Sustainable Development

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 In the late 1970’s, development economists began seriously
rethinking macroeconomic policy recommendations would be
incomplete without reference to natural and environmental
issue.
 But the earlier models ignore N&Er

 The new approach in development studies- HNCD-

considered the issue N&Er into its analysis
 So, the earlier dominant development, Modernism,
was substituted by the concept of sustainable
development.

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 The World Commission on Environment and Development
(WCED), in 1987 Brundtland Commission Report Our Common
Future clearly explained the concept of sustainable
development.

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 The most immediate and perhaps one of the most significant
results of Our Common Future was the organization of the
 UN Conference on Environment and Development
(UNCED), also known as the Earth Summit, which
gathered many heads of state in Rio de Janeiro in 1992.
 This meeting bring together 108 government leaders, more
than 2,400 representatives from nongovernmental
organizations (NGOs) attended, and 17,000 people
participated in a parallel NGOs event.
 Produced Agenda 21

 Key commitments in the Rio Declaration included integration

of environment and development in decision making.

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 On the eve of third millennium United Nations formulated
MDGs by incorporating the ideology of 1980s and 1990s.
 This agenda was officially recognized following the
millennium summit in 2000, where all the world leaders
present adopted the United Nations Millennium
Declaration.
 The aim of MDGs is to encourage development by
improving social, economical and environmental
conditions in the World’s poorest countries.
 Ensuring environmental sustainability is the seventh
goal of MDGs.

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 On 25 September 2015, the 193 countries of the UN General
Assembly adopted the 2030 Development Agenda titled
Transforming our world: the 2030 Agenda for Sustainable
Development.

 The Official Agenda for Sustainable Development has 92

paragraphs, with the main paragraph (51) outlining the 17
Sustainable Development Goals and its associated 169 targets.

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 Assumptions
 Over depletion and degradation of global resources: the
atmosphere and oceans mainly by developed countries.
 Many developing countries have economies that are dependent
on exports of primary commodities.
 This leads to a tendency to over-exploit their own
resources in order to produce more.
 Sustainable development is a concept intended to link economic
development to the environment– so that current economic
activity meets the needs of the present but does not compromise
the ability of future generations to meet their needs.
Criticisms
 Developed countries blamed developing countries for their
excessive exploitation of natural resources and developing countries
blame developed countries for their emission gases they release from
their industries.
 Blaming each other has created a problem than being a solution
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 Several people defined SD from different perspectives.
 Accordingly, there are various definitions of Sustainable
Development.

 Some of the well known definitions are as follows

 “To improve the quality of life while living within the
carrying capacity of ecosystems”
 Maintaining a balance between the human need to improve
lifestyles and feeling of well-being, and Preserving natural
resources and ecosystems, on which we and future
generations depend.
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 Sustainable development is commonly defined as
“Development that meets the needs of the present without
compromising the ability of future generations to meet
their own needs”

 This definition is considered as the standard definition of SD,

because of its widespread use and frequency of citation.

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 From all definitions we can, possibly, conclude that:
 Sustainable development is development that lasts.

 Sustainable development is the effective use of resources

for economic development by considering the future
generations.
• In other words, sustainable development
interlinks the development and carrying
capacity of environment.

 While discussing about SD, it is not reasonable to argue

that all natural resources should be preserved.

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The goal of SD
 The goal of sustainable development is principally equity,
rather than efficiency, issue.

 Achieving sustainable development involves achieving

equity both
 within generations (intragenerational equity) and

 Across generations (intergenerational equity).

 Economic efficiency is not a sufficient condition for sustainable

development.
 This is, however, not to say that economic efficiency is
irrelevant to sustainable development.
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 In general SD implies
 A desirable human condition
 Improving the well-being of mankind in different
aspects.

 Enduring ecosystem condition

 long lasting nice ecosystem

 Having an ecosystem that supports human life and

others.

 A balance between
 present and future generations; and

 within the present generation

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 In other words, SD encompasses the three general policy areas
namely
 Economy

 Environment and

 Society.

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 Models help us understanding the concepts of Sustainability
better.
1. Three Pillar Basic Model
 This is one of the most well-known models created using the
three dimensions –
 Economy

 Environment and

 Society

 This model is called ‘three pillars’ or ‘three circles model’.

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 2. The Egg of Sustainability
 It illustrates the relationship between people and ecosystem as
one circle inside another, like the yolk of an egg.
 This implies that people are within the ecosystem, and that
ultimately one is entirely dependent upon the other.

 So, a society is well and sustainable only if both, people

and the eco-system, are well.
 Thus, according to this model:
 sustainable development= human well-being +
ecosystem well-being
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Eco-system

People

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 Sustainability rules holds that future generations should be left
no worse off than current generations and should be better-off.
 This implies that the allocation that affects the future
generation is unfair.
 Now let us the two important rules of sustainability

1. The Hartwick-Solow approach

 This approach proposed a rule for ensuring non-declining
consumption.
 According to this approach, so long as the stock of capital
did not decline over time, non-declining consumption was
also possible.
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 2.Non-declining natural capital stock approach (the London
School)
 This approach suggests the limited substitutability between Km
and Kn.

 Thus in this approach, if it is possible to maintain some

amount of Kn constant, this holding constant of Kn becomes
a rule for sustainable development.

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 THE END

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 Section Three
National Accounting Practices and Macroeconomic
Performance

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 National Income Accounting
 It is used to summarize, measure and assess the performance
of the economy and contribution made by different sectors of
the entire economy over a specified period of time.

 The conventional governmental measures of macroeconomic

performance such as GNP convey no information on the state of
the environment
 Hence, considered inappropriate for evaluating long-
term welfare aspects and sustainability.

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 But the reality is that true national income, particularly in the
case of developing countries, rely heavily on the exploitation of
natural resource.
 As a result, it is important to consider the state of environmental
and natural resources in national accounts.
 So, experts or Economists developed a newer system of national
account, which is called Natural Resource Accounting (NRA)
 Natural Resource Accounting (NRA) is one of the emerging
tools and approaches for integrated economic and
environmental management and development planning
 It provides more accurate indicator of

• macroeconomic performance and

• well-being (sustainable development)

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 Therefore,
 NRA will enhance the capacity of policy-makers and
development planners
• To properly evaluate the complex trade-offs
between economic expansion and
environmental degradation.

 Some examples of NRA approaches are the following

 Physical Resource Accounts (PRA) approach
 This method attempts to account for the extraction
and use of natural resources and the generation of
waste and environmental externalities in physical
terms.
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 Monetary Accounting approaches
 This approach states that
 stocks of natural resources -such as oil and gas
reserves, stocks of fish and soon- should be treated
in the same way as stocks of man-made capital (km)
and
 A deduction should be made to allow for the
depletion or consumption of these natural resources

 Hence we have two methods that enable us to deal with

depletion of kn.
• The depreciation approach
• The User Cost approach
• Genuine Saving approach

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