Brief for GSDR 2015 The Concept of Sustainable Development: Definition and Defining Principles Rachel Emas, Florida International University* Introduction those external costs. By levying this charge, called In 1987, the Bruntland Commission a Pigouvian tax, the market price will more published its report, Our Common Future, in an accurately reflect the comprehensive costs and effort to link the issues of economic development benefits of the activity. and environmental stability. In doing so, this report provided the oft-cited definition of From this, Michael Porter and Claas van sustainable development as “development that der Linde theorized that pollution is a sign of meets the needs of the present without inefficient resource use. Therefore, win-win compromising the ability of future generations to opportunities for the environment and economy meet their own needs” (United Nations General can be captured through improvements which Assembly, 1987, p. 43). Albeit somewhat vague, reduce pollution in production processes (Porter this concept of sustainable development aims to & van der Linde, 1999). These authors argue that maintain economic advancement and progress competitive advantages rely on the capacity for while protecting the long-term value of the innovation; thus, “by stimulating innovation, strict environment; it “provides a framework for the environmental regulations can actually enhance integration of environment policies and competitiveness” (Porter & van der Linde, 1995, development strategies” (United Nations General p. 98). As the Porter Hypothesis states, properly Assembly, 1987). However, long before the late designed environmental policies that make use of 20th century, scholars argued that there need not market incentives can encourage the introduction be a trade-off between environmental of new technologies and reduce production sustainability and economic development. waste. The tests of this theory have yielded mixed results, but scholars generally agree that Economics of Sustainability policy design and public support are crucial By utilizing economic tools, early theorists elements to the success of these incentives. offered that policies to protect the environment Nonetheless, market-based environmental tools could also promote innovation and turn a profit. are generally perceived as more “business In 1920, Arthur Pigou noted that the presence of friendly” than traditional command and control incidental, uncharged services act as a barrier to policies (Cooper & Vargas, 2004). achieving equilibrium in the market. In his work “The Economics of Welfare”, Pigou noted that the The appreciation of our natural resource divergence between marginal private costs and constraints is also in our best interest. Truly benefits and marginal social costs and benefits rational and “effective governance requires a create what we now call “externalities” (Pigou, nation to consider and protect the environment 1920). These externalities are conceived as and natural resources on which its current and transaction spillovers, or costs and benefits future development depend. Any other approach unaccounted for in the given price of a good or is self-defeating. The connections between the service. In order to correct the market failure, environment and development thus provide a Pigou proposed a tax on those activities that powerful rationale for environmental protection: produce negative externalities at a rate equal to enlightened self-interest” (Dernbach J. C., 1998, p. 1 [email protected]. *The views and opinions expressed are the author’s and do not represent those of the Secretariat of the United Nations. Online publication or dissemination does not imply endorsement by the United Nations. 20). This inherent interdependence between the In the application of this definition of long-term stability of the environment and the sustainable development, one issue concerns the economy is the foundation of the field of substitutability of capital. There are several types sustainable development. Similar to Porter’s win- of capital: social, natural, and man-made. The win hypothesis that a trade-off isn’t necessary, definition of weak sustainable development sustainable development policies look to tackle explains that only the aggregate level of capital the sources of environmental degradation, not matters: man-made, or manufactured, capital is just the symptoms, while still providing an adequate alternative to natural capital. Strong opportunities and creating incentives for sustainability, on the other hand, recognizes the economic advancement (Porter & van der Linde, unique features of natural resources that cannot 1995). be replaced by manufactured capital. Most ecologists and environmentalists are proponents Components of a healthy environment, of the strong sustainability definition (Stoddart, such as clean air and water, are considered public 2011) . goods in that they are non-rivalrous and non- excludable. Thus, it is up to the public sector to In addition to substitutability, this maintain the provision of these goods and definition of sustainability is also founded on services. More recently, nations have moved several other important principles. Contained towards the implementation of these market- within the common definition of sustainable based mechanisms to internalize the complete development, intergenerational equity recognizes costs of pollution and ensure long-term stability the long-term scale of sustainability in order to of the environment; in other words, to ensure address the needs of future generations sustainable development. (Dernbach J. C., 1998; Stoddart, 2011). Also, the polluter pays principle states that “governments Sustainable Development: Definition and should require polluting entities to bear the costs Principles of their pollution rather than impose those costs Although many definitions abound, the on others or on the environment” (Dernbach J. C., most often used definition of sustainable 1998, p. 58). Thus, government policy should development is that proposed by the Brundtland ensure that environmental costs are internalized Commission (Cerin, 2006; Dernbach J. C., 1998; wherever possible; this also serves to minimize Dernbach J. C., 2003; Stoddart, 2011). This broad externalities. definition, which will be used in this dissertation, does not limit the scope of sustainability. The The precautionary principle establishes explanation does, however, touch on the that “where there are threats of serious or importance of intergenerational equity. This irreversible damage, lack of full scientific certainty concept of conserving resources for future shall not be used as a reason for postponing cost- generations is one of the major features that effective measure to prevent environmental distinguish sustainable development policy from degradation” (United Nations Conference on the traditional environmental policy, which also seeks Human Environment, 1992). Therefore, the to internalize the externalities of environmental proponent of an activity bears the burden of degradation. The overall goal of sustainable proving that this action will not cause significant development (SD) is the long-term stability of the harm. Explicitly stated in the Rio Declaration, the economy and environment; this is only achievable notion of common but differentiated through the integration and acknowledgement of responsibilities recognizes that each nation must economic, environmental, and social concerns play their part on the issue of sustainable throughout the decision making process. development. This principle also acknowledges the different contributions to environmental degradation by developed and developing 2 nations, while appreciating the future Cooper, P. J., & Vargas, M. (2004). Implementing development needs of these less developed sustainable development: From global countries (Brodhag & Taliere, 2006; Dernbach J. policy to local action. Lanham, MD: C., 1998; United Nations Conference on the Rowman and Littlefield Publishers, Inc. Human Environment, 1992). Developed nations, Dernbach, J. C. (1998). Sustainable development therefore, bear greater responsibility in light of as a framework for national governance. the resources they require and the pressures they Case Western Reserve Law Review, 1-103. exert on the environment. Dernbach, J. C. (2003). Achieving sustainable development: The Centrality and multiple The key principle of sustainable facets of integrated decisionmaking. development underlying all others is the Indiana Journal of Global Legal Studies, integration of environmental, social, and 247-285. economic concerns into all aspects of decision Pigou, A. (1920). The Economics of welfare. making. All other principles in the SD framework London, England: Macmillan and have integrated decision making at their core Company. (Dernbach J. C., 2003; Stoddart, 2011). It is this Porter, M. E., & van der Linde, C. (1995). Toward a deeply fixed concept of integration that new conception of the environment- distinguishes sustainability from other forms of competitiveness relationship. Journal of policy. Economic Perspectives, 97-118. Porter, M. E., & van der Linde, C. (1999). Green Institutionally, government organizations and competitive: Ending the stalemate. are typically organized into sectoral ministries and Journal of Business Administration and departments. This works fairly well until the Politics, 215-230. system encounters something very Stoddart, H. (2011). A Pocket guide to sustainable comprehensive