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Unit 1, GRE401

Introduction to Sustainable Development; Case Study: Envisioning the Future; and The Ecological Economic Problem: Matching Ultimate Means with Ultimate Ends

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Unit 1, GRE401

  1. 1. Sustainable Development and Competitive Advantage Unit 1: Part 1Introduction to Sustainable Development © Jeremy B Williams 2012
  2. 2. 2 Outline1) Establishing the theoretical basis for sustainable development2) The limitations of environmental economics3) Weak sustainability vs strong sustainability4) Summary of differences © Jeremy B Williams 2012
  3. 3. 31) ESTABLISHING A THEORETICAL BASIS FOR SUSTAINABLE DEVELOPMENT• ‘Sustainable development’ (SD) is a term that means many things to many people• Murcott lists more than 50 academic definitions (see Topic 1.2.1)• Problematical because SD has been defined by interest groups in ways that meet their own agendas. © Jeremy B Williams 2012
  4. 4. 4 The Brundtland Report (1987)• The most widely accepted definition: ‘development that meets the needs of the present without Gro Harlem compromising the ability of future Brundtland generations to meet their economic needs’. © Jeremy B Williams 2012
  5. 5. 5 Other definitions of SD• ‘improving the quality of human life while living within the carrying capacity of supporting ecosystems’ IUCN/UNEP/WWF, 1991• ‘to equitably meet developmental and environmental needs of present and future generations’ Principle 3, Rio Declaration, 1992 © Jeremy B Williams 2012
  6. 6. 6 Points to observe …• Notwithstanding the many definitions of SD, it is fairly clear that it is a little more than growth• A key point to observe is that the word ‘development’ conveys a meaning emphasising equity and increasing quality of life• There is also an emphasis on the future. © Jeremy B Williams 2012
  7. 7. 7 A concern for the future“I conceive that landbelongs to a vast family ofwhich many are dead, feware living, and countlessmembers are unborn”. Kwame Nkrumah (1909-72) Ghanaian leader © Jeremy B Williams 2012
  8. 8. 8 Failure of the GDP measure to account for the environment• Neglects depletion of natural capital• Inadequate treatment of ‘defensive’ expenditures (e.g. pollution abatement and health protection costs)• Failure to account for the effects of environmental degradation. © Jeremy B Williams 2012
  9. 9. 9 Uncertainty creates cynicism• ‘moral convictions as a substitute for thought’ Redclift, M (1987), Sustainable Development: Exploring the Contradictions Methuen, London, p. 2.• ‘how to destroy the environment with compassion’ Smith, J.W (1991) The High Tech Fix: Sustainable Ecology or Technocratic Megaprojects for the Twenty-first Century, Aldershot, Academic Publishing Group, p. 135.• ‘a good idea which cannot sensibly be put into practice’ ORiordan, T (1988) ‘The politics of sustainability’, in R.K.Turner (ed.) Sustainable Environmental Management: Principles and Practice, London, Belhaven, p. 48. © Jeremy B Williams 2012
  10. 10. 10 This is where ecological economics comes in …• A body of literature has now emerged that is providing the SD concept with some much needed ballast• At the time of Brundtland, the SD concept emerged devoid of a theoretical core – ecological economics can fill this void• SD is the ecological economic problem © Jeremy B Williams 2012
  11. 11. 11 2) THE LIMITATIONS OF ENVIRONMENTAL ECONOMICS• Environmental economics (as a sub-discipline of the neo-classical paradigm) views the environment as a subset of the economy (the factor ‘land’)• Implicitly, mainstream economics looks upon land as an inexhaustible resource, and it is not affected by output (Environmental economics at least acknowledges the negative externalities associated with production, and theorises about how they might be ‘internalised’.) © Jeremy B Williams 2012
  12. 12. 12 GDP and the neo-classical circular flow model• What is ‘assumed away’ in the model? Wages, profit, rent, interest Resources Households Firms Goods and services Payments for products © Jeremy B Williams 2012
  13. 13. 13The neoclassical world view The economy The environment © Jeremy B Williams 2012
  14. 14. 14The ecological economics world view The environment The economy Source: Ray Anderson (2002) © Jeremy B Williams 2012
  15. 15. 15 The economy and the environmentReduction in natural capital Economic growth Source: Ray Anderson (2002) © Jeremy B Williams 2012
  16. 16. 16The economy and the environment Source: Ray Anderson (2002) © Jeremy B Williams 2012
  17. 17. 17The economy and the environment Source: Ray Anderson (2002) © Jeremy B Williams 2012
