Sustainable Development

A goal of economic systems is to maximize the utility of goods and services to society. Usually, these products are assigned value in units of currency. Some examples of valuated goods and services include the following: manufactured products, such as automobiles, computers, highways, and buildings; harvested natural resources, such as wood, hunted animals, and the products of agriculture; and the services provided by farmers, industrial workers, and others.

Conventional economics does not seriously consider non-valuated resources, or goods and services that are not assigned value in the marketplace. Examples of nonvaluated ecological resources include the aesthetics of natural landscapes, services such as nutrient and water cycling, and rare species and natural ecosystems. Consequently, the merits of non-valuated ecological resources cannot be easily compared with those of valuated goods and services. This in turn means that degradations of non-valuated resources are not usually considered to be true "costs" by conventional economists, and they do not have a strong influence in cost-benefit calculations.

In conventional accounting, large profits can often be made by undertaking activities that cause substantial environmental damage, including the exhaustion of potentially renewable resources. Clearly, this is an ecologically false accounting, but it has been rationalized by considering degradations of environmental quality to be externalities, or costs that are not directly paid by the individuals or companies that are causing the damage. However, the costs of resource and environmental degradation are very real, and they are borne by society at large—which of course includes the individuals or institutions responsible for the degradation.

Ecological economics is a new, actively developing sub-discipline within economics. The principal distinction of ecological economics is that it attempts to find a nonanthropocentric system of valuation. This is different from conventional economics, in which valuations are based almost entirely in terms of the importance of good and services to humans, as determined in the marketplace.

Accountings in ecological economics include the important social and environmental costs that may be associated with the depletion of resources and the degradation of environmental quality. These costs are critical to achieving and measuring sustainable development, but they are not seriously considered during accountings in conventional economics.