sustainability_economis paper
sustainability_economis paper
Economics Letters 79 (2003) 339–343 www.elsevier.com/locate /econbase I nterpreting sustainability in economic terms: dynamic efficiency plus intergenerational equity Robert N. Stavinsa ,*, Alexander F. Wagnerb, Gernot Wagnerc aJohn F. Kennedy School of Government, Harvard University, 79 John F. Kennedy Street, Cambridge, MA 02138, USA bDepartment of Economics, Harvard University, Cambridge, MA 02138, USA cDepartment of Economics, Stanford University, Stanford, CA 94305, USA Received 20 September 2002; accepted 20 November 2002 Abstract Economists have confined the concept of ‘sustainability’ to intertemporal distributional equity.We propose a broader definition, combining dynamic efficiency and intergenerational equity, and relate it to two concepts from neoclassical economics: potential Pareto-improvements and inter-personal compensation. ? 2003 Elsevier Science B.V. All rights reserved. Keywords: Sustainability; Sustainable development; Intergenerational equity; Kaldor–Hicks criterion; Environmental quality JEL classification: Q01; D90 1. Introduction There has been much debate among economists, and between economists and nearly everyone else regarding the meaning of the frequently employed concept of ‘sustainability’. As one popular periodical wrote in regard to the World Summit on Sustainable Development, held in Johannesburg, South Africa, in 2002, sustainability ‘risks being about everything and therefore, in the end, about nothing’ (The Economist, 2002). Ecologists and many others outside the economics profession have taken sustainability to be the unique and comprehensive criterion that can and should guide global *Corresponding author. Tel.: 11-617-495-1820; fax: 11-617-496-3783. E-mail address: robert stavins@harvard.edu (R.N. Stavins). ] 0165-1765/03/$ – see front matter ? 2003 Elsevier Science B.V. All rights reserved. doi:10.1016 /S0165-1765(03)00036-3 340 R.N. Stavins et al. /Economics Letters 79 (2003) 339–343 development. In contrast, economists...