The Concept of Sustainable Economic Development

by

EDWARD B. BARBIER, Ph.D.(London)

International Institute for Environment and Development,

3 Endsleigh Street,
London WC1H ODD,
England, UK
INTRODUCTION DEVELOPMENT AND ECONOMIC DEVELOPMENT
In recent years there has occurred a major revision in As, over the years, economic policy goals have changed,
development thinking that is presenting a fundamental concepts of economic development have also been modi-
challenge to the conventional consensus on economic fied. The current consensus in non-Marxist thought defines
development. This new approach emphasizes meeting the economic development as the 'process whereby the real per
basic needs of the poor, advocates cultural sensitivity, and capita income of a country increases over a long period of
encourages 'grassroots' participation in the development time — subject to the stipulations that the number below an
process. More crucially, it stresses that 'real' improvement "absolute poverty line" does not increase, and that the
cannot occur in Third World countries or anywhere else distribution of income does not become more unequal'
unless the strategies which are being formulated and imple- (Meier, 1976 p. 6). This consensus ascribes the following
mented are environmentally sustainable. As a result, there characteristic features to economic development:
is a growing 'recognition that the overall goals of environ-
ment and development are not in conflict but are indeed a) It is only one part of the total development of society,
the same, namely the improvement of the human quality of and can be distinguished and analysed separately;
life or welfare for present and future generations' (Bartel- b) Its quantitative dimension is associated with economic
mus, 1986 pp. 13-4). accumulation, or growth in real per caput output;
However, the concept of sustainable economic develop- c) Its qualitative dimension is associated with technologi-
ment is a difficult one to grasp analytically. Given that one cal and institutional change, or 'innovation' broadly
is attempting to describe the environmental, economic, defined; and
and social, features of an ongoing process, the difficulty lies d) It should ideally be measurable, i.e. economic develop-
in arriving at a universally acceptable definition that is also ment is associated with direct and readily measurable
analytically precise. More often than not, precision is economic gain.
sacrificed for acceptability. For example, the World Con- The 'total development of society' involves not only
servation Strategy (IUCN, 1980) emphasizes 'the mainten- changes in economic activity but also political, social, and
ance of essential ecological processes and life-support sys- cultural, transformations. In assessing the 'total develop-
tems, the preservation of genetic diversity, and the sustain- ment of society', economics tends to focus primarily on
able utilization of species and ecosystems', with the overall economic changes and thus isolates economic develop-
aim of achieving 'sustainable development through the ment from 'total' development. The general consensus
conservation of living resources'. While lauding the general remains that 'it is conventional to begin with an increase in
underlying message, sympathetic economists have none- per capita real income as the best available overall index of
theless been critical of the definition and objectives out- economic development' (Meier, 1976 p. 8).
lined in the World Conservation Strategy for being too However, although per caput growth is considered the
imprecise to be operational, for failing to perceive crucial crucial indicator of economic development, the conven-
issues of trade-offs among economic and conservation tional consensus also accepts that there are important qual-
goals, and for ignoring valuation problems (Tisdell, 1983; itative dimensions to development that distinguish it from
Pearce, 1985). economic growth. That is, 'economic development implies
While it may be extremely difficult, if not impossible, to not only more output but also different kinds of output
define sustainable development in any analytically rigor- than were previously produced, as well as changes in the
ous way, there is still a need to describe its characteristics technical and institutional arrangements by which output
and to distinguish it from other concepts of development. is produced and distributed' (Herrick & Kindleberger,
To do this is the aim of the following paper, which attempts 1983 p. 21). In addition to the invention and diffusion of
to refine and substantiate the concept of sustainable econ- new technology, these 'innovations' would include changes
omic development. Stressing the unique environmental, in organization, government policy, patterns of ownership,
economic, and social, features of sustainability, is the first human skills and tasks, and consumer tastes and pref-
step towards an interpretation that is sufficiently rigorous erences.
to provide the useful tools needed for practical analysis and In its efforts to establish empirical validity and concep-
policymaking. This paper limits itself to discussing the tual concreteness, economics has been keen to translate any
concept of sustainable economic development as applied notion of `economic improvement' into a variable to be
to the Third World. measured and compared. Thus if increases in aggregate real

101
Environmental Conservation, Vol. 14, No. 2, Summer 1987—© 1987 The Foundation for Environmental Conservation—Printed in Switzerland.
102 Environmental Conservation

per caput income are considered 'the best available overall ventive or mitigating measures, and failure to consider
index of economic development', any relatively poor na- alternative project designs or locations (Lee, 1985).
tion exhibiting both absolute and relative increases in real Perhaps the most important contribution of sustainable
income must by definition be developing successfully. development approaches is the recognition of a fundamen-
Moreover, quantitative indicators of economic develop- tal process of 'cumulative causation' (Myrdal, 1968) in
ment can be disaggregated and aggregated to any level. For situations of poverty, environmental degradation, and
example, the same criteria of relatively and absolutely underdevelopment :
increasing real per caput income can be applied to a rela-
tively poor region, community, or income group, within a `Poor people in their struggle to survive are driven to
doing environmental damage with long-term losses.
country. Their herds overgraze; their shortening fallows on steep
The above-cited four features represent only the basic slopes and fragile soils induce erosion; their need for
consensus, as the concept of economic development and its off-season incomes drives them to cut and sell firewood
relationship to overall development have been constantly and to make and sell charcoal; they are forced to culti-
redefined throughout the post-war (World War II) era. As vate and degrade marginal and unstable land. Putting
this 'semantic history' has been carefully reviewed else- people first, and enabling them to meet their needs, can
where (Arndt, 1981; Meier, 1984), it will not be discussed be, then, to reduce these pressures, to reduce degrada-
further here. tion, and to maintain potentials for sustainable agricul-
ture and sustainable development at higher levels of
productivity. And this in turn means that more people in
THE MEANING OF SUSTAINABLE future can have adequate, secure, and decent, levels of
ECONOMIC DEVELOPMENT living' (Chambers, 1986b p. 7).
