ABSTRACT
This chapter presents the standard definition of sustainability in economics and discusses the use of net national product as a summary measure of sustainability. It describes the relationship between property rights and the need for adjustments to net national product to account for natural resource depreciation. The chapter also discusses treatment of pollution control costs and considers physical quantities of resource stocks as a measure of sustainability. It explores the issues relating to irreversibility and ecosystem resilience. The chapter provides the relationship between sustainability and policy reform in the environmental and resource sectors and also presents the desirability of sustainability. Using Net national product (NNP) to measure sustainability implicitly assumes that tradeoffs among capital assets—including tradeoffs between manufactured capital and natural capital—are possible and adequately valued using prices. Natural resources and environmental amenities enter NNP in two ways, via direct consumption of resources and environmental amenities and via changes in resource stocks.
