Sustainable development concepts: an economic analysis

This paper attempts to analyze sustainability concepts, such as sustainable growth, sustainable development and sustainable resource use, in terms of the conventional neoclassical theory of economics. It then tries to analyze why free market forces may not achieve sustainability, and how policy intervention may help or hinder sustainability. Several different definitions of sustainability are reviewed. Most require that the "quality of life' should not decline over the long-term future. Many can also be interpreted in terms of maintaining an economy's capital stock. A number of simple models of the economy and the environment are used to explore these issues. Such models may not achieve much realism, but they should help to clarify conceptual thinking about sustainable development. The main results suggested by these simple models are that, if non-renewable resource inputs are essential, then inadequate technical progress and open access to environmental resources may be the key factors that cause unsustainability. The suggested implications for policy are that conventional environmental policies may also improve sustainability, making a separate sustainability criterion redundant in practice; and that politically difficult short-term sacrifices may be needed to reach optimal and sustainable growth paths. A simple model with renewable resources shows how population growth can threaten sustainability, and how poverty and environmental degradation can be linked, establishing the case for development assistance. -from Author