The 1970s saw the emergence of a major revision in Although rapid population growth and uneven distribu-
development thinking that presents a fundamental chal- tion in some areas undoubtedly complicates natural re-
lenge to the conventional consensus on economic develop- source management, it is also true that 'population pres-
ment. In common with the call for a 'basic needs strategy' sures on resources usually reflect an extremely skewed dis-
(ILO, 1976; Streeten et al., 1981; Stewart, 1985), this revi- tribution of resources. When farmers encroach on tropical
sion emphasizes improving the basic needs of the poor. forests or cultivate erodible hillsides, population pressure
However, the sustainable development approach addition- is blamed, but the pressure typically stems from the con-
ally argues that 'real' improvement cannot occur in Third centration of land in large holdings' (Repetto, 1986c p. 45).
World countries unless the strategies which are being for- Nor can the vagaries of climate be solely blamed for the
mulated and implemented are environmentally sustaina- environmental degradation occurring even in ecologically
ble over the long-term, are consistent with social values fragile regions. For example, a World Bank (1985) study
and institutions, and encourage 'grassroots' participation concludes that drought by itself does not pose a threat to the
in the development process. Thus it is argued that 'there long-term sustainability of rural production systems in the
will be no sustained development or meaningful growth West African Sahelian and Sudanian zones, but accelerates
without a clear commitment at the same time to preserve the negative consequence of resource abuse enforced by
the environment and promote the rational use ofresources' poverty :
(Tolba, 1984). Similarly, to be socially and culturally sus-
`The spread of rainfed, extensive agriculture into forest,
tainable, 'development must be gauged by the values bush and pasture areas reduces total forage available to
[which] a society itself, or some member thereof, deems to transhumant livestock, particularly when, as now, mixed
be requisite for its health and welfare' (Goulet, 1971 p. farmers increasingly collect and stock crop residues to
333). carry their own animals through the dry season period.
The 1972 United Nations Conference on the Human When drought strikes, transhumant pastoralists do what
Environment, held in Stockholm, is usually credited with they can to save herds. Lacking alternative forms of
popularizing the concept of sustainable development, al- forage, they try to increase their animals' intake of
though Caldwell (1984) suggests that the origins of the term browse. They vigorously lop trees already weakened by
probably lie in the Paris 'Biosphere Conference' and the lack of soil moisture. Many trees die as a result of this
abuse. Pressure then intensifies on the remaining wood-
Washington, DC, conference on the Ecological Aspects of stock during the next drought. Clearing fields for animal
International Development, which were both held in 1968. traction or machine cultivation may disrupt existing soil
In general, the concern has been that 'few if any countries fertilization cycles based on nutrients that in-field trees
take adequate account of environmental considerations return to the soil surface in the form of humus. If these
when making policy or planning development. Few allo- organic nutrients are not replaced by organic and/or
cate or regulate uses of their living resources so as to ensure chemical fertilizers, crop yields decline. Stripping trees
that they are environmentally appropriate and sustainable. from fields also reduces the windbreak effect that even an
Many lack either the financial or technical resources, or the open canopy can provide, and increases wind erosion.
political will, or adequate legislative, institutional, or pub- When fields are fallowed, in those systems where
lic, support for conservation (or any combination of these) man/land ratios still permit it, natural regeneration oc-
curs much more slowly. In the meantime, soils may suf-
to carry out fully the conservation measures required' fer both wind and water erosion' (World Bank, 1985 p.
(IUCN, 1980 para. 8.8). 7).
The result of those lacunae is that, at the level of project Thus the basic premise of sustainable economic devel-
planning and design, unwanted environmental impacts opment is that 'many environmental problems in develop-
have arisen from inadequate attention having been paid to
environmental consequences, and from the lack of knowl
edge and information necessary to predict them; other
causes have included ignorance of cost-effective pre-
 Barbier: The Concept of Sustainable Economic Development 103
ing countries originate from the lack of development, that i) It is indistinguishable from the total development of
is from the struggle to overcome extreme conditions of society and cannot effectively be analysed separately,
poverty' (Bartelmus, 1986 p. 18). Poor people often have as `sustainability' depends on the interaction of econ-
no choice but to opt for immediate economic benefits at the omic changes with social, cultural, and ecological,
expense of the long-run sustainability of their livelihoods. transformations;
For example, one of the consequences of deforestation and ii) Its quantitative dimension is associated with increases
the depletion of fuel-wood supplies is that it forces poor in the material means available to those living, or des-
households to divert dung for use as fuel rather than for tined to live, in absolute poverty, so as to provide for
fertilizer. The 'present value' of the dung as fuel is higher adequate physical and social well-being and security
than its value as a soil nutrient, but 'the context is one against becoming poorer;
where there is no choice anyway since there are neither fuel iii) Its qualitative dimension is multifaceted, and is asso-
nor fertilizer substitutes to which households can gain ciated with ensuring the long-term ecological, social,
access' (Pearce, 1986 pp. 5-6). The result, however, is most and cultural, potential for supporting economic activ-
certainly a decline in soil fertility, low levels of productiv- ity and structural change ; and
ity, and loss of future economic welfare. iv) It is not easily subject to measurement; the quantita-
The primary concern of sustainable economic develop- tive and qualitative dimensions are mutually reinforc-
ment, therefore, is ensuring that the poor have access to ing and inseparable, and thus cannot be fully captured
sustainable and secure livelihoods. At the national level, by any concept of direct and measurable economic
this calls for policies, regulations, and incentives, to induce gain.
