ABSTRACT
Sustainability is about managing development on a global scale. Its fundamental precept is that providing for the needs of the present generation should not impoverish future generations. At a minimum, this means that, over the generations, the consumption of natural resources should remain constant. Thus sustainability is not concerned purely with the imperatives of here-and-now economics, but involves moral and political questions: Should we ensure that future generations are no worse off than we are? How can this be done? Sustainability is not the choice of the marketplace, which will always tend toward the short term. Yet economists agree that sustainability is possible.
Hartwick (1977) shows that the achievement of a constant per capita consumption path (which would satisfy our definition of sustainability) results when all scarcity rent is invested in capital. None of it should be consumed by current generations.
Would all scarcity rent be invested? With a positive discount rate, some of the scarcity rent is consumed, violating the Hartwick rule. The point is profound. Restoring efficiency will typically represent a move toward sustainability, but it will not by itself be sufficient. Further policies must be implemented to guarantee sustainable outcomes. (Tietenberg 1996: 543)
