1. chy is a valid goal only when it is consistent with sustainability. The goals can be put into operation by having them accepted as part of the political debate and implemented in the decision making structure of institutions that affect the global economy and ecology (for example, the World Bank).
  2. Develop better global ecological economic modeling capabilities to allow us to see the range of possible outcomes of our current activities, especially the interrelated impacts of population, pollution, per capita resource use, and wealth distribution.
  3. Adjust current incentives to reflect both short- and long-run, local and global ecological costs, including uncertainty. To paraphrase the popular slogan, we should model globally and adjust local incentives accordingly. Below I list three broad, mutually reinforcing policy instruments that have a high likelihood of ensuring that economic development (as distinct from economic growth) is ecologically sustainable (Costanza, 1994). They use market incentives to produce the desired results (sustainable scale, fair distribution, and efficient allocation). These incentives are as follows:
  4. a.  

    Ecological tax reform. A natural capital depletion tax aimed at reducing or eliminating the destruction of natural capital would assume more of the tax burden instead of taxes on labor and income. Use of nonrenewable natural capital would have to be balanced by investment in renewable natural capital to avoid the tax. The tax would be passed on to consumers in the price of products and would send the proper signals about the relative sustainability cost of each product, moving consumption toward a more sustainable product mix. This policy will encourage the technological innovation that optimists are counting on while conserving resources in case the optimists are wrong.

    b.  

    The precautionary polluter pays principle (4P) would be applied to potentially damaging products to incorporate the cost of the uncertainty about ecological damages as well as the costs of known damages (Costanza and Cornwell, 1992; Costanza and Perrings, 1990). This would give producers a strong and immediate incentive to improve their environmental performance to reduce the size of the environmental bond and tax they would have to pay. The 4P approach can allow long-term worst-case ecological costs to be made apparent to individual actors in an efficient and culturally acceptable way.

    c.  

    A system of ecological tariffs aimed at allowing individual countries or trading blocks to apply incentives a and b above without forcing producers to move overseas to remain competitive. Countervailing duties would be assessed to impose fairly the ecological costs associated with production on both internally produced and imported products. Revenues from the tariffs would be reinvested in the global environment, rather than added to general revenues of the host country. The ecological tariffs should be proportional to the environmental damages that occur any-



The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement