Sustainability and the economics of assuring assets for future generations

This paper presumes the international discourse on the sustainability of development is concerned with: (a) the rights of future generations to the services of natural and produced assets; and (b) whether formal and informal institutions which affect the transfer of assets to future generations are adequate to assure the quality of life in the long-run. Sustainability is primarily an issue of intergenerational equity. The noneconomic discourse on sustainability is clearly about caring for the future. Conversely, this paper contests the implicit premises of economics as now practiced. First, in the face of the sustainability debate, many academic and practicing economists still assume that technology will offset resource depletion and environmental degradation. Second, existing theory on intertemporal resource allocation tacitly assumes that current generations hold all rights to assets and should efficiently exploit them. Third, there has been an implicit assumption that the mechanisms affecting the maintenance and transfer of assets to future generations are both working optimally and are unaffected by current economic decisions. This paper addresses each of these working premises of economics. It presents sociological explanations of how economics evolved to help identify how it became the way it is and to give perspective on how sustainability challenges the discipline.