Weak vs' Strong

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• Weak vs. Strong
• Sustainability

Guillermo García Jasone Ibisate Miren
Larrañaga Raquel Pérez
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The paradox of poor countries
SD aim Allow future generations to create the
same level of welfare as we are have now.
And current situation At present there are
people living under extreme poverty conditions.
Their optimum policy Increase
PARADOX
- Consumption
- Population
It goes against SD.
Should poor countries concern about current
situation
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1987 The World Commission on Environment and
Development

• Development which meets the needs
• of the present without compromising
• the ability of future generations to meet
• their own needs.
• 3 perspectives
• Economic perspective
• Environmental perspective
• Social perspective

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Economic perspective

• Related to the production of goods and services
  on a continuing basis.
• This requires that the different kinds of capital
  (manufactured, natural, human and social) must be
  maintained or augmented.
• Maintenance over the long term.

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Environmental perspective

• Maintenance of biodiversity, atmospheric
  stability and other ecosystem functions.
• In order to achieve it to limit the
  human population, the total resource demand and
  to modify current consumption preferences and
  production techniques.
• The market mechanisms tend to deplete and degrade
  this natural capital.

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Social perspective

• Fairness in distribution and opportunities,
  democracy and the fulfilment of basic health and
  educational needs interrelated
  with environmental sustainability.
• Reed and other authors include distributional
  equity, provision of social services, gender
  equity, population stabilization and political
  accountability and participation.
• The social component of sustainability for
  achieving the economic and ecological components.

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Goals and policies of the Commission

• Population stable level of population.

• Industry restructure in order to reduce emission
  and reuse materials.

• Agriculture A sustainable agricultural system
  requires changes on
• Production
• Consumption

• Energy transition from fossil fuels before 2050.

• Renewable Resource Systems reform institutional
  management not over-stressing the world
  fisheries, forests and water systems.

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Four approaches to Sustainable Development

• Very weak sustainability
• Weak sustainability
• Strong sustainability
• Very strong sustainability

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Very weak sustainability

• The stock of capital assets should not decrease
  in order to achieve a sustainable development.
• This stock is integrated by
• manufactured capital (Km) natural capital (Kn)
  human capital (Kh) ethical capital (Ke)
  cultural capital (Kc)
• Natural capital could be depleted as long as the
  rents deriving from the sale of these resources
  would be reinvested in other types of capital.

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Weak sustainability

• Defend of the preservation of a certain level of
  environmental resources to support the
  ecosystems.
• Hartwick rule doesnt require maintenance of any
  particular stock of natural capital
• Hicksian sustainability is related to the
  non-decreasing consumption.
• Pearce and Atkinson's formula
• Z S/Y - dM/Y dN/Y

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Weak sustainability

• Neo-classical economic theory looks for the
  maximization of welfare.
• To compare the economic values of consumption in
  different time periods it is necessary to use the
  discount rate.
• Sustainability requires the total value of
  manufactured plus natural capital to remain
  constant over time.

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Weak sustainability

• Weak sustainability is not consilient with
  respect to the following points
• 1. The economic characterization of preferences
  is inconsistent with economic valuation studies.
• 2. Weak sustainability was formulated explicitly
  for non-renewable resources, not for complex
  biological systems.
• 3. Production functions assume unlimited
  substitution options. The results can not be
  interpreted because there is not clear
  relationship between physical and value units.

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Strong sustainability

• Economic values cannot reflect all the services
  provided by the natural capital.
• Natural capital should remain constant in order
  to achieve a sustainable development.
• Both, manufactured and natural capital, must be
  used together to be productive because they are
  complements (Daly).

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Strong sustainability

• The economic system can not grow beyond the
  limitations set by the regeneration and
  waste-absorption capacities of the ecosystem.
• The goal consists on the limit resource
  consumption of renewals to sustainable yield
  levels and to re-invest the proceeds from
  non-renewable resource exploitation into
  renewable natural capital.

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Very strong sustainability

• It is also known as Stationary State
  Sustainability.
• This theory imposes a zero economic growth
  scenario in order to preserve the environment.

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Natural capital valuation problem

• It is very difficult to assign monetary values to
  natural capital and to the services it provides.
• There is not a common unit of measurement and it
  is not possible to estimate the relative
  importance to each other and to non-environmental
  goods and services.
• The economic value approach is to value resources
  in monetary terms and then calculate the
  aggregate monetary value of the stock of natural
  resources.

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Natural capital valuation problem

• Money is chosen as a way of measurement because
  we show our preferences in this unit and allows
  comparisons between alternative uses.
• But!
• Can money measure the value of natural resources?

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Natural capital valuation problem

• Maintaining the value of stock natural capital
  will ensure the well-being of future generations.
  
• This argument has 2 main problems
• Needs of future generations are considered within
  the preferences of current generations.
• There are limitations to measure natural capital.

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Natural capital valuation problem

• Considering the irreversibility and high
  uncertainty of some decisions concerning the
  environment there should be a minimum safe
  standards
• But preserving and improving the environment
  costs money
• So, when adopting an environmental decision,
  monetary valuation is absolutely central

A study of the World Bank in 1995 showed that the
global value of the ecosystem was of 33 trillion
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Natural capital valuation problem

• The formulation of strong sustainability as
  constant natural capital stock is dependent on
  the proper valuation of aggregate natural capital
  
• But these attempts to move toward strong
  sustainability have met a difficulty
• Incommensurability Can a single unit of
  measurement can adequately express environmental
  concerns?

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Natural capital valuation problem

• Environmental economists say that when valuating
  natural resources should be considered
• The actual use value
• The existence value
• Option value

Value assignment depends on human perceptions and
it is complicated to assign objective values
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Natural capital valuation problem

• Travel cost model positively correlated
  with the cost that visitors have to afford in
  order to visit these places.
• Willingness to pay (WTP) how much an
  individual would pay for the benefits derived
  from the environment
• Willingness to accept (WTA) the value the
  same individual would accept in terms of
  environmental degradation.
• WTA gtWTP

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Ecological economics in strong sustainability

• The preservation of critical natural capital in
  physical terms, and an insistence on the need for
  direct, non-monetary, indicators.
• Two lines of criticism
• Doubts over the reach of participatory decision
  making processes are compatible with the
  capitalist market economy.
• It cares only partially with the problem of how
  to operationalise strong sustainability since it
  has not been based on an analysis of the
  political economy of capitalism.

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Personal opinion

• Preserving the stock of natural capital is
  necessary for the generation of future welfare.
• We think that is possible to cope with the
  exigencies imposed by sustainable development
  experiencing a certain economic growth.