The community's stock of assets

The natural environment will change regardless of human activity. However, human activity of any kind will lead to quantitative and qualitative changes in the community's stock of environmental and other assets as people use its component parts, modify them, add to or subtract from them, and leave the resultlng stock for future use.

For it to be said that this stock is being managed on a sustainable basis, the needs of tomorrow's generations must be incorporated in today's decislons, so that future generations can enjoy a standard of living at least comparable to that of present generatlons.

Changes in the composition of the stock

The uses people make of parts of the stock of assets will, of course, have differlng impacts on the future composition of the stock. In many cases some combination of uses will be viable simultaneously or sequentially, but in other cases uses may be mutually exclusive. Uses can be active or passive. Forest resources, for instance, can be used to provide timber for housing or furniture or pulp for paper productlon: they can be used for recreation: to protect water catchments or wildlife habitat: or they can be protected as wilderness.

There is a range of stock compositions that can satisfy present and future needs. Technological improvements will continue to change the relationship between the resource base and its productive capacity. But as we do not know in what ways technology will develop, there can be advantage in keeping our options open as far as possible.

Where renewable resources are involved, active use may mean a short term reductlon in the stock of resources but a recovery to previous levels over time. In making judgements concernlng the sustainable yield of a given resource, care needs to be taken to assess all the values consumed, not just those contributing to the next stage of the production process.

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Substitution of capital for natural assets

One of the more important questions relates to the extent to which natural assets can be used and converted to capital assets without putting ecological sustainability at risk.

There are limits on the extent to which changes in the composition of the stock of assets can be made without fundamentally chaniging some biological processes. Often we do not know what these limits are. To cross those limits could mean reducing future options for present and future generations, unless adequate substitutes for the assets can be developed.

If resources are used in a market context where prices reasonably reflect their full valuation, including environmental values, it is doubtful whether those limits will be approached. As the perception of scarcity increases, incentives are created to suppress consumption and to develop new sources of supply or supplies of alternatives. There is, however, a very real danger that the limits could be crossed if market structures are deficient and there is no regulatory framework to compensate for those deficiencies. But it may not be possible to make the market sensitive to all environmental degradation. Biological systems may be approach a state of collapse before the market reflects significant ecological stress.

Increasing current or future productive capacity cannot fully compensate future generations for severe environmental degradation or destruction. Decision making processes will need to take account of the extent and nature of the environmental damage likely to be caused by resource exploitation. In cases of very localised, site-specific damage, account will need to be taken of whether the local habitat is rare in national or international terms or whether the flora and fauna of the area are prevalent elsewhere.

On the other hand, environmental preservation cannot be pursued exclusively, without regard for the effect on income, personal freedoms or other things we value. The difficulty is in judging the appropriate levels of risks, benefits and costs in specific cases.

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Equity within and between generations and impacts across sectors

Measures to achieve ecologically sustainable development will have differential impacts on groups within the community and will not be uniform across sectors. The degree and pace of implementation of measures which provide for inter-generational equity will need to be analysed in terms of their effect on present generations and socio-economic groups.

Adopting measures which move particular economic activities onto a more ecologically sustainable basis can affect the competitiveness of those activities. Any such effects on competitiveness could affect the material well-being of particular people or groups in society.

The most obvious potential economic impact could be on employment levels in those activities. Tightening environmental standards for particular enterprises however warranted this may be - could affect the viability of, and hence employment in, those enterprises.

To the extent that a move to ecologically sustainable development affects the international competitiveness of entire lndustries or sectors of the economy, significant macro-economic impacts might be felt. The current account deficit and the nation's overseas indebtedness might be exacerbated. This, in turn, could affect the level of interest rates and inflation. Export opportunities in new, environmentally benign industries could counteract this effect to some extent.

All of these impacts - on employment, indebtedness, interest rates and inflation - have obvious equity implications within present generations. Some groups, such as low-paid workers in the affected industries, could be especially vulnerable.

Moreover, any increases in the nation's overseas indebtedness could affect the economic well-being of future generations - for it is they who would be called upon to repay that indebtedness.

Conversely, a reluctance to move towards ecologically sustainable development because of possible economic impacts would have the effect of increasing the environmental debt that must be borne by future generations. And activities which are ecologically unsustainable may affect future employment prospects. For example, forest or fisheries practices that are not on a sustainable yield basis will jeopardise future employment prospects in those industries.

Policies which do little more than convert an economic debt into an environmental debt, or vice versa, are unlikely to be effective in improving the living standards of future generations while protecting the living standards of present generations. That is, they are unlikely to be policies that promote ecologically sustainable development.

The task, therefore, is to integrate ecological and economic considerations so that processes and activities are both ecologically and economically sustainable.

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Inter-generational equity and non-renewable resources

The principle of equity between generations in the use of non-renewable resources presents some difficulties. One interpretation is that consumption of non-renewable resources by the present generation in itself impoverishes future generations. This implies that these resources should never be used. Therefore, no generation should benefit from their use. This would seem to be an extreme definition. It ignores the fact that the use of non-renewable resources will generate additional income and add to the nation's capital stock, so enhancing future productive capacity. It also ignores the fact that, in many cases, exploitation of resources transforms rather than destroys the resource. So a resource can often be recovered and used again, albeit at a price.

A more balanced approach might be to allow for current use if that would raise livlng standards more than future use would do. At the heart of this approach is maximising the net value of the income stream derived from the resource over time.

But while such an approach might be conceptually attractive. in practice Judgements may be difficult because of the range of uncertainties involved, including changes in future demand patterns, and the development of substitutes.

Although the total stock of a resource is, by definition, finite, its actual quantity and its recoverable quantity are unknown, and the latter will vary over time. What can be recovered will depend on a range of technological and economic factors.

Some have argued that the rate of using nonrenewable resources should not exceed the rate at which renewable substitutes or more efficient technologies could be brought on stream. Bt there is also much uncertainty about the rate of technological improvement and substitution by renewable or other resources.

Sometimes an assumption is made that renewable resources are in themselves preferable alternatives to non-renewables. In many cases this may be so. Bt the use of renewable resources - for instance hydro-electric power as an alternative to the use of fossil fuels for electricity generation - can also have undesirable environmental consequences.

The key challenges in managing the use of nonrenewable resources are to ensure that their exploitation occurs in the most efficient manner possible, that full account is taken of the importance of maintaining ecological systems and that exploitatlon occurs in a manner that ensures minimal environmental damage.

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