Towards the New Understanding of Sustainable Development

Igor Makarovimakarov@hse.ru

Higher School of Economics

Moscow, Russia

Oxford, November 18-19, 2011

Sustainable development – classical definition

Sustainable development is that one which “implies meeting the needs of the present without compromising the ability of future generations to

meet their own needs” (Brundtland report)

Strong sustainability

Weak sustainability

Conventional economic development model

Strong sustainability “Each generation should leave

water, air, and soil resources as pure and unpolluted as when it came on earth... Each generation should leave undiminished all the species of animals it found existing on earth” (UNESCO)

Natural capital shouldn’t be decreased and shouldn’t be substituted by any other form of capital

‘Weakness’ of strong sustainability Any consumption of non-renewable resources

even if it is necessary for human development conflicts with the strong sustainability concept

Stopping consuming natural resources will lead to the degradation of human civilization – it is both unpractical and immoral

Weak sustainability Sustainable development

requires that across generations there should be no decline in the possibility of total capital to generate flows of service

The aim of sustainable development is the increase (at least non-diminution) of total welfare which is comprised of natural, physical and human capital

Any form of capital can be substituted by the others

Adjusted net savings (World Bank)

‘Weakness’ of weak sustainability: look at ANS data!

ChinaBangladesh

IndiaKorea Rep.

RomaniaBelarus

SwedenCosta Rica

BelgiumIsraelJapan

GermanyIndonesiaPakistan

MexicoPeru

EthiopiaFrance

CanadaBrazil

EgyptUK

South AfricaRussia

USASaudi ArabiaSudan

GreeceAngola

-35 -25 -15 -5 5 15 25 35 45

Source: WB, 2009

“Strong’ sustainability, overriding all other considerations, is morally unacceptable as well as totally impractical; and ‘weak’ sustainability, in which compensation is made for resources consumed, offers nothing beyond traditional economic welfare maximization”

W. Beckerman (1994)

Critical natural capital Critical natural capital –

the part of natural capital which has vitally important functions and can’t be substituted by any other forms of capital or even other types of natural capital

Conventional sustainable development concept proceeds from the prerequisite that the larger amounts of physical, human and natural capital generation possesses the better it is able to respond to challenges it faces, including natural resource and environmental ones

Iceland

Switzerland

Costa Rica

Sweden

Norway

Mauritius

France

Austria

Cuba

Colombia

EPI (2010): Top10 countries

Source: www.epi.yale.edu

Tragedy of the commons Each herdsman wants to

graze more and more cattle on the pasture, but it leads to degradation

Situations of the conflict between individual and common interests – social dilemma

Garrett Hardin (1968)

Why do institutions matter? They help to resolve social

dilemmas Ostrom (1990) showed that

some communities can manage the commons efficiently and others can’t. It depends on whether the community is able to build robust institutions Elinor Ostrom (1990)

Better institutions result in lower transaction costs which have significant importance while solving social dilemmas.

Institution of trust! Fukuyama (1995): the deficit of trust is like an additional tax imposed on transactions

Correlation between EPI and Trust Index

Robust institutions decrease the vulnerability of society to environmental challenges!

Sen (1999): there have never been hunger in democratic societies even if these societies are poor! Vulnerability of society to environmental challenges is not a matter of poverty but a matter of poor institutions

Why do institutions matter?

Institutions of civil society are able to unite the whole society in green initiatives. Due to civil society’s efforts “green” becomes up-to-date – more and more people (and than firms and governments) become “greener”

Why do institutions matter?

Weak sustainability concept + critical natural

capital + addition of institutional capital

Thanks for your

attention!