form Sustainability • Macroeconomics (GNP, GDP) • Green GDP (GDP less environmental expenses) • Genuine Savings (considers capital investment less regeneration rate & excess waste) • ISEW (per-capita real consumption less social & environmental factors, adjusted for future generations & income inequality) • Genuine Progress Indicator (GPI: real personal consumption adjusted for income distribution, ecological & social costs, household & volunteer work)

7. Measurement options for Strong Form Sustainability • Carrying Capacity (based on Net Primary Product (NPP)--vegetation produced on given land area) • Ecological Footprint (EF--amount of land per capita necessary to support human consumption of resources of food, energy, timber, etc.)

8. Case Studies show difficulty in comparing alternate measurement schemes w/traditional development • U.S. (& other rich developed countries) • GDP continues to grow • ISEW continues to decline • GPI continues to decline • Less-Developed Countries (LDCs) • many farmers become rural/urban laborers displaced from land • huge budgets lead to/encourage corruption • weak oversight/penalties often result in inefficiencies/failures/unintended consequences • emphasis on export-oriented industry

9. Sustainable Production & Consumption (ch. 14 Hackett) • Traditional view: • sustainable production is the problem of LDCs • sustainable consumption is the problem of hi-income DCs • Hackett’s view: • All countries are challenged • US, Japan, Germany investing in cleaner, more environmentally-friendly technologies

10. “Hard Path” vs. “Soft Path” • “Hard Path” • dependence on nonrenewable fossil fuels (& polluting energy/production systems) • regional/national energy grids • “Soft Path” • government intervention to more efficient energy, renewable & less-polluting energy/production sources • decentralized energy production (local & home-based)

11. Soft Path Alternative Energy Sources • Solar • Biomass • Wind • Hydrogen • Methane • Ocean waves

12. The Challenge for Sustainable Production Technology • Create firm-level profit opportunities • Provide similar goods/services or alternative that fill similar needs • Be not much more expensive than conventional alternative • Educate producers/consumers on need for change • Maintain competitiveness in the market

13. Product Life-cycle Analysis • Evaluation of environmental & natural resource impacts of products/services throughout lifecycle from extraction, production, marketing/distribution, use & disposal • European method for waste management policy • responsibility for disposal of aluminum cans is with the company that is selling the product in aluminum cans (Coke, Pepsi, etc.)

14. Government Intervention Options • EPR (Extended Producer Responsibility) Programs (life cycling) • Tax/subsidize • Eco-labelling • Standards • Fund research/development • Education

15. Sustainable Local Communities(ch. 15 Hackett) • Ostrom’s characteristics: • Inclusive • Democratic • Common vision • Efficient monitoring/enforcement • Adaptable to change

16. Challenges for Local Communities • Free migration & trade lead to: • export-based development, which leads to: • population increases, unemployment, public financing at risk, & exploitation of community & resources by firms • Alternative: • Small business (import-substitution development), which leads to • increased diversity of economy • increased democracy • decreased income leakage • limits on public financing risk

17. Other Issues for Locally Sustainble Communities • How to “grow” stocks of • natural capital • human capital • human-made capital • Examples of needs • Education/training • Telecommunications/new technology links • Maintaining/enhancing noncommercial amenities (parks, greenspace, arts, etc.)

18. Selected Economic Instruments for Sustainble Community Development • Microlending • very small-scale lending for low-income people w/o collateral • promotes empowerment, independence, entrepreneurial creativity • Import-substitution small businesses • promote local small business to encourage local production & sale of goods/services that substitute for imports • promotes stability/diversity & reduces income leakages

19. Selected Economic Instruments for Sustainble Community Development (cont.) • Ecotourism • promote locals to host/guide tourists for neighboring unique ecosystem • provides financial incentives to protect environment & alternative to exploiting the environment in harmful ways • Land tenure rights • secure land tenure & property rights • recognize Common Property Rights • reduces adverse impacts on common ground, & encourages long term thinking w/r/t property use

20. Sustainable Community Examples • Torbel, Switzerland • Japanese Village Commons • Spanish Irrigation Commons • Maine & Brazil self-governed Fisheries • Pahchayat Community Forests