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8-b. Sustainability & Natural Resource Management?

[Sustainable Economic Development, Production/Consumption, & Local Communities]

Larry D. Sanders

(SPRING 2006)Dept. of Ag Economics Oklahoma State University

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INTRODUCTION--ch. 13-14-15 Hackett; Lectures 11, 18 Apr

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.

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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

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Alternate Theories in Sustainable Economic Development

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

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Alternate Theories in Sustainable Economic Development (continued)

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

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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) Index of Sustainable Economic Welfare (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)

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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.)

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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

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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

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“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)

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Soft Path Alternative Energy Sources

Solar Biomass Wind Hydrogen Methane Ocean waves

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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

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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.)

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Government Intervention Options

EPR (Extended Producer Responsibility) Programs (life cycling)

Tax/subsidize Eco-labelling Standards Fund

research/development Education

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Sustainable Local Communities(ch. 15 Hackett)

Ostrom’s characteristics:– Inclusive– Democratic– Common vision– Efficient

monitoring/enforcement– Adaptable to change

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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

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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.)

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NGOs/CSOs as Local Community Developers

NGOs—Non-Governmental Organizations– Representatives of independent citizen organizations are increasingly active in

policy making . . . NGOs are often the most effective voices for the concerns of ordinary people in the international arena. NGOs include the most outspoken advocates of human rights, the environment, social programs, women's rights and more. [http://www.globalpolicy.org/ngos/]

CSOs—Civil Society Organizations– The emergence and growth of Civil Society over the past two

decades has been one of the most significant trends in international development. The World Bank recognizes that civil society plays an especially critical role in helping to amplify the voices of the poorest people in the decisions that affect their lives, improve development effectiveness and sustainability, and hold governments and policymakers publicly accountable.

– [http://wbln0018.worldbank.org/essd/essd.nsf/NGOs/home]

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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

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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

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NGO/CSO Example

Foundation for Women– California nonprofit organization– Village Banking Project

» Microcredit program for “poorest of poor globally”

» Currently focused in India

» Loans as little as $4 allow women to start home-based businesses to support families

» 2 banks in India funded with $35,000 led to 3 more banks w/$15,000 each (1999 to present)

» Each bank serves 2500 women & their families

– Now considering if feasible in Southern California– [http://www.foundationforwomen.org/]

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Sustainable Community Examples

Torbel, Switzerland Japanese Village Commons Spanish Irrigation Commons Maine & Brazil self-governed Fisheries Panchayat (India) Community Forests

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L8b: Homework

Read Ch. 13, Hackett (11 Apr) Read Ch. 14, Hackett (11 Apr) Read Ch. 15, Hackett (13 Apr) Do # 2, p. 348 (13 Apr) – 4 points Do #3, p. 371 (13 Apr) – 4 points Do #1, p. 395 (13 Apr) –4 points Refer to “Internet Links” (13 Apr) –3 points

– Select 2 links (pp. 349-351)– Briefly review, including

» Content» Bias or objectivity» Likely use of material

Refer to “Internet Links” (13 Apr) –3 points– Select 2 links (pp. 371-372)– Briefly review, including

» Content» Bias or objectivity» Likely use of material

Alternate Homework—tba; evaluate own ecological footprint (3 pts)