Trust law, sustainability, and responsible action

The problem of managing for sustainability is marked by the need to make decisions on behalf of others and by the uncertainties that attend such decisions. However, the economic literature on sustainability has paid scant attention to how decisions on behalf of others might differ from decisions on behalf of oneself. And, when risk has been modeled explicitly, the expected utility hypothesis has generally been used: a generation acts sustainably if the expected value of the next generation’s utility is not less than the present’s. This paper investigates how we think about responsibly acting on another’s behalf by looking to the United States law of trusts because in important respects the current generation views its responsibility to the future as a trust relationship. Trust law illuminates responsible decision making under both risk and uncertainty. Even under conditions of risk more conservative action than would be suggested by the expected utility hypothesis is warranted. Because it emphasizes preservation of trust principal and disavows profit maximization, trust doctrine indicates that special caution should be exercised in conditions of uncertainty. Finally, resource economic concepts of strong sustainability, the precautionary principle, and the safe minimum standard of conservation are interpreted according to trust principles. © 1999 Elsevier Science B.V. All rights reserved.