economic behaviour that is 'environmentally rational' (Lee Sustainable economic development is therefore directly
& Goodland, 1986). As will be discussed below, this 'ma- concerned with increasing the material standard of living
cro' approach to sustainable development has been en- of the poor at the 'grassroots' level, which can be quanti-
dorsed by the World Commission on Environment and tatively measured in terms of increased food, real income,
Development and is currently being explored within the educational services, health-care, sanitation and water
World Bank and the Asian Development Bank (Asian supply, emergency stocks of food and cash, etc., and only
Development Bank, 1986; Conable, 1986; Warford, 1986). indirectly concerned with economic growth at the aggre-
However, macroeconomic or 'top-down' approaches are gate, commonly national, level. In general terms, the pri-
not sufficient; ultimately, the focus must be on 'the needs mary objective is reducing the absolute poverty of the
and priorities of poor people as they perceive them' (Cham- world's poor through providing lasting and secure liveli-
bers, 1986a). As emphasized by a recent submission to the hoods that minimize resource depletion, environmental
World Commission, 'satisfaction of basic human needs — degradation, cultural disruption, and social instability.
food, clean water, fresh air, fuel, shelter, health-care edu- TOWARDS AN ANALYTICAL METHOD
cation, and employment—is essential to sustainable devel-
opment' (Global Tomorrow Coalition, 1985 p. 5). Because the criteria underlying sustainable economic
In addition, for economic development to be truly 'sus- development differ so markedly from the conventional
tainable' requires 'tailoring the design and implementation economic consensus, there is really a need for a completely
of projects to the needs and capabilities of people who are new analytical approach in that regard. Unfortunately, a
supposed to benefit from them' (Uphoff, 1985 p. 359). As a rigorous exploration of such a new methodology has yet to
recent review of development projects has shown, not only be attempted. At best, this paper can only suggest some of
does 'attention to issues of sociocultural compatibility ... the basic steps required in formulating such an ap -
pay off in economic terms—among others, in economic proach.
rates of return twice as high as those of the socially insen- There are many obstacles to overcome. For one, the
sitive and inappropriate projects', but it also lays to rest 'the conceptual complexity of sustainable economic develop-
fallacy of overinnovation and of a socially insensitive ment makes precise measurement of its 'success' through
development strategy that justifies change in terms of quantitative indicators extremely difficult. The quantita-
abstract goals rather than in terms of locally perceived tive dimensions of sustainability (e.g. increases in food,
needs' (Kottak, 1985). real income, life expectancy, etc.) can perhaps be captured
Any attempt to reduce environmental degradation will by some 'basic needs' or 'physical quality of life' index.
be counter-productive if there is failure to respect the needs However, the more qualitative dimensions (e.g. cultural
and encourage the participation of those social groups diversity, social cohesion and stability, improvements in
which are most affected by any change. For example, environmental quality, greater self-esteem, etc.) are vir-
World Bank-financed social forestry programmes in India tually impossible to quantify.
have failed in the past to have an impact on the landless, In addition, not all the quantitative and qualitative
small, and marginal, farm households that are most re- aspects of sustainable economic development can be max-
sponsible for deforestation. This was because of a limited imized simultaneously in all situations. This suggests that
commitment to serving community needs, the lack of any development effort must surmount a continuous and
involvement of poor women (who collect fuel-wood and dynamic configuration of trade-offs, such as between in-
fodder), and the distrust of social forestry programmes by creased productivity and environmental degradation, or
the landless (Centre for Science and Environment, 1985 pp. improving the status of women and preserving traditional
56-7). values, or introducing new techniques and relying on tra-
To summarize, in contrast to the conventional consen- ditional skills. Assessing the appropriate choice in the face
sus on economic development, the following revised cri- of these trade-offs will require knowledge of the benefits
teria underline sustainable economic development: and costs involved in alternative decisions.
