Economics and Governance for Sustainable Development

Introduction In this chapter we assess the role of economics in governance for sustainable development. Firstly, we ask how has the ‘mainstream’ environmental and resource economics paradigm helped us understand the nature of sustainable development? We explain the context in which environmental and resource economics developed and the main propositions made during its formative years. These help us to understand the paradigm’s approach to sustainable development or sustainability (we do not distinguish between these two terms, although some do). Taken to the limits of formalism, it culminates in the social planner’s desire to optimise human welfare over all time and the drive to place monetary values on, and aggregate, all forms of wealth, including natural assets. This chapter then outlines the strengths and weaknesses of this approach by comparing it with an alternative set of approaches that has come to be known as ecological economics.