The Economics of Sustainability
Pp. 40-64 (25)
Joshua C. Farley
Human society currently faces a number of unprecedented challenges, ranging
from global climate change and biodiversity loss to peak oil and natural resource depletion.
Unfortunately, competitive market economies systematically favor the conversion of
ecosystem structure into economic products over its conservation in order to provide vital
ecosystem services. In order to design a sustainable economic system, we must assess the
desirable ends of economic activity as well as the scarce resources required to attain them.
The most critical desired ends require cooperation, not competitive markets. Fortunately,
humans have evolved as cooperative, social animals, and proper economic institutions can
elicit cooperative behavior in order to attain these ends. Building a sustainable economy
requires a scientific approach in which institutions for allocation are determined by the ends
we hope to attain and the physical characteristics of the resources at our disposal, not by
ideological commitments to a market economy.
Biodiversity loss, climate change, peak oil, human needs, sustainable,
scale, just distribution, scarce resources, rivalry, excludability, stock-flow, fundservice,
cooperative behavior, collective action, public goods, open access
resources, price rationing.
Department of Community Development and Applied Economics, University of Vermont, Burlington, Vermont, USA