104 Environmental Conservation
Given that many of the qualitative dimensions of vari- Sustainable development involves a process of trade-offs
ous trade-offs cannot be quantitatively measured, precise among the various goals of these three systems; as noted
analysis of all benefits and costs cannot be assured. More- above, it is not possible to maximize all these objectives all
over, the dynamic nature of development, and the diverse the time. For example, as the economic process of produc-
social, economic, and ecological, conditions in which it tion and consumption is dependent on resource use,
must be pursued, mean that the various trade-offs involved increasing even useful goods and services may conflict with
are constantly changing over time. This makes continuous ensuring the maximum productivity and genetic diversity
assessment of benefits and costs even more crucial. One of the biological and resource system. There may also be
basic analytical approach is to view this process as an conflict among intra-system goals. For instance, in some
interaction among three systems: the biological (and other rural communities institutional sustainability could mean
resource) system (BS), the economic system (ES), and the reinforcing societal norms that inhibit women's economic
social system (SS). independence and limit their social participation. This
may conflict with rural women organizing themselves to
Each system has its own unique set of human-ascribed
secure increased social justice, participation, and access to
goals: land, credit, skills, etc. (Muntemba, 1985). Given these
Biological system goals: potential trade-offs among goals, a choice must be made as
— g enetic d ivers ity to which objectives should receive priority, and thus
— resilience greater weight, in the development strategy.
— biological productivity This process of trade-offs among goals must also be
Economic system goals: adaptive, for as individual preferences, social norms, eco-
— satisfying basic needs (reducing poverty) logical conditions, etc., change over time, so must the rela-
— equ ity- enhancing tive weights attached to the various goals. Thus, for exam-
— increasing useful goods and services ple, after social norms have adjusted to allow women
Social system goals: greater economic independence and increased social parti-
— cu ltu ral d ivers ity cipation, perhaps there will be less conflict generated by
— institutional sustainability pursuing institutional sustainability (e.g. in terms of the
— social justice process of community decision-making, social organiza-
— participation tion of production activities, etc.).
The general objective of sustainable economic develop- As economic, social, and ecological, conditions also vary
ment, then, is to maximize the goals across all these sys- in different locations and situations, priorities among goals
tems through an adaptive process of trade-offs, as illus- should also differ. For instance, in the West African Sahe-
trated by the shaded area in Fig. 1. In contrast, the current lian and Sudanian zones, biological and resource produc-
conventional consensus on economic development at- tivity and resilience are clearly a high priority (World Bank,
tempts to maximize only economic system goals, and Mar- 1985). For agro-ecosystems in the critical uplands of East
xist economics maximize only ES and SS goals. Java, the trend of increasing absentee land-ownership
raises the additional issue of equity in land tenure. This
may indirectly affect sustainability through its impact on
the incentives for soil conservation (KEPAS, 1985).
Finally, interactions among BS, ES, and SS, goals (cf. Fig.
1) change as the scale or hierarchy of the systems is
extended from the local to the regional, and thence to the
national and even global, level. As 'systems theory holds
that the behaviour of higher systems in such a hierarchy is
not readily discovered simply from a study of lower sys-
tems, and vice versa' (Conway, in press), the choice of sus-
tainable development goals to be pursued at, say, the
national level, may differ from those advocated at the local
level.
SUSTAINABLE ECONOMIC DEVELOPMENT APPLIED
The next stage in making the concept of sustainable
economic development operational would be to develop
the tools necessary to analyse the trade-offs among the
systems, and to apply these tools to interacting systems at
different levels of scale (hierarchy), over various time-
scales and locations, and under markedly different econ-
omic, social, and ecological, conditions. However, before
c on v e n t ion a l marx ist
ec onomics e con om ics
this next stage can be adequately tackled, two additional
issues concerning the applicability of the concept of sus-
FIG. 1.Sustainable economic development maximizes the goals tainable economic development need to be clarified: first,
across the biological and resource system (BS), the economic system is the concept only relevant to agriculture, including for-
(ES), and the social system (SS), as illustrated by the shaded area. In estry and rangeland and wildlife management, or can it also
contrast, conventional development approaches maximize only ES
goals, and Marxist economics maximizes only ES and SS goals. be made applicable to all forms of economic and social
 Barbier: The Concept of Sustainable Economic Development 105
activity, including industry and human settlements? Se- have also yielded a marketable surplus of between US $400
cond, does sustainability in agriculture require the return- and 2,000 per hectare. This has allowed gardeners to pay
ing of all organic matter to the soil and thus support a back the costs of the wells—to purchase seed, fertilizer, and
subsistence rather than a surplus-producing system? The other inputs, and to acquire valuable marketing skills (Cot-
latter question will be addressed first: tingham, 1987).
`In agricultural development, ecosystems are trans- Although it is clearly much easier to conceive of the
formed into hybrid agro-ecosystems for the purpose of sustainability of agricultural, forestry, rangeland, and wild-
food or fibre production' (Conway, 1985 p. 34). While life, systems than of economic development, the concept of
agricultural sustainability requires the organic material of sustainable development should also be applicable to all
the soil to be replenished, this criterion can be met in a forms of economic and social activity, including industry
number of ways by both subsistence and surplus agricultu- and human settlements. This can best be explained with
ral systems. For example, there exist many 'naturally sub- reference to the various definitions of sustainability in the
sidized solar-powered ecosystems', such as tidal estuaries literature. As the previous discussion makes clear, in the
and river deltas, where biomass productivity is greatly case of agriculture, or agro-ecosystems, application of the
enhanced by the flowing of water that assists the importa- concept is self-evident, as one is talking about systems that
tion of organic matter and nutrients from other regions are directly dependent on environmental resources and
(Odum, 1975 pp. 17-8). Many important agro-ecosystems essential ecological functions for `sustainability'. This is
(e.g. delta-based agricultural systems) have traditionally particularly true if we take Gordon Conway's (in press)
tapped these regions to produce a surplus without much more technical definition of agricultural sustainability as
loss of sustainability—precisely because the natural flow of `the ability of a system to maintain its productivity when
organic material into the system continues to maintain the subject to stress or shock', where the stress is 'a regular,
latter's fertility. In fact, many agro-ecosystems are not sometimes continuous, relatively small and predictable
`closed' with respect to material cycling but are interdepen- disturbance, for example the effect of growing soil salinity
dent on one another and on other natural ecosystems for a or indebtedness', and the shock is 'an irregular, infrequent,
continuous inflow of organic material and nutrients to relatively large and unpredictable disturbance, such as is
maintain soil quality (e.g. natural soil and nutrient runoff caused by a rare drought or flood or a new pest'.
