Ecological Sustainability, Intergenerational Resource Transfer and Economic Development

This chapter explores the implications for sustainable economic development of two important global trends: the increasing link between ecological scarcity and poverty in developing countries, and the growing calls to respect the “sustainability” and resilience of the Earth’s remaining ecosystems. The chapter provides an overview of current economic thinking on sustainability, which is captured in the capital approach to sustainable economic development. In recent years, this approach has been extended to incorporate ecosystems—or ecological capital—as an important yet unique form of economic wealth. But ecosystems are subject to irreversible conversion, and are prone to collapse. Thus, there are concerns that sustainability must encompass limits on the exploitation or irrevocable loss of this essential ecological capital, and a growing scientific literature suggests that there are “planetary boundaries” to the expansion of economic activity and populations. In addition, the economic consequences of ecological decline are not distributed equally across all individuals. Poor people in the rural areas of developing countries are disproportionately affected by the increasing scarcity of ecosystems and their vital goods and services. The chapter therefore explores the policy challenges posed by these two inter-related problems—ecological scarcity and poverty, and ecological sustainability and planetary boundaries. Overcoming these challenges not only is an important strategy for economic development and poverty alleviation but also represents an important a necessary form of intergenerational resource transfer for global sustainability. Finally, the chapter discusses options for dealing with this global market failure through compensating developing countries for conserving ecosystems and biodiversity, international payments for ecosystems services, and new international environmental agreements.