MPA Program ATPSSpring 2010

Dzieza/Geri/Gould

Defined, explored…“We do not inherit the earth from our

ancestors. We borrow it from our children.” Haida Proverb

Sustainable development “meets the needs of the present without compromising the ability of future generations to meet their own needs.”

- 1987, World Commission on Environment and Development (a.k.a the Brundtland Commission)

Another try….“using, developing and protecting resources

in a manner that enables people to meet current needs and provides that future generations can also meet future needs, from the joint perspective of environmental, economic and community objectives.”

- “The People of the State of Oregon”Chapter 918 of Oregon Laws 2001

Other definitions….Newton, Business Ethics …. “…seven generations away,

a path chosen still seems to be the correct one.” (p. 81); “the ability to continue a profitable practice indefinitely without having an environmental limit suddenly appear to end it.” (p. 144)

 UNESCO: “Every generation should leave water, air

and soil resources as pure and unpolluted as when it came on earth.”

 “Every generation should leave undiminished all the

species of animals it found existing on earth.”  Robert Solow (and others): “Preserving the capacity of

future generations to be at least as well off as this generation.”

 

Why the concern? Unsustainable environmental and social

trends: HIPPOHabitat destruction Invasive species PollutionPopulation. More people means more of the

other HIPPO effects.Over harvesting

Per capita CO2 emissions, by country and population

“Waste” is extensive3% of the Btu value of coal becomes usable light5% of a palm oil plant gets used to make detergent8% of the sugars in barley are fermented to make

beer0.2% of the coffee plant becomes coffee we drink~60% of the materials used become waste before

they enter the economyCivilization relies on energy: 200 mboe per day;

energy systems (oil, natural gas, coal, nuclear) are vast, unequal, unstable

Since we started using fossil fuels, we have released 400 billion tons of carbon into the biosphere

But….How can anyone be against “sustainability”?In order to make sense of the concept, we need

to understand our implicit and explicit assumptions

How might we as humans value the natural world?

How might we define values inherent in nature?Where does economics fit in?What are the implications for environmental

policy?

Policy/Value continuum for Earth’s resourcesUnlimited Exploitation – monetary values, profitWise use – we also value externalities, costs and

benefits borne by and generated for othersConservation – value in non-market uses, e.g.,

recreationPreservation – value in keeping things natural,

non-use…..may want wilderness even if you don’t use it

To what extent do we value Nature?Assigning rights to animals – animals have

rights independent of human valuesAssigning rights to ecosystems – whole

ecosystems have rights Community holism – humans as just another

part of the ecosystem, mutuality between humans and other ecosystem elements

Deep ecology – living by natural laws, reduce populations. Humans as an uncontrollable cancer on the planet

What??!!Some of these preferences leave humans out

of the equationIs there a “best” preference?Do policy analysts/entrepreneurs make these

preferences explicit?

Should “man” have….“…dominion over all the earth.”? (Genesis 1)The “anthropocentric” philosophical tradition

can be traced back to the Bible and beyond….through Francis Bacon, J.S. Mill, Jeremy Bentham, Adam Smith to economist Julian Simon and many others

It’s our duty to develop the earthValue of nature and its products is based on

their usefulness to humans

The Nature-first ethic…also has a distinguished if less well known

pedigreeEnglish regulated polluting industry Thoreau; John MuirUS and creation of national parksAldo Leopold; Rachel CarsonJames Lovelock’s Gaia Hypothesis

Policy analysis for environmental decisions

Clarity about likely policy outputs and outcomesAssessments based on scientific evidenceEstimates of costs and benefitsLikely implementation problemsEconomic analysisIntergenerational analysisExplicit discussion/analysis of values is often

omitted

What values do we emphasize?US tends to be pragmatic: we assess ideas,

hypotheses based on what we believe will be their practical consequences

We are also a relatively instrumental society. Something has instrumental value if and only if it has value as a means to promote some ends.

We value ends (goals) and means (ways to attain those goals)

The “grand narrative” of US public administration… to create efficient and effective government….is firmly in this tradition

What has intrinsic value for us? Something has intrinsic value (or non-

instrumental value) if and only if it has value regardless of whether it is also useful as a means to promote other ends.

We have a difficult time identifying what we value intrinsically

Do we value “nature” or “conservation” (ecosystems, butterflies, my cat) in their own right, or because they bring us identifiable and measurable benefits?

Most arguments for environmental protection are based on instrumental values.

Economics: Solow’s analysisComplex environmental issues have a long time

frameWhat obligations do we have to future

generations? Distributional equity—between current/future humans

But: we know little about the technology that will be available 100 years from now

We will create a built environment with plant, equipment, technological knowledge

Resources are fungible to a large extentCan’t rely on “the market” as future generations

aren’t involved in current market transactions

Discount rates and time horizonsCosts of a policy/project are usually incurred

immediatelyBut we have a clear time preference….as

consumers we are impatient and prefer immediate over postponed consumption.

We won’t trade $1 now for only $1 a year or more from now—but want to be compensated for deferred consumption. A dollar of cost/benefit generated in the future is worth less

As a result, streams of benefits and costs in the future are usually discounted

Real interest rates (adjusted for inflation) are historically between 3-5%

Discount rates and present valuesA low discount rate reflects society’s concern

for the future, since future benefits will have a higher value

Higher discount rates minimize future benefits and suggest that current projects/expenditures foregone (often private ones) have a higher value

At a 5% discount rate, $1 to be received 25 years from now is worth only 29 cents

At a 1% discount rate, $1 to be received 25 years from now is worth 77 cents

Present value of $1000Years from Now 5 % disc. rate 3% disc. rate 1% disc. rate

5 $ 783.53 $ 862.61 $ 951.47

10 $ 613.91 $ 744.09 $ 905.29

20 $ 376.89 $ 553.68 $ 819.54

50 $ 87.20 $ 228.11 $ 608.04

100 $ 7.60 $ 52.03 $ 369.71

210 $ 0.04 $ 2.01 $ 123.74

From an economist’s perspective…Thinking about sustainability means

considering how to value current consumption vs. saving for the future

We can conserve renewable resources, using a disciplined approach, for trees, soil, other biotic resources…

A sustained yield of these is possible, with strong governance, ownership

More difficult with “common pool” resources such as ocean fish

But how about non-renewable resources?

