Sustainable Development

The 1987 UN Commission on Environment and Development, chaired by Norwegian Prime Minister Gro Harlem Brundtland, coined the term sustainable development, referring to “progress that meets the needs of the present without compromising the ability of future generations to meet their own needs.” Sustainability means not only the survival of the human species but also maintaining the productivity of natural, produced, and human assets from generation to generation. In judging whether these assets are sufficient, we need to be aware of the extent to which physical (produced) capital can substitute for natural capital (see Daly's theorem later in this chapter).

This chapter analyzes land, natural resources, and the environment as economic resources in LDCs, and whether development is sustainable, given natural resource depletion and environmental damage. We look at differences among land, natural resources, and capital; assess the effect of changing real oil prices on consumption in the 1970s, 1980s, and 1990s; analyze the adverse impact of Dutch disease in a booming export sector on other sectors; discuss whether abundant resources might be a curse rather than a blessing; examine the effect of poverty on the environment; identify market imperfections that contribute to environmental degradation; examine the change in pollution with economic growth; specify a decision-making rule for abating pollution; indicate how to place a monetary value on pollution discharges; discuss the growth of arid and semiarid lands; examine economic development in tropical climates; analyze policy toward environmental resources, such as biodiversity and climate, that are global public goods; consider the extent to which growth is limited by a scarcity of natural resources; look at measures of economic welfare that consider resource depletion and environmental damage; and examine the ethical dilemmas of rich nations in a world of limited resources and income inequalities.