Economic Sustainability And Economic Development - 1913 Words

Sustainable. Often heard used as a marketing buzzword to boost sales or win votes, it is firmly ingrained in the contemporary public psyche. A term first largely introduced by the 1987 Brundtland Report (by The World Commission on Environment and Development) who defined and politicized the term ‘sustainable development’, ‘sustainability’ has since taken on numerous connotations. Ecological sustainability refers to the robustness of our ecosystems and the ability to maintain or enhance our planet’s unique biodiversity. Economic sustainability is defined by Cato as continued economic development while not degrading our planet’s ecology (Cato, 2011), however not all definitions accord such a large role to the ecological state of our planet.†¦show more content†¦Where environmental problems are concerned, the neoclassical approach does not account for the market failure that occurs when all individuals are making decisions to achieve their personal ‘greatest happiness’. While theoretically this leads to a balanced optimum market; exclusivity, non-excludability, externalities, imperfect information, inappropriate government regulations and prisoners’ dilemma all prevent the macro-economic market from reaching a true pareto optimum (Goodland et. al, 1987) as predicted by the paradigm. In environmental terms, market failure results in an array of impacts of varying significance that are often amplified by the globalized macro-economy and our planet’s vast social inequity. For example, an externality such as air pollution may not directly affect the consumer, but can have adverse impacts on the local environment where the product was produced. This impact is often not reflected in the market value of the product, altering marginal cost curve and undermining the possibility of reaching an optimal market. In addition, the impacts of market failure often disproportionately affect the poorest communities and amplify social inequity. The neoclassical paradigm is thus fundamentally