from the highland, fertilizing lowland agricultural areas). In As noted above, unchecked resource abuse within an
these instances '100% recycling of organic materials' is not agro-ecosystem, whether the result of inappropriate use of
necessary to avoid long-term soil degradation; instead, petrochemicals and fertilizers, overcropping of erodible
what is required are agricultural techniques and practices soils, poor drainage, etc., can affect overall agro-ecosystem
that do not degrade soil quality and ecological functions at sustainability by increasing either stress, shock, or both.
a rate faster than the natural cycles and flows can 'repair' The key is to reduce the resource degradation, and there-
the damage. fore the disturbances associated with it, to a level where the
Moreover, in many instances of sustainable rural or agri- natural processes and function of the agro-ecosystem can
cultural 'development', one is talking about transforming a counteract them and thus preserve overall sustainability.
system that was previously unsustainable into one that is at Of course the crucial element in all this is that the prod-
least relatively sustainable. A good example is a World uctivity of the agro-ecosystem is essential to human live-
Neighbors project in Honduras (Bunch, 1987). At a cost of lihoods; hence one is really talking about 'sustainable live-
$13 per person, the Guinope Integrated Development Pro- lihoods' as defined by Chambers (1986b) as 'a level of
gram has transformed a previously unsustainable small- wealth and of stocks and flows of food and cash which
holder agro-ecosystem through appropriate agricultural provide for physical and social well-being and security
technology, training, and erosion control—including inter- against becoming poorer.' Moreover, one of the priorities
cropping of 'green manure' crops with the traditional corn of sustainable development must be to 'balance' the need
or sorghum —into a surplus-producing system with yield for poor people to gain better livelihoods than formerly,
increases of over 300% and a marketable surplus of vege- with the needs of future generations. Thus, in rural settings
tables. Even in drought-prone Africa, there are numerous where livelihoods are dependent on the productivity of
successes in improving agricultural sustainability—ranging agro-ecosystems and its equitable distribution, one is back
from the large-scale Kenyan Soil and Water Conservation to Conway's view of agricultural sustainability as main-
Programme to the Yatenga Water Harvesting Project in taining `productivity when subject to stress or shock'.
Burkina Faso (Harrison, 1987). Alternatively, one could take Goodland & Ledec's (1986)
Finally, if maintaining the nutrient levels and organic even broader definition of sustainable development as 'a
material of soil is a necessary condition for agricultural pattern of social and structural economic transformations
sustainability, there should be no fundamental problems in (i.e. "development") which optimizes the economic and
maintaining an agro-ecosystem by 'some increase of exter- other societal benefits available in the present without jeo-
nal inputs' provided those inputs are ecologically benign or pardizing the likely potential for similar benefits in the
even beneficial (e.g. organic fertilizers, appropriate bio- future'. Then one can clearly consider as sustainable devel-
technology, integrated pest management, etc.). If the acqui- opment any economic activity that raises social welfare
sition of those additional inputs actually improves soil with the maximum amount of resource conservation and
quality sufficiently to raise productivity, then farmers may the minimum amount of environmental degradation al-
be better off with them than they were formerly. For exam- lowable within given economic, social, and technical, con-
ple, a Lutheran World Relief project in Niger will have straints. In this sense, industry and human settlements are
built an estimated 3,200 wells by the end of 1987. At an subject to the criteria of sustainable development.
estimated cost of US $400 each, these wells have not only
increased subsistence food output from project gardens but
106 Environmental Conservation
In the case of industry, for example, it is precisely similar benefit in terms of saving scarce wood-supplies is
because industrial activity involves some resource use and the Kenya Improved Charcoal Stove Programme (Opale,
some waste generation, that it is necessary to find a pattern 1987). A whole industry has now emerged around the pro-
of activity that is more resource- and waste-minimizing duction of an improved stove design. The efficiency im-
than maximizing. provements of the new ceramic jiko stove, of up to 30% for
Absolute sustainability may not be physically possible charcoal burning, means that the stove pays for itself after 2
for any particular pattern of industrial development, but or 3 months. By the end of 1985, 180,000 stoves had been
one must still find a pattern that is relatively more sustain- sold. This has created a substantial increase in trade for
able than are others. In other words, because industry is local tinsmiths, potters, and small-scale urban industries
dependent on raw material and energy inputs from the producing ceramic liners.
