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11 - Economics and the governance of sustainable development

Published online by Cambridge University Press:  05 June 2012

By
Simon Dietz  and
Eric Neumayer
Edited by
W. Neil Adger  and
Andrew Jordan
Simon Dietz
Affiliation:
London School of Economics and Political Science
Eric Neumayer
Affiliation:
London School of Economics and Political Science
W. Neil Adger
Affiliation:
University of East Anglia
Andrew Jordan
Affiliation:
University of East Anglia
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Summary

Introduction

In this chapter we assess the role of economics in the governance of sustainable development. First, we investigate how well the mainstream environmental and resource economics paradigm has helped us understand the nature of sustainable development. We explain the context in which this paradigm developed and the main propositions made during its formative years. These help us to understand the paradigm's approach to sustainable development (or sustainability – we do not distinguish between these two terms, although some do). Taken to the limits of formalism, it culminates in the social planner's desire to optimise human welfare over time and the drive to place monetary values on, and aggregate, all forms of wealth, including natural assets. This chapter then outlines the strengths and weaknesses of this paradigm by comparing it with an alternative set of approaches that have come to be known as ecological economics.

Our second question is, how can economics inform governance systems for sustainable development? Thus the final section of this chapter reflects on the contributions that economics can make to the policy process, using two high-profile examples: the Copenhagen Consensus devised by Bjørn Lomborg (Lomborg, 2001) and the Stern Review of the Economics of Climate Change (Stern, 2007). Although economic analysis has much to offer (for example in the design of policy instruments for delivering sustainable development), we caution firmly against a reliance on formal modelling to prescribe a single, optimal path of policy.

Type
Chapter
Information
Governing Sustainability , pp. 259 - 282
Publisher: Cambridge University Press
Print publication year: 2009

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