II. Environmental protection in economic thinking
6. Theory of Sustainability
6.2. Resources to Be Sustained
its leaders, whether they recognize the critical resource type whose quantita-tive expansion or qualitaquantita-tive improvement can contribute most to increasing the output.
However, some features should always be taken into consideration:
• One of the differences between the natural capital and the other three resources is that the natural resources are more difficult to replace, and in some cases, the change may be irreversible: for example, ex-tinct species cannot be brought back to life, and critical changes in the climate may lead to irreversible changes.
• Fairly balanced development is needed (or, in the case of natural cap-ital, the existing resources must be preserved) because it is not enough to have some resource elements that are highly developed even in global terms if other resource elements are lacking or are of very low quality. A persistently high-quality output requires the satisfactory status of all resource elements.
• There is a strong transverse relationship between many resource types. A better-educated society is also generally more health-con-scious: people tend to smoke less, do more regular physical exercise, and are, therefore, healthier. In a healthier society, fewer working hours are lost because of sickness-related absence. More highly qual-ified people tend to be more aware of the environmental impact of their consumption, and a society that is richer in knowledge capital may be more prone to ensure better protection of the natural capital.
A society with a constantly shrinking population is also an aging so-ciety, where it becomes more difficult to maintain health and funding problems concerning social security (the maintenance of the pension system) may also arise.
For centuries, the resource management pattern of societies was based on the expansion of all resources, but that included the reduction of natural re-sources. There was a trade-off: the natural capital was reduced (through over-fishing in the seas, deforestation, exploitation of soil fertility, over-pollution of the air or water, biologically active surfaces being covered with concrete, etc.), while the other three resources were increased.
Y = f(Km, Kh, Ks, Kn)
The emergence of the scarcity of natural resources in the second half of the 20th century raised the question of whether it is possible to maintain a per-sistently high level of output if the amount of natural capital falls below a
critical level. Has the age of the trade-off of natural resources come to an end? Furthermore, if so, is it possible to develop physical, human and social resources in a manner that allows for the replacement of the income benefits that had been previously generated by the exploitation of the natural capital?
In this context, two concepts of sustainability have been developed. The measure of weak sustainability is the persistent non-declining level of output (production potential), where possible. According to the weak sustainability criterion, the trade-off between resources is possible, and the natural capital can be further reduced. However, according to the strong sustainability cri-terion, any loss of natural capital that would result in a partial loss of Y is prohibited.
Thus, the criterion of weak sustainability is:
δK(t)/δt ≥ 0, for all cases of t > t(0), where t means time and t(0) is the current moment.188
The criterion of strong sustainability suggests that a management system must be developed in which natural resources are replaced and maintained in such a way that, in the long term, the margin of the production potential should not be reduced even if the other production factors remain unchanged at the same time. With this, substitution is forbidden: natural resources can-not become scarce even in themselves, and the expansion of the other three production factors cannot compensate for the possible reduction of natural resources.
Thus, the criterion of strong sustainability is:
δK(t)/δt ≥ 0 and δKn(t)/δt ≥ 0, for all cases of t > t(0).189
In other words, the above (previously weak) sustainability criterion must also be fulfilled in terms of the natural capital alone, and substitution is only pos-sible between non-natural capital types.
188 Hanley and G. Atkinson (2003): Economics and Sustainable Development: What Have We Learnt, and What Do We Still Need to Learn? in F. Berkhout, M. Leach and I. Scoones (eds.), Negotiating Environmental Changes: New Perspectives from Social Science, Edward Elgar, Chel-tenham, UK
189 Ibidem.
Weak and strong sustainability
Weak sustainability Strong sustainability Main idea: The maintenance of
re-sources in general
Natural resources should not become scarce even in them-selves
Focus of analysis: Supporting decision-making through marginal analyses
Absolute magnitude and ex-tent of material and energy use Method of
assessment:
In monetized values In physical and biological val-ues used in natural sciences Discounting: Permitted, but determining
the adequate social discount rate is an issue
Disapproved due to ethical reasons; resources must be fairly distributed among gen-erations
Pricing of natural resources:
Prices give an efficient indi-cation of the relative scarcity of resources
Prices are unreliable due to the frequency of externalities Technological
development:
It makes it possible to avoid the reduction of future pro-duction potential even when natural resources continue to be used.
It is not a solution because new technologies generate new environmental problems.
Extent of govern-ment intervention:
Enforcement of internalisa-tion regulainternalisa-tions and the rules of private law
Furthermore, determining the maximum size of the econ-omy and ensuring fair distri-bution among generations Role of economic
analysis:
Finding the optimal level of natural resource use
The irreversible processes, un-certainty and the stability of ecosystems should also be taken into account.
Source: Hanley, Shogren and White (2007)190, based on van Kooten and Bulte (2000)191, in Bartus and Szalai (2014)192.
190Hanley N., J.F. Shogren and B. White (2007): ‘Environmental Economics’, in Theory and Prac-tice, Palgrave Macmillan, Basingstoke, UK – New York, N.Y., US
191 Kooten G.C. van and E.H. Bulte (2000): The Economics of Nature: Managing Biological Assets, Blackwell Publishers, Oxford, UK
192 Bartus and Á. Szalai (2014): Környezet, jog, közgazdaságtan [Environment, Law, Economics], Pázmány Press, Budapest