Peter Diamandis: Abundance is our Future. Available at: is_our_future.html

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1 Peter Diamandis: Abundance is our Future. Available at: is_our_future.html Paul Gilding: The Earth is Full. Available at: What is Sustainability? Three Models: Three legged stool Three overlapping circles Three nested dependencies Sustainable Development Constraints on Growth Weak vs. strong sustainability Social Bequests 1

2 Three-Legged Stool A common model of sustainability is made up of a triad of economical, social, and environment sustainability. Sustainability Three-Legged Stool The three-legged stool model reinforces the three dimensions that are required for us to enjoy a high quality of life and suggests that society is unstable if one of them is weak. This model suggests that three simultaneous goals must be achieved: economic profitability, social responsibility and environmental conservation. This is also often called the triple bottom line perspective. 2

3 Three-Legged Stool Many argue that this model may be a good accounting tool but not an effective or realistic way of characterizing sustainability. Fundamentally the triad model is based on a triangle of forces in balance. To achieve environmental sustainability we need to change both society and the economy. We cannot have a stable triangle where we are trying to sustain all three systems in their existing state. The paradox we face is that we need to find ways to curb consumption while spreading the capacity to consume. This paradox at the heart of our attempt to achieve environmental sustainability and is glossed over with the idea of the three-legged stool. Three Overlapping Circles The overlapping-circles model of sustainability acknowledges the intersection of economic, environmental, and social factors. 3

4 Three Overlapping Circles However, this model implies that the economy can exist independently of society and the environment i.e., that the part of the red circle that does not overlap with the blue and green circles has an existence of its own. Three Nested Dependencies The three-nested-dependencies model reflects a co-dependent reality. It shows that human society is a wholly-owned subsidiary of the environment that without food, clean water, fresh air, fertile soil, and other natural resources, society and economy cannot survive. 4

5 Three Nested Dependencies For example, if one were to ask, Was the devastating collapse of the cod fishery off the east coast of Newfoundland an environmental disaster, a social disaster, or an economic disaster? one would have to answer, Yes. Three Nested Dependencies This model also emphasizes that it s the people in societies who decide how they will exchange goods and services. That is, we decide what economic model to use. Because we create our economies, we can change them if we find our current economic models are not working to improve our quality of life. (i.e., the economy is the tail and society is the dog not vice versa) 5

6 Starting Place for Conceptualizing Sustainability The real world This photo reminds us of a stark reality: there is no umbilical cord going somewhere else; we must live within the carrying capacity of the planet. The three nested dependencies model reflects this reality. The Difficulty of Protecting the Biosphere The global biosphere has one energy input and no output for waste. There is growing recognition that the action of man is causing catastrophic changes to the global biosphere. One of the dilemmas is the scale of the problems, which dwarf a single human actor. A single human cannot directly act to influence the biosphere but rather the collective action of society through its institutions and market economy is what is important. 6

7 Society and Transportation Patterns An example is a single driver making a single trip that driver perceives that his individual action has minimal impact. However, when that trip is multiplied by millions we begin to see a noticeable effect on the biosphere. However, this one trip by a given driver and the millions of other trips by his peers are only possible because they are facilitated by society. Society and Transportation Patterns Transportation patterns feed into other socially created patterns, including land use, distribution of goods, distribution of social opportunities, health and diseases. and some of these patterns, including the production of goods and services and the distribution of land use, feed back into transportation pattern. Based on these relationship billions of trips are made each day leading to changes in the biosphere and affecting the fate of all species on the planet. 7

8 Changing Society Therefore, the key to understanding sustainability is twofold: Individuals can only have a significant effect on the biosphere through social institutions and mechanisms. Individuals are capable of changing society and its institutions. The Environmental Constraints on Growth The problem is that conventional economic analysis does not account for the constraint on the economy of the limited capacity of the natural environment. For example, there is no economic mechanism in place to put a value on the fact that oil is a finite resource. Market price react to the scarcity of oil at a given point in time but not to its overall scarcity in an absolute sense. The implication is that the economy must be constrained by both social and environmental considerations. 8

9 Sustainable Development Development that meets the needs of the present without compromising the ability of future generations to meet their own need. Intra- and inter-generational equity Anthropocentric Intragenerational Principles Reduce gross inequities between the poorest and wealthiest both nationally and globally Meet the basic needs of the poorest with food, shelter, healthcare, clean water, access to electricity, education, and opportunity for work Avoid exploitation of poorer country/region resources and labor to create even greater wealth for the richest Provide ways to protect the common good (social, environmental, economic) locally and globally through national and international governance/cooperation Maintain stable institutions that protect human rights, adjudicate conflicts, and allow responsible trade and market economy activities Intergenerational Principles Trustee: Every generation has an obligation to protect interests of future generations Chain of obligation: Primary obligation is to provide for the needs of the living and succeeding generations. Sustainable Development Sustainability of what exactly? non-declining aggregate output or consumption non-declining utility non-declining aggregate resources (productive base) non-increasing pollution 9

10 Weak Sustainability Sustainability is an obligation to conduct ourselves so that we leave the future the option or the capacity to be as well off as we are. Weak sustainability: any loss of natural capital should be balanced out by creation of new capital of at least equal value. Assumes natural capital and man-made capital are substitutes. This is the approach taken by most neoclassical economists. Key Criterion: Does the combined value of all assets remain constant? This makes it possible to substitute one form of capital for another. Thus natural capital can be depleted or the environment degraded as long as there are compensating investments in other types of capital. Strong Sustainability For renewable resources: Keep the annual offtake equal to the annual growth increment (sustainable yield). For non-renewables: Deplete non-renewables at a rate equal to the development of renewable substitutes. These can be summarized as: Never reduce the stock of natural capital below a level that generates a sustained yield unless good substitutes are currently available for the services generated. These guidelines are examples of strong sustainability: natural systems should be maintained whenever possible. Critical natural capital should be preserved under all circumstances. Assumes natural capital and man-made capital are compliments. This approach is taken by most ecological economists. 10

11 Differing Viewpoints Neoclassical vs. ecological economics Neoclassical economists: Man-made capital and natural capital are substitutes. Economic well-being covers all other concerns. Sustainability is thus an argument for dynamic efficiency. Thus, a measure of economic welfare simply needs to be maximized. Ecological economists: Man-made capital and natural capital are compliments. Substituting financial capital for natural resources is incompatible with maintaining a suitable physical environment for the human species. We must step outside the conventional economic framework to establish the conditions for human happiness A key concern is the carrying capacity of the environment. Weak vs. Strong Sustainability Over the long term for strong sustainability: forest destruction <= forest regeneration carbon emissions <= carbon fixation fish catches <= regeneration capacity soil erosion <= soil formation 11

12 Sustainable Development Others have suggested a better approach to sustainability would be that of social bequests. The social bequest approach changes the focus to what, rather than how much, we leave to future generations. When the problem is phrased as how much this always implies that some amount of a resource should be used and some left. This change would free us from a 'zero-sum' game in which our gain is an automatic loss for future generations. The example of rainforests illustrates this point: If we decide to use 25% of a rainforest and leave the rest, but then the next time we make a decision we start all over again and use 25% of what s left, and so on, eventually there will be no rainforest left. By focusing on bequests of specific rights and opportunities for future generations, we can remove ourselves from the straightjacket of substitution and marginal tradeoffs. 12