The Costs of Achieving Sustainability

The emergence of the concept of sustainable development has encouraged economists and decisionmakers to look at the the extent to which established systems for national accounting (SNA) can be modified to take account of concerns for ecological sustainability. In this paper, we examine carefully definitions of and methods for arriving at, "corrected aggregates" -- variously called "Green GNP", "environmentally corrected national income" (EN!), and"sustainable national income" (SNI) -- and their relationships to the "weak" and "strong" criterion of sustainability. In particular we consider the relation between an estimate of a SNI, and various measures that have been proposed for estimating an "environmentally corrected national income" (EN!). Two main types of EN! "correction" methodologies are distinguished and discussed: (i) those based on capital theory and the idea of accounting for depreciation of "natural capital" stocks; and (ii) those based on identification in biophysical, ecological and social ternzs of norms for sustainability, with subsequent estimates of the costs of achieving these norms. Our main conclusions are: (1) with careful applications, these two approaches can be regarded as complementary for the estimation of an EN!; (2) in no instances do these measures of an ENI correspond to estimations of SNI for a country. Rather, the existing ENIs can be regarded as embodying information about the "costs of achieving sustainability" given the existing capital stocks and about the "distance separating a country from sustainability". Conceptual and enzpirical estimation work should proceed by exploring the relationship between EN! and SNI as distinct and complementary policy reference points.

Issue Date:
Oct 01 1994
Publication Type:
Working or Discussion Paper
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