  18. 18. 18The economy and the environment At some point, the flows between environment and economy become unsustainable Source: Ray Anderson (2002) © Jeremy B Williams 2012
  19. 19. 19 Cornucopia?• The neo-classicalists argue that a properly functioning market will ensure that as resources/sinks become scarce: production methods will become more efficient consumption more environmentally friendly the extent of recycling and pollution control will increase humankind will become more inventive• This would allow for continuing increase in quality of life without environmental deterioration. © Jeremy B Williams 2012
  20. 20. 20 A flaw in the logic• The major focus of mainstream environmental economics is puzzling (see Unit 4) over the conditions under which the market mechanism will function ‘properly’• The problem is, there are no properly functioning markets – not for natural capital, at least• These assets would need to be privately owned and freely exchanged, which is rarely the case © Jeremy B Williams 2012
  21. 21. 21 Ayres (1993)• The most important ‘scarcities’ (clean air, clean water, climatic stability, biological diversity, the absorption of waste by natural systems, etc) lie outside the market mechanism and outside the realm of plausible technological substitution. Ayres, R.U. (1993). Cowboys, Cornucopians and Long-Run Sustainability. Ecological Economics, 8, 189-207. © Jeremy B Williams 2012
  22. 22. 22 3. WEAK SUSTAINABILITY vs STRONG SUSTAINABILITY• Weak sustainability acknowledges the concept of Hicksian income* – limiting consumption to the ‘interest’ or flow of services produced by the capital stock• But, it is assumes maintenance of total capital John Hicks stock (MMK + NK) without regard to proportions• Each kind of capital is treated as being substitutable for another. * Hicks, John R. (1939). Value and Capital: An Inquiry Into Some Fundamental Principles of Economic Theory, Oxford: Clarendon Press. © Jeremy B Williams 2012
  23. 23. 23The ‘everything-has-a-price’ view of neoclassical economics• Weak sustainability is achieved so long as investment > the combined depreciation of MMK and NK• Robert Solow (1974)*: ‘If it is easy to substitute other factors for natural resources … then... the world can, in effect, get along without natural resources, so exhaustion is just an event, not a catastrophe.’ *Solow, R. (1974). ‘The economics of resources or the resources of economics?’ American Economics Review, 64 (2), pp.1-14. © Jeremy B Williams 2012
  24. 24. 24 Strong sustainability• Strong sustainability rejects the idea that MMK adequately compensates future generations for ecological depreciation• Regardless of price, MMK cannot replace the unique services and amenities provided by nature – most notably life-support services• Strong sustainability advocates the precautionary principle – where there are threats of serious or irreversible damage, one should not wait for full scientific consensus. © Jeremy B Williams 2012
  25. 25. 25 4. SUMMARY OF DIFFERENCES• Environmental economics • Ecological economics – The environment (‘land’) is a – People (and economies) are ‘factor of production’ integral to the environment – There are man-made substitutes – There are no substitutes for for environmental goods and many environmental goods services and services – Environmental problems can be – Addressing environmental addressed by making problems requires a trans- adjustments to the economic disciplinary enquiry systems – Operates within a co- – Operates within a comparative evolutionary paradigm statics paradigm © Jeremy B Williams 2012
  26. 26. 26Envisioning the future Case Study 1 © Jeremy B Williams 2012
  27. 27. 27Think© Jeremy B Williams 2012
  28. 28. 28 The future• If you dont know where youre going, you end up somewhere else• We have to decide where we want to go, and balance that with where it is possible to go © Jeremy B Williams 2012
  29. 29. 29 Envisioning• The processes of envisioning and goal setting are extremely important• They are also very underdeveloped skills in our society!• In order to effectively envision, it is necessary to focus on what one really wants, not what one will settle for. © Jeremy B Williams 2012
  30. 30. 30 For example:Really want Settle for• Self-esteem • Fancy car• Serenity • Drugs• Health • Medicine• Human happiness • Higher GDP• Permanent prosperity • Unsustainable growth © Jeremy B Williams 2012
  31. 31. 31Read© Jeremy B Williams 2012
  32. 32. 32• Unit 1 courseware• Especially Disposable Planet? (Activities, Unit 1); Topic 1.1.1 © Jeremy B Williams 2012
  33. 33. 33Discuss © Jeremy B Williams 2012