primary sector (agriculture, forestry, fishing, mining, and With regard to human settlements, particularly in urban
quarrying, etc.), and the prospect of 100% recycling of areas, there is a similar case to be made for sustainable
waste residuals is still a technical impossibility, it is essen- settlement development. As Hardoy & Satterthwaite (1984
tial to ensure that the resulting impacts on the environment p. 329) conclude, 'in most cities lack of land-use control
and its resources are as minimal as possible. As a result— and lack of legal alternatives to unauthorised settlements
depending on economic and technical feasibility—some of creates a haphazard, sprawling pattern and a density of
the `sustainability' criteria that are applicable to industrial development too dispersed to allow for cost-effective in-
activity could include increased recycling, minimal use of frastructure and service provision. It also promotes illegal
non-renewable resources, exploiting renewable resources housing developments on dangerous land-sites, unneces-
at a rate less than their natural rate of 'ecologically safe' sary sprawl over prime agricultural land, and the destruc-
regeneration, reducing waste-generation levels to well tion or degradation of the natural landscape with little or no
within the assimilative capacity of the environment, and provision for public space.' Moreover, 'The housing envi-
ensuring maximum resource-use efficiency within indus- ronments of lower-income groups in Third World cities are
trial processes. among the most degraded and dangerous living environ-
Finally, because some form of industry and manufactur- ments that exist', and are characterized by 'a lack of readily-
ing capacity is essential to tackling the mass poverty in available drinking-water, sewage connections (or other
Third World countries, emphasizing a 'sustainable' pattern systems to dispose of human wastes), garbage collection,
of industrial development is practically as important as and basic measures to prevent disease and provide primary
emphasizing sustainable agricultural development. More- health-care' as well as by 'crowded, cramped conditions,
over, there are important social criteria that must also be which mean that communicable diseases such as TB flou-
included in sustainable industrial development if we are rish—usually aided by low resistance among the inhabi-
also to talk about its providing 'sustainable livelihoods'. tants due to malnutrition' (ibid., pp. 318-9).
These criteria are best enunciated by the population af- There is grave need, therefore, for appropriate human
fected by industrial development; but, at the very least, settlements projects to tackle those problems and thus
they should include providing secure employment and minimize the environmental degradation and vicious pov-
favourable indirect and induced employment effects, the erty-trap suffered by the residents. One interesting example
use of technology that is appropriate to the level of skills is the Orangi Pilot Project (OPP) in Karachi, Pakistan
and knowledge of its local labour force together with intro- (Hasan, 1987). Orangi Township is the largest squatter
ducing new skills which can be easily assimilated through colony in Karachi, with 700,000 people on 5,000 acres
training, and a minimal displacement of traditional econ- [2,025 hal of land. People have built their own dwellings,
omic activities on which livelihoods currently depend. and have indicated that their most pressing need is a single,
These are similar to the economic and social criteria that low-cost form of sanitation for the disposal of excreta and
should be inherent in sustainable agricultural develop- wastewater. Participating residents agreed to form local
ment, and are broadly consistent with the ES and SS goals `lane' organizations to contribute funds and organize work
discussed previously. detail. After five years, 1,571 'lane' organizations had built
The case of micro-hydrosystems' manufacture and use their sewage systems, serving approximately 200,000 peo-
in Nepal, funded and run by United Mission Nepal, is a ple, at a cost of $1.7 million (all but $100,000 funded by
good illustration of sustainable industrial development residents). Equivalent work would have cost government
(Hislop, 1987). Hand-processing of rice, with traditional agencies $8.5 millions. Moreover, the enthusiasm and public
wooden water-mills, produced low yields and kept women learning generated by the OPP has sponsored additional
working for 18 hours a day in some seasons. Nepal then follow-on programmes in housing, women's welfare, and
began manufacturing its own modern cross-flow turbines women's work, initiated by the 'lane' organizations.
and accessories for small hydroelectric schemes for about
400 mills scattered across remote villages and run by small
entrepreneurs. The turbine-powered mills give better
ECONOMICS REVISITED
yields and do the work in 15 minutes at the cost of a small
percentage of the produce. This frees women's labour for As the above discussion indicates, there are certain
other essential tasks, and with a power output of around development projects and programmes that reflect the
1-7 horsepower the modern turbines make possible a wide principles of sustainable economic development. How-
range of new activities on top of the traditional rice-mill- ever, there is yet to be a systematic application of these
ing—including power generation and hence electric cook- principles in development policymaking and strategies as a
ing which saves fuel-wood. whole. Part of the problem is that the leading policymaking
Another industrial development project that has had a institutions, such as the World Bank, are only just begin-
 Barbier: The Concept of Sustainable Economic Development 107
ning to emphasize the need to incorporate environmental as the need to preserve unknown species for their intrinsic
considerations in their development strategies (Conable, value (Goodland & Ledec, 1986).
