View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by OpenSIUC UNIVERSITIES COUNCIL ON WATER RESOURCES WATER RESOURCES UPDATE, ISSUE 127, PAGES 20-30, FEBRUARY 2004 Water Resources Sustainability: An Ecological Economics Perspective Christopher Lant Southern Illinois University Carbondale ustainability is both a vague and politicized theoretical revision to neo-classical economic term, yet it is precisely because the world analysis. Second, this theoretical perspective points Scommunity has rallied around sustainability and us toward better methodologies for measuring the sustainable development as normative goals of value of water in competing uses. Third, it helps us ecological-economic performance that the stakes are identify the program of institutional reform that has high for defining the concept in a manner that is true the best chance of delivering more sustainable water to its spirit. To do so, one must counteract definitions resources management practices. that either suit particular interests or are so broad and vague that most of what people do for self- An Ecological Economics interested reasons fits within them. Like other fields, View of Sustainability water resources has struggled to bring the concept of sustainability to bear in the realm of practice. For An ecological economics view of sustainability is example, what allocation of water in the Klamath inevitably based in systems thinking (Capra 2002; River basin best achieves sustainability? Are plans Costanza et al. 1993; Costanza 2001). Figure 1 to pipeline fossil ground water from the Ogallala of presents a systems conceptualization of sustainable North Texas to the growing cities of Dallas and San development where natural, human, intellectual and Antonio consistent with sustainability? Is it manufactured capital are transformed continuously, sustainable to forego renewable hydroelectric power one into another, by the processes of the market in hopes that it will prevent the extinction of a strain economy. The system is driven by low-entropy solar of chinook or coho salmon? Is the recent completion energy and evolves through the process of of the Three Gorges dam project on the Yangtze interactions among its interdependent components River an example of sustainable development? How (Capra 1996), releasing high entropy heat as waste. sustainable is it to live in a world where about one A component of this system is the market economy billion people lack access to safe drinking water and as analyzed by neo-classical economics, where land, two billion lack access to the basic benefits of the labor and capital are obtained as factors to produce sanitation revolution (DeVilliers 2000)? goods and services for consumption and investment To bring life to the concept and goals of that are measured as economic output. sustainability, it must guide us toward the best In contrast to neo-classical economics, ecological answers to these questions. Building a functional economics views production and consumption of and operational definition of sustainability is the marketable goods and services as only an important challenge. Ecological economics helps us make more part of a larger process. Neo-classical economics sustainable water resources decisions in three views manufactured capital (i.e., infrastructures of important ways. First, it provides a needed various kinds) as essential to economic production. UCOWR 20 WATER RESOURCES UPDATE Water Resources Sustainability: An Ecological Economics Perspective Figure 1. A systems conceptualization of sustainable development. Recent literature emphasizes the critical importance and social. Consequently, increasing economic output of intellectual capital as the driving force of the in the short term by diminishing one or more of these information revolution. Social scientists have capital stocks is “unsustainable,” unless that capital extended the analysis to include human and social stock is in long-term surplus supply. For instance, capital and ecological economics has extended it the 18th and 19th Century American pioneers found further to include natural capital. Human capital is a frontier enormously rich in natural capital (e.g., the set of attributes (e.g., knowledge, skills, attitudes, forests, fertile soils, fish and wildlife populations, mental and physical health, etc.) that determine useful mineral deposits, unpolluted waters), but individuals’ capacity to contribute to society. While impoverished in human-derived forms of capital in a definitions of social capital vary, it is usefully form suitable to their purposes (as opposed to Native conceived as the set of historically developed American forms and purposes). For them, liquidating institutions that structure the productive and this natural capital in order to transform it into reproductive process as a whole. Natural capital is manufactured and human capital increased the value both the standing stock of natural resources that of the overall capital stock available to frontier society await future use and the characteristics of and was necessary for the development process to ecosystems that maintain ecological and be sustaining. But times have changed. Natural environmental processes, such as biological capital, historically taken for granted as a free good productivity and diversity and biogeochemical or accounted for only when it is used as an industrial cycling. raw material, is more and more often one of the Economic production is absolutely dependent in limiting factors in the system as a whole, in the same the medium-to-long term on each of these forms of sense that Phosphorus is often the limiting factor in capital: natural, human, manufactured, intellectual algal growth. A sustainable economy must therefore WATER RESOURCES UPDATE 21 UCOWR Lant limit withdrawals from and produce investments in and habitat for the tremendous diversity of life of all forms of capital, working synergistically with non- this planet. The ecosystem functions that generate economic processes of natural and social these ecosystem services are the biogeochemical reproduction, to ensure that no form of capital is processes that make some parts of the Earth, and diminished in order to increase short-term output of no other place that we know of, habitable. marketable goods and services. That is sustainable An ecological economics approach to development. sustainability provides a valuable critique of neo- If various forms of capital were completely classical macroeconomics by pointing out that substitutable, the “weak” sustainability criterion economic growth can occur in positive, neutral, or would be satisfactory. As long as we maintain the negative ways with respect to sustainability. aggregate capital stock, shortages in one form of Sustainable economic growth occurs when new capital (e.g., natural capital) could be substituted for applications of knowledge (intellectual capital) allow by investments in other forms (e.g., manufactured a society to increase the efficiency with which capital). But since these forms of capital are various forms of capital are utilized to produce goods incompletely substitutable in practice, the “strong” and services. This occurs through new or improved sustainability criterion should hold—each form of technologies, better systems of social organization, capital must be protected from degradation (Pearce better means of making the experience of work an et al. 1992; Tietenberg 2003). Manufactured capital investment in rather than a withdrawal from human can occasionally substitute for natural capital in the capital, or more efficient transformation of natural production of ecosystem services.1 For example, capital into products. Hawken et al. (1999) provide levees and flood control reservoirs contain flood convincing evidence that the modern western waters formerly held by wetlands and organic matter industrial system, especially that of North America in soils. Wastewater treatment plants accelerate and Australia, is very efficient at utilizing labor and the rate at which aerobic bacteria oxidize organic manufactured capital, but is not an efficient matter. In most cases, however, natural capital (i.e., transformer of natural capital into economic value. nature itself) is the most efficient and effective Huge improvements can thus be made with current producer of ecosystem services. Even in the example technology; the developed western European and given, levees and reservoirs can provide flood control Japanese economies provide working examples of services in lieu of wetlands, but they do not provide some of these improvements. Because this type of equitable services in terms of habitat or economic growth reinforces each of the system biogeochemical processing. This illustrates the need components in the long term, it is the core of to maintain natural capital as the best means to sustainable development. generate multiple ecosystem services in most Neutral economic growth occurs when important instances. Achieving a better understanding of social processes (e.g., cooking meals, raising children, ecosystem services, the ecosystem functions that growing food) or natural processes (e.g., maintain them, and the ways in which they contribute maintenance of soil fertility) that have heretofore to human capital is, consequently, a key research occurred in the non-market spheres of ecological or agenda as identified by the National Science social reproduction are incorporated within the Foundation (NSF Advisory