  34. 34. 34 Two world views Technological optimist Technological sceptic• Technical progress can deal with • Technical progress is limited and ecological any future challenge carrying capacity must be preserved• Competition • Cooperation• Linear systems with no • Complex, nonlinear systems with discontinuities or discontinuities and irreversibilities irreversibilities • Humans in partnership with nature• Humans dominant over nature • Partnership with others• Everybody for themselves • Market as servant of larger goals• Market as guiding principle © Jeremy B Williams 2012
  35. 35. 35 Four visions of the future Real state of world Optimists right Sceptics right Technological optimist ? ?World view Technological sceptic ? ? © Jeremy B Williams 2012
  36. 36. 36Dystopian ‘Mad Max’ world? © Jeremy B Williams 2012
  37. 37. 37Alternative ‘Star Trek’ world? © Jeremy B Williams 2012
  38. 38. 38Controlled ‘Big Brother’ world? © Jeremy B Williams 2012
  39. 39. 39Ecotopian world? © Jeremy B Williams 2012
  40. 40. 40 Four visions of the future Real state of world Optimists right Sceptics right Technological Star Trek Mad Max optimistWorld view Technological Big Brother Ecotopia sceptic © Jeremy B Williams 2012
  41. 41. 41Deliver © Jeremy B Williams 2012
  42. 42. 42Watch archive footage in 2055 © Jeremy B Williams 2012
  43. 43. 43 Trace the events back to 2011 from 2055 … what happened?• Sketch out one of the four visions of the future• Reflect upon the various initiatives that might, or might not have been taken, and the prospective consequences• Prepare a 10-12 minute presentation © Jeremy B Williams 2012
  44. 44. Sustainable Development and Competitive Advantage Unit 1: Part 2The Ecological Economic Problem:Matching ultimate means with ultimate ends © Jeremy B Williams 2012
  45. 45. 45 Outline1) From empty world to full world2) Why some believe there is no need to worry about climate change3) Why we should worry about climate change4) Living within our means © Jeremy B Williams 2012
  46. 46. 461) FROM EMPTY WORLD TO FULL WORLD © Jeremy B Williams 2012
  47. 47. 47 The Classical Economists• Adam Smith (1723-90) – Moral philosopher, Theory of Moral Sentiments, (1759) – Political economy – market part of the social fabric• Thomas Robert Malthus (1766-1834) – One of the first to talk of the limits to growth with his Essay on the Principle of Population, (1798) – Seen by some as the forefather of ecological economics © Jeremy B Williams 2012
  48. 48. 48• John Stuart Mill (1806-73) – On the notion of the stationary state: ‘If the earth must lose that great proportion of its pleasantness which it owes to things that the unlimited increase of wealth and population would extirpate from it, for the mere purpose of enabling it to support a larger, but not a happier or better population… …I sincerely hope, for the sake of posterity, that they will be content to be stationary long before necessity compels them to.’ John Stuart Mill, Principles of Political Economy, book IV, chapter VI, pp 756-57, (1848), as presented in J. E. Cohen, How Many People Can the Earth Support?, WW Norton, pp. 397-98, 1995. © Jeremy B Williams 2012
  49. 49. 49The rise of conspicuous consumption (1899) © Jeremy B Williams 2012
  50. 50. 50Oil-fuelled economic growth: ‘The Golden Age’ © Jeremy B Williams 2012
  52. 52. 52 1.Doubts about the science© Jeremy B Williams 2012
  53. 53. 53© Jeremy B Williams 2012
  54. 54. 54Image source: healthandenergy.com/global_warming_cartoons.htm © Jeremy B Williams 2012
  55. 55. 552.We will invent our way out of trouble © Jeremy B Williams 2012
  56. 56. 56 3.Think about today not the future© Jeremy B Williams 2012
  57. 57. 571.Doubts about Bordering on the science the absurd2.We will invent Ignores our way out precautionary of trouble principle 3.Think about today not the Unethical future © Jeremy B Williams 2012
  58. 58. 3) WHY WE SHOULD WORRY ABOUT CLIMATE CHANGE © Jeremy B Williams 2012
  59. 59. 59© Jeremy B Williams 2012
  60. 60. 60© Jeremy B Williams 2012
  61. 61. 61© Jeremy B Williams 2012
  62. 62. 62The Stern Review, October 2006 • On climate change: “The greatest market failure the world has ever seen”Sir Nicholas Stern © Jeremy B Williams 2012
  63. 63. 63IPCC Fourth Assessment Report February, 2007: Evidence of Human- caused Global Warming is ... “Unequivocal” © Jeremy B Williams 2012
  64. 64. 64© Jeremy B Williams 2012
  65. 65. 65“Climate change will not be a major issue in my life time.” A. Strongly disagree B. Disagree C. Note sure D. Agree E. Strongly agree © Jeremy B Williams 2012
  66. 66. 662005: CO2 = 379ppm © Jeremy B Williams 2012
  67. 67. 67350.org© Jeremy B Williams 2012