1986; Runnalls, 1986). On the other hand, as the previous Finally, as this expanded approach inevitably raises
sections make clear, the concept of sustainable economic issues of intertemporal choice, the interest rate chosen to
development needs to be made more concise, systematic, discount the future may determine whether environmental
and rigorous, before it can be usefully applied in policy- degradation is 'optimal'. It is often stressed that the appro-
making and planning. priate discount rate should emerge from the project ap-
A further problem is that most proponents of sustainable praisal process (UNIDO, 1972). In practice, imperfect
development usually advocate `grassroots' or 'bottom-up' capital markets, inconsistent data on the productivity of
approaches to development planning, whereas conven- capital, and large variances in domestic borrowing for
tional policymaking has consistently been 'top-down' in investment, makes it difficult to establish an economic
approach—beginning at the international or national level accounting rate of interest for Third World countries (Phil-
and filtering down to the regional and local levels. This lips, 1986). Furthermore, in many examples of poverty-
explains why the conventional economic consensus on induced environmental degradation, the sacrifice of long-
development, with its emphasis on economic growth and term sustainability for immediate economic returns im-
national economic performance, is more suited to `top- plies a high discount rate. This behaviour, however, is itself
down' than to 'bottom-up' development. `the result of the resource degradation process which com-
Nevertheless, the growing recognition that environmen- pels actions to be taken which imply high discount rates'
tal considerations must be incorporated into development (Pearce, 1986 p. 13). In other words, the high apparent
strategies is having some influence on policymaking and discount-rates are a reflection of the constraints imposed
planning. This influence is beginning to be felt in econom- by environmental degradation rather than the desired
ics, which is the discipline best able to analyse trade-offs social choice.
among environmental costs and benefits. There are essen- In contrast to social cost-benefit analysis, resource ac-
tially four different developments in economics, particu-
counting involves adjusting national income accounts to
larly in the sub-discipline of environmental and resource
register both the direct costs inflicted by environmental
economics, concerned with deriving policy recommenda-
degradation and the 'depreciation' of natural capital to
tion from the issue of environmental sustainability. These
allow for losses in future production potential (Environ-
areas can be referred to as 'cost-benefit analysis', 'resource
mental Accounting Workshop, 1985; Repetto, 1986b). Al-
accounting', 'macroeconomic policymaking', and `sustai-
though the national accounts record the income earned
nability-applied research'.
from harvesting resource stocks (e.g. fish catch, timber,
As was pointed out by the Authors of the classic UNIDO
meat, etc.), the loss of future income through declining
Guidelines, the main rationale for conducting social cost- resource stocks and deteriorating environmental quality is
benefit analysis is `to subject project choice to a consistent
excluded. By allowing for such 'depreciations' in the natu-
set of general objectives of national policy' (UNIDO,
ral capital stock, the net contributions of resource degrad-
1972). As perceptions of national policy objectives in Third
ation to national income are much lower, and more accu-
World countries have changed, for example emphasizing
rately reflect the impact on economic welfare. For example,
the need for scarce foreign exchange and equitable income
depreciation of the forest stock in Indonesia due to defor-
distribution, project appraisal and planning have been
estation and timber extraction was estimated to cost
expanded to reflect the new objectives (Little & Mirlees,
around $3.6 thousand millions in 1982, or approximately
1974; Squire & Tak, 1975). Consequently, the recent em-
4% of GNP (Repetto, 1986b).
phasis on the role of environmental quality and the long-
run productivity of natural resource systems in sustaining
Because resource accounting uses the existing system of
economic development, has led to further extensions of
national accounts, it appeals to economic policymakers.
social cost-benefit analysis to include environmental im-
Nonetheless, there are a number oflimitations on its appli-
cation. For one, measuring the stock of economic capital
pacts (Dixon & Hufschmidt, 1986; Dixon et al., 1986).
and its rate of depreciation in Third World countries is in
That is, in contrast to traditional project evaluation which
itself a complicated task. Given the difficulties in quantify-
considers only the direct project benefits and costs, 'the
ing and monetizing environmental goods, extending depre-
expanded approach includes the external and environmental
ciation accounting to the stock of natural capital would
improvement benefits (plus the benefits from environ-
prove even more difficult. Moreover some natural re-
mental protection), as well as the costs of external and/or
sources, such as the forest timber and fish stocks of a
environmental damages and of environmental control
country, may be readily counted as discrete units, whereas
measures' (Dixon & Hufschmidt, 1986 p. 7). The basic
others, such as soils and watersheds, are not easily meas-
methodology is first to identify and measure the environ-
urable 'stocks' as such. Finally, accounting for the depre-
mental effects, and then, secondly, to translate them into
ciation of natural resource stocks does not include all the
monetary terms for inclusion in the formal project analy-
sis. externality, or 'off-site', environmental quality effects. For
example, the total environmental costs of deforestation
However, extending cost-benefit analysis to incorporate
the environmental impacts of projects encounters a num-
and timber extraction should include the economic costs of
ber of problems. First, physical estimation of environmental soil erosion, siltation of waterways, flooding, and climatic
impacts. Thus the direct depreciation loss of $3.6 thousand
effects is often difficult. Second, as most environmental
millions for deforestation in Indonesia must be an under-
resources are non-marketed common-property 'goods',
estimation of the total environmental costs of forest deple-
economic valuation of their services is not straightforward.
