Discusses the Weak Sustainability Theory of Sustainable Development

1. SUSTAINABLE
DEVELOPMENT 1
Prof. Prabha Panth,
Osmania University, Hyd

2. 25-Apr-15 2
Definition of Sustainable
Development:
• Brundtland’s definition in his book Our
Common Future (1987)
“Sustainable development is development
that meets the needs of the present
generation, without compromising the
ability of future generations to meet their
own needs.
Prabha Panth

3. 25-Apr-15 3
Main themes of SD
1. Poverty Focus – Development should satisfy
needs of present generation,
2. Future Focus – Environmental resources should
be conserved for future generations to meet
their own needs
3. Technology Focus –To change technology to
achieve ecofriendly development.
4. Environmental Focus – developmental policies
to change based on limits to growth due to
environmental degradation.
Prabha Panth

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Three aspects of SD
Economic
SocialEnvironment
Sustainable
development
Prabha Panth

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Theories of sustainable
development
• Weak Sustainability theory: based on the
Neo-classical principle of substitution of
capital.
• Strong Sustainability theories: no
substitution of physical and natural capital
• Very Strong Sustainability theories: based
on ecological approaches to development.
Prabha Panth

6. 25-Apr-15 6
WEAK SUSTAINABILITY
THEORY
• Hartwick, Solow, Dasgupta have
contributed to Weak Sustainability Theory.
Objective of Weak Sustainable Theory:
1. To maintain non-declining per capita
human welfare over time.
2. To combine efficiency and equity
principles in development.
Prabha Panth

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Assumptions:
1. Welfare W = f(U): welfare is a function of
Utility;
– U = f(C): Utility is a function of
Consumption;
– C = f(Y): Consumption is a function of
income; and
– Y =f(K): Income is a function of Capital.
2. K = KM + KN, where KM = manmade
capital and KN = natural capital.
Prabha Panth

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• K is homogeneous, so KM and KN are
perfect substitutes.
• The same amount of welfare (income)
can be generated and maintained either
by KM or KN.
• Full employment and optimum allocation
of all resources,
• To achieve inter-generational equity,
• Techno-centric – technology will find
solutions.
Prabha Panth

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• Objective: To sustain the present levels of Y, C
and Welfare over time, in the face of depletion of
non-renewable resources, and to achieve inter-
generational equity.
• The Model:
Y = f (K) - - - - - - (i)
or Y = f (KM, KN) - - - - - - (ii)
• As Y, KM increases, but KN gets depleted.
• To maintain the same level of income,
total K should be kept constant.
Prabha Panth

10. 25-Apr-15 10
• Therefore since they assume that KM is a
substitute for KN,
• KM should increase at the same rate as KN
decreases.
• Then total K will remain constant,
• If total K is constant, Y is also constant.
• Then C and welfare will also remain
constant.
Prabha Panth

11. 25-Apr-15 11
Hartwick’s Rule:
• The essence of the Weak Sustainability
theory is given by Hartwick’s rule.
• Hartwick’s Rule:
“The stock of capital can be held constant
by reinvesting all Hotelling rents from non-
renewable resource extraction (KN) into
man-made capital (KM), to maintain real
consumption over time.”
Prabha Panth

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Rs
0
NRR reserves
HARTWICK’S RULE
AR
100 MN TNS
P0
MEC
Q0
A
P1
B
Q1
C
Hotelling rent
As development
takes place, the
stock of natural
resource is
depleted. This
raises its price to
P1, and generates
Hotelling rent =
BC.
According to
Solow and
Hartwick, this rent
should not be
consumed, but
invested in
production of KM.
Prabha Panth

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K=KM + KN ------------ 1
• KM is man-made capital, KN is natural capital.
Addition to capital stock, is given by:
dK = d(KM + KN )  0 ------------ 2
dt dt
• Net addition to capital stock equals gross
investment minus depreciation:
dK = St – Kt ------------- 3
dt
• where St = Savings = Investment in time t, and
Kt = depreciation of overall capital stock in t
Prabha Panth

14. 25-Apr-15 14
• Combining (2) and (3), net capital should
be positive:
St – Kt  0 ------ 4
or St – (KMt + KNt)  0
St – (KMt )  KNt ------- 5
Addition to physical capital should be equal
to or greater than depletion of natural
capital.
This is the condition for Weak Sustainability.
Prabha Panth

15. 25-Apr-15 15
Limitations
1. K is not homogeneous and so physical
capital (KM) and natural resources (KN) are
not substitutes.
2. KN is complementary to KN.
3. Pollution impacts of development ignored.
Higher pollution leads to unsustainable
development.
4. Assumes all types of environmental
degradation can be measured in monetary
terms.
5. Based on Economic sustainability;
recommends that the present pattern of
economic development should continue
unabatedly.
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6. Environmental sustainability not
discussed. Permits natural capital to
be exhausted, as long as physical
capital increases.
7. Inter-generational equity not shown.
8. Intra-generation equity not discussed
– how should less-developed
countries achieve sustainable
development, or how should
environmental resources be
redistributed in the world at present.
Prabha Panth