Sustainability

Interpreting Sustainability

G.M. Heal Columbia Business School

May 1996.

This research was supported by grant number 93-09610 from the NSF, and by a grant from the Fondazione Eni Enrico Mattei. I am grateful to Graciela Chichilnisky for valuable comments on this paper, and to Andrea Beltratti and Bob Solow for insightful discussions of the issue of sustainability. This is a development of a plenary talk given at the 1994 Annual Meetings of Social Science Federation of Canada in Ottawa, and subsequently presented at the Stanford Environment Forum. I have benefitted from the comments of participants at both meetings, especially Paul Ehrlich, Bill Reilly and Jonathon Roughgarden.

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Abstract Sustainability is unimportant, influential but elusive concept. I review concepts related to sustainability in earlier literature, and then summarize and synthesize recent work on sustainability by Chichilnisky [9], Beltratti Chichilnisky and Heal [6], [5], and Heal [24]. This provides a basis for formalizing the concept and operationalizing it via shadow prices and associated accounting practices.

For an electronic copy of this paper, please visit: http://ssrn.com/abstract=1693

1 Interpretations of Sustainability

"Sustainability" had become quite uninfluential and widely-used word. At the Earth Summit in Rio considerable attention was devoted to sustainability. and the concept is embodied in the resulting UN Framework Convention on Sustainable Development. In addition. the OECD. the UNCTAD, and the U.S. Presidential Council on Sustainable Development. and many other domestic and international policy-oriented institutions. are devoting time and energy to the analysis of sustainable policies. An economic theorist or a public policy economist could easily find this very worrying. for sustainability y is not part of our lexicon, as Solow has lucidly noted [41]: it has as yet no established meaning. There is a literature on sustainable development. which I shall...