Chapter 4 ECONOMICS-BASED APPROACHES

Document begins: Chapter 4 ECONOMICS-BASED APPROACHES1 Maryanne Grieg-Gran and Annie Dufey, IIED 4.1 Introduction Sustainability assessment has been employed by economists to assess the performance of an economy by adjusting standard economic indicators such as Gross National Product (GNP). It is also used to assess the consequences of policy at both national and international level and to examine the full costs and benefits of projects. This chapter examines economic approaches to assessing sustainability. First, we consider how economists define sustainability, as this heavily influences their approach to assessment. An important distinction is made between economic sustainability and how economists approach the broader concept of sustainability. We then discuss how economists estimate sustainability impacts in different situations, in particular the modelling of relationships between economic, environmental and social variables. Finally, we review the economic tools available to evaluate and compare economic, environmental and social impacts and to overcome the problem of different units of measurement. 4.2 Economic definitions of sustainability and economic sustainability 4.2.1 The term `sustainability' Sustainability and sustainable development are often used interchangeably by economists, or the former is considered to be a pre-requisite for the achievement of the latter. Common to both is an emphasis on the future ...