The concept of ecological sustainability requires that at least some stocks of environmental assets be prevented from rising above or falling below certain threshold levels. This paper considers the implications of this requirement in the context of a general model of environmental control, paying particular attention to the informational and structural conditions that are necessary and sufficient to satisfy the requirement. These conditions turn out to be particularly stringent, and will not ordinarily be satisfied. The paper then considers the scope for achieving the goal of ecological sustainability when the system is not controllable through economic incentives, implying that prices are inadequate observers of environmental processes. It argues the merits of a policy of environmental stabilization based on direct observation of the physical system, in which ecological sustainability is assured through the imposition of physical restrictions on economic activity so as to avoid breaching the critical thresholds. Since the price assumptions of the model are very weak, the results are robust with respect to a range of economic theories of price.
ASJC Scopus subject areas
- Economics and Econometrics