Third, little consensus exists regarding methods for mon tion.
etary valuation of 'intangible' environmental goods, such
108 Environmental Conservation
A more comprehensive economic approach to the prob- lands, such as the review recently conducted in Indonesia
lems of environment and development is the integration of (Government of Indonesia & IIED, 1985).
environmental and natural resource management directly Until very recently, the issue of sustainability has been
into macroeconomic policy. This is proposed in two ways : largely ignored in conventional economic analysis. As dis-
`(a) through the design of investment programs supporting cussed above, the traditional approach to cost-benefit
environmental and natural resource objectives, and (b) analysis maximizes discounted net income flows. Unless
through promotion of economic, social, and institutional, the sustainability of the economic activity generating in-
policies and incentives that influence the environmentally come is explicitly included as a welfare objective, it may be
related behaviour of government agencies, major resource optimal 'to drive or exploit a system so that it is not longer
users, and countless small-scale resource-using activities, sustainable' (Tisdell, 1986 p. 10). This is another argument
which occur throughout a nation's economy' (Warford, in favour of extending cost-benefit analysis to include the
1986). The appeal of such an approach is that it would rely external environmental impacts of projects. As Pearce
on traditional economic tools and concepts, such as mar- (1985 p. 21) has argued, however, even if the external
ginal opportunity cost, to measure the total environmental environmental costs imposed by resource depletion are
cost borne by society of depleting a natural resource estimated, 'there is nothing in the conventional concept of
(Pearce, 1986; Warford, 1986). Moreover, some existing an external cost to account for the decay of ecological pro-
economic policies such as irrigation subsidies, fiscal and cesses themselves', and as a result, 'in the absence of perfect
financial inducements for livestock rearing, and agricultu-
information about both perfect and instantaneous re-
ral export taxation, not only encourage environmental
sponse to ecological disequilibrium, the system can be
degradation but may also be economically inefficient (Re-
unsustainable'. In other words, because the soil erosion,
petto, 1986a). Correcting these policies offers the oppor-
increased flooding, and sedimentation, accompanying de-
tunity to pursue both environmental and developmental
forestation, affect also other economic activities, those
goals.
impacts will be counted as external costs; however, any
Designing macroeconomic policies and incentives for decline in the resilience of the forest system and its ecolog-
natural resource management may in the long run provide ical functions resulting from further stress, is not strictly an
the best potential for initiating policies based on the con- economic 'externality'.
cept of sustainable economic development. At present, Thus if the sustainability of the ecological processes
however, this approach has yet to be developed sufficiently underlying economic activity is recognized to have value,
for implementation as a source of concise policy guidelines then sustainability must explicitly be included as one of the
for Third World countries. Along with cost-benefit analy- objectives to be pursued by development planners and
sis and resource accounting, this approach faces the diffi- policymakers. As has been stressed throughout this paper,
culty of quantifying and monetizing environmental im- the pursuit of sustainability in turn may require balancing
pacts. There also need to be clearly defined priorities and several goals that are spread over three systems—econ-
mechanisms built into macroeconomic policies when the omic, social, and biological etc. As not all of these objec-
goals of development and environment are not mutually
tives can be simultaneously maximized, the possible trade-
compatible. For example, exploitation of wilderness forest-
offs for different activities and conditions need to be ana-
lands may cause irreversible environmental damage over
lysed. Making explicit the types of trade-offs involved is a
time; on the other hand, the scarce foreign exchange earn-
vital function that economics can provide in applied sus-
ings generated by timber and mineral exports are an imme-
tainability research.
diate benefit.
Similarly, the abolition of taxes on agricultural exports
may mean higher incomes for cash-crop producers, but the ACKNOWLEDGEMENTS
rise in producer prices may encourage the extension of
I would like to thank Czech Conroy, Gordon Conway,
cultivation onto 'marginal' land. Finally, macroeconomic
Richard Sandbrook, and Robin Sharp, all of IIED, and
policies are by definition top-down in implementation.
anonymous referees, for useful comments on an earlier
Although some degree of flexibility is necessary to allow for
version of this paper. The paper has also benefited from a
regional variations in economic and environmental condi-
discussion on sustainable development that was held on 29
tions, such an approach cannot be ideal for encouraging
September 1986 at IIED, London, England. Besides the
grassroots participation in decision-making. Thus, it is
Author, participants included Czech Conroy, Gordon
essential that macroeconomic policies for natural resource
Conway, Paul Harrison, Gerald Leach, Jules Pretty, and
management be supplemented by projects at the regional
and local levels that have sustainability as their primary Richard Sandbrook. Comments, by David Hall and David
objective. Pearce, on discussion notes prepared for that meeting by
Projects and sectoral policies for sustainable economic the Author, Paul Harrison, and Gerald Leach, were also
development are therefore a natural complement to any helpful, as were the notes themselves.
macroeconomic environment and development initiative.
This in turn requires appropriate applied analysis of the SUMMARY
sustainability of development projects and policies at the Increasing recognition that the overall goals of environ-
local, regional, and sectoral, levels. For example, as dis- mental conservation and economic development are not
cussed above, Conway (1985 and in press) has developed conflicting but can be mutually reinforcing, has prompted
an approach for assessing the sustainability of agro-ecosys- calls for 'environmentally sustainable' economic develop-
tems. Similarly, there is a growing interest in reviews of ment. Although there are difficulties in defining sustaina-
policies affecting the sustainable development of forest ble development in an analytically rigorous way, there is
 Barbier: The Concept of Sustainable Economic Development 109
still a need to evolve a concept of sustainability that both CHAMBERS, Robert (1986a). Poverty in India: Concepts, Research
distinguishes it from other post-war meanings of develop- and Reality: an Exploration. Institute of Development Stud-
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