Neoclassical economics and market-based mechanisms now dominate the world economy but they often do a poor job of incorporating nonmarket resources or protecting the environment.
Ecological economics brings the insights of ecology into economic analysis. It calls for consideration of the role of natural capital and ecological services in planning and accounting.
A resource is anything with potential use for creating wealth or giving satisfaction. Minerals and fossil fuels are examples of nonrenewable resources. Biological organisms and ecological processes are renewable and self-reproducing but can be exhausted by overuse. Resources can be defined by their economic and technological feasibility, as well as their location and physical size. We distinguished between known, proven, inferred, and unconceived resources, and between economically important and technically accessible reserves.
Questions about the scarcity of resources and their effects on economic development are important in determining what kind of society we have. Open-access systems encourage narrow self-interests and resource exploitation. In communal property resource systems, self-governing, locally based community management has successfully sustained natural resources for centuries in many cases.
Cost-benefit analysis can be a useful tool in environmental management. Ultimately, our aim should be to internalize costs that are now treated as externalities. GNP is used as a measure of economic progress but new measures for human well-being and environmental health are needed. The genuine progress index of sustainable welfare and the human development index are proposed as alternatives.
Some business leaders believe their only responsibility is to maximize profits. Others regard operating in a socially responsible manner consistent with the principles of sustainable development and environmental protection to be good for employee morale, public relations, and the bottom line.
The principles of eco-efficiency and design for the environment could help us attain sustainability.