  68. 68. 68Source: http://www.21school.ox.ac.uk/news/archive/200702_inaugural_lecture.cfm © Jeremy B Williams 2012
  69. 69. 69Source: http://www.21school.ox.ac.uk/news/archive/200702_inaugural_lecture.cfm © Jeremy B Williams 2012
  70. 70. 7019282004Upsala Glacier, Argentina © Jeremy B Williams 2012
  71. 71. 71Blomstrandbreen Glacier, Norway 1922 © Jeremy B Williams 2012
  72. 72. 72Blomstrandbreen Glacier, Norway 2002 © Jeremy B Williams 2012
  73. 73. 73The Imja Glacier, Himalayas © Jeremy B Williams 2012
  74. 74. 74The Imja Glacier, Himalayas © Jeremy B Williams 2012
  75. 75. 75Floods in Southern China, July 2009, 400,000 left homeless © Jeremy B Williams 2012
  76. 76. 76Southwestern China, March 2010 Anhui Province, China, August 2006 © Jeremy B Williams 2012
  77. 77. 77 Forced migrations• 2005: UN study reveals that there could be as many as 50 million environmental refugees around the world by 2010.• Same study estimates that as many as 100 million people live in areas that are below sea level or liable to storm surge © Jeremy B Williams 2012
  78. 78. 78© Jeremy B Williams 2012
  79. 79. 79 • 1 metre sea level rise will inundate more than 15 percent of Bangladesh, displacing more than 13 million people© Jeremy B Williams 2012
  80. 80. 80 Annual carbon dioxide emissions• Bangladesh: 172kg per capita• United States: 21 tonnes per capita © Jeremy B Williams 2012
  81. 81. 81© Jeremy B Williams 2012
  82. 82. 82 The ecological footprint concept• How many planets would we need if everyone lived like you? http://www.myfootprint.org © Jeremy B Williams 2012
  83. 83. 83 Calculating the ecological footprint• Official statistics on consumption are used to calculate the amount of biologically productive land and water area required to produce the resources consumed and to absorb the wastes generated using prevailing technology Image source: http://www.ew.govt.nz © Jeremy B Williams 2012
  84. 84. 84 Worldwide, there exists about 1.9 biologically productive global hectares per personImage source: www.adbusters.org © Jeremy B Williams 2012
  85. 85. 85At what stage do you think humankind will outstrip its supply of biologically productive hectares? A. 2010 B. 2020 C. 2050 D. 2100 E. No answer © Jeremy B Williams 2012
  86. 86. 86Image source: http://www.footprintnetwork.org/ © Jeremy B Williams 2012
  87. 87. 87Image source: http://www.footprintnetwork.org/ © Jeremy B Williams 2012
  88. 88. 88Image source: http://www.footprintnetwork.org/ © Jeremy B Williams 2012
  89. 89. 89 ChinaImage source: http://www.footprintnetwork.org/ © Jeremy B Williams 2012
  90. 90. 90 4) LIVING WITHIN OUR MEANS• Ecological economics addresses the relationships between ecosystems and economic systems in a holistic way• As the term suggests, it integrates economics with ecology (which tends to concentrate on ‘natural’ systems rather than the human impact upon them)• But as we shall see, it also embraces moral philosophy, ethics and political economy. © Jeremy B Williams 2012
  91. 91. 91 What does sustainable development look like?• How do we know when a nation has reached the point of sustainability?• Who determines the characteristics of a sustainably developing economy?• Lawn (2001): The moral issues of distributive justice are unlikely to be realised if biophysical limits to growth are ignored• By the same token, disrespect for moral issues is not conducive to biophysical constraint. © Jeremy B Williams 2012
  92. 92. 92 Inter-generational and intra-generational equity• Principle 3, Rio Declaration: ‘… to equitably meet developmental and environmental needs of present and future generations’.• inter-generational equity – a necessary condition for sustainability• intra-generational equity – a necessary condition for development © Jeremy B Williams 2012
  93. 93. 93The ends-means spectrum © Jeremy B Williams 2012
  94. 94. 94 The ‘triple bottom line’• Economic sustainability in the ‘Hicksian’ sense • Preserving the capital (MMK, NK and HK)• Social sustainability • Participation, fellowship, social cohesion• Environmental sustainability • Maintaining the life-supporting function of ecosystems – Emissions stay within assimilative capacity – Utilisation of renewable resources is within regeneration rates © Jeremy B Williams 2012
  95. 95. 95 Summary: The SD matrix Inter-generational Intra-generational justice: Sustainability justice: DevelopmentEconomic Accumulation of capital Reduction of povertyEnvironmental Conservation and Environmental justice (in environmental application of laws, protection regulations)Social Health, education, Democracy and leisure participation © Jeremy B Williams 2012
  96. 96. 96© Jeremy B Williams 2012