Solow’s critique“….when we use up something that is irreplaceable….

then we should be thinking about providing something of equal value.” (Solow, 1991, p. 184)

Oil, natural gas, etc., should be invested, not consumed. They can be converted into forms that provide benefits over an extended period

These forms include built capital, knowledge, technology

Avoid consuming irreplaceable natural capital (e.g., oil) that provides no future benefits

A process of substituting natural capital with built capital and knowledge

His comparisonUK: Consumed North Sea oilNorway: Invested its proceeds from North

Sea oil

And a moral dilemma…Inequality is common, within and between

countriesThe poor want current consumption, not

investmentCan we justify telling those now not

consuming that we need to deprive them to protect future generations?

Are current high consumers willing to decrease their consumption?

Solow’s definitionsWeak Sustainability – preserving options for

future generations….“sustainability…is the obligation to preserve the

capacity to be well off…as well off as we.” Strong Sustainability– leaving resources

undiminishedSolow is skeptical that strong sustainability is

either possible or desirableBut… Some functions of the environment cannot

be duplicated by humans, e.g., ozone layer, The Amazon

An ExampleDiscounting and climate change: How do we

compare present-day gains and losses with gains and losses a hundred years in the future?

A very high carbon price will drastically cut global output, imposing an immediate cost

Stern Report: rejects the idea of discounting future costs and benefits when they are compared with present costs and benefits.

Discounting is unethical in this case because it discriminates between present and future generations. It imposes excessive burdens on future generations.

Immediate action is needed now to prevent catastrophe

Consequences….Assuming current technology, China, India,

remainder of the high growth developing would sacrifice substantial growth and improvement in living conditions

New growth paths would need to be created for low consumption societies

Nordhaus’ rejoinder:Discounting is necessary in order to find a

reasonable balance between present and future. Discounting is fair because a dollar generated

through economic growth, and saved by the present generation becomes fifty-four dollars to be spent by our descendants a hundred years later.

Policy options: mitigation and adaptation. Having more wealth in the future will make

adaptation more affordable. How much costly mitigation is essential now, given our lack of understanding of natural systems?

What Types Of Solutions?Government Fiat/RegulationMarket-based solutionsPolicy criteria: speed of implementation,

extent of compliance, overall effectiveness, incentives for innovation and resilience, transition costs

Example: Burn No More Coal—by government edictVs. A High Carbon Tax

Regulatory vs. Market SolutionsProblems with regulationRelatively static; world is dynamicWe have difficulty anticipating all possible

outcomes of a policy, pro or con, so gaps in regulatory coverage are almost inevitable

…unintended consequences occurIt’s very difficult to estimate costs and

benefits of a proposed policy ex anteCosts and benefits are allocated politically

Problem with marketsThey tend to favor those with resourcesMay be subject to overshooting,Can be gamedOften don’t work when monopoly power….Externalities…Public goods….Common property resources (oceans, air) are

at issueLong-term consequences are usually not

considered.

Framework for Considering Environmental Policy ProposalsValues: Anthropocentric vs. Nature-centricDiscount rate: Low vs. High Sustainability: Weak vs. StrongPreferred solution type: Regulatory vs. MarketAllocation choice: Immediate consumption vs.

InvestmentImpacts on Inequality: Reduce current

inequality or mitigate future environmental harm by limiting growth and ignoring inequality

How do we change our thinking, our systems?Individual changeSystemic change: scale and scope of change

required are daunting May inspire paralysis and inaction

New Thinking Is Needed..From short-term thinkingan economy outside

of naturea linear flow of

resourcesfossil fuelsscarcity emphasis

Tolong-term thinkingan economyintegrated with naturea systems flow of

resourcessolar-derived energyabundance emphasis

What Can We Do?Believe that change is possibleEncourage higher density urban livingMass transitApartments/condos, not housesJobs near population centersTransition in our energy economy: end

subsidiesEconomy/society move to a greater

emphasis on services, social interaction, less on material consumption

What Can I Do? Save more; consume lessRide the busEat food grown locallyMinimize plane travel Compact florescent lights, green powerInsulate your house and keep heat lowRecycle and use recycled products.Lobby for change

WorkshopForm small groups. Pick an organization with which you work or

volunteer. Identify a sustainability challenge faced by

that organization.How can the organization mobilize to meet

that challenge?

SourcesBruner, Bill. Winter 08 lecture notes on sustainabilityNewton, Lisa (2005). Business Ethics and the Natural

Environment. New York: Wiley-Blackwell. Nordhaus, William (2008). A Question of Balance:

Weighing the Options on Global Warming Policies. New Haven: Yale University

Solow, Robert M. (2000). "Sustainability: An Economist's Perspective." Lecture to the Marine Policy Center, Woods Hole Oceanographic Institution, Woods Hole, MA, June 14, 1991. In Stavins, Robert, Ed. Economics of the Environment: Selected Readings. 4th ed. New York, NY: W. W. Norton.

Stern, Nicholas (2007). The Economics of Climate Change: The Stern Review. Cambridge: Cambridge Univ. Press.