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Sustainable Economic Development. A Paradigm Change

Author

Listed:
  • Angela Köppl

    (WIFO)

  • Claudia Pichl

    (WIFO)

Abstract

At the turn of the last decade a paradigm change in environmental policies became apparent. At the end of the 1970s and at the beginning of the 1980s, during the first environmental revolution, environmental problems were seen as a potential conflict between economic growth and the quality of the environment; since the end of the 1980s, however, the new concept of "sustainable development" which has guided the discussion and policies regarding the environment, has implied the possibility of a complementary relationship between the environment and economic development. The beginning of the second "environmental revolution" at the end of the 1980s manifests itself in new questions: in what way should the environment be considered in economic processes in order to secure a sustainable development path? Questions of how to manage the economy or how to achieve economic growth without harming the environment have become relevant. The functions and services of the environment are not boundless. This fact was taken into account in defining guidelines for a sustainable development in the Brundtland report, for example, in the following way: "Sustainable development is a development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Thus, the sustainable development path is geared towards regional as well as intertemporal equity, and the goals of sustainable development include in addition to economic goals in the narrow sense others such as ecological and social goals. The research that has attempted to draw up guidelines governing sustainable development has defined goals that are fraught with uncertainties. These uncertainties are related to technological development, the uncertainties in the knowledge regarding the manifold interdependencies in the ecological system, and the uncertainties and quantification problems arising in formulating welfare indicators. The transition to a development which is in accordance with the new guideline is more clearly discernible. Given the rising importance of the new concept of "services", it is imperative to reduce the pollution and exhaustion of environmental resources per unit of service of, for example, energy. A pragmatic approach is the reduction in throughput; the efficiency of the material flows should be increased without reducing the volume of welfare-producing services. Attaining the goal of sustainable development presupposes the creation of a reporting system which supplies information on the input and throughput of materials and the resulting burden on the environment. The rise in efficiency presupposes that technical progress is steered in a certain direction. The paradigm of "sustainable development" can also be viewed as a new paradigm of technological development. The use of clean technologies, in particular, should be promoted. The institutional background and environmental instruments providing the right incentives play an important role in realizing the savings potential and/or the use of clean technologies. Given the medium-term goal of changing the proportions of capital, labor, and resources as well as the direction of technical progress, economic instruments have gained in importance, complementing environmental regulations. These instruments, such as taxation of inputs harmful to the environment, lead in the medium term to the deployment of other technologies which use less of these production factors, but perhaps require more know-how or labor.

Suggested Citation

  • Angela Köppl & Claudia Pichl, 1995. "Sustainable Economic Development. A Paradigm Change," WIFO Monatsberichte (monthly reports), WIFO, vol. 68(11), pages 691-696, November.
  • Handle: RePEc:wfo:monber:y:1995:i:11:p:691-696
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