12

Economics of environment and development

David Pearce and Ed Barbier

THE ORIGINS OF BLUEPRINT FOR A GREEN ECONOMY BY DAVID PEARCE

IIED can legitimately claim to have been one of the birthplaces of the economic approach to sustainable development. In 1988 the then UK Conservative Government sought a structured response to the Brundtland Report of 1987.¹ The Brundtland Report was not the first international report to focus on the notion of the sustainability of economic and social activity, but it remains the most celebrated statement of the issues. The new focus was on forms of economic development that would permanently raise the living standards of the world's population, and especially the living standards of the poorest people. The notion of permanent development was intended to avoid forms of economic change that would benefit generations now but impose unacceptable risks for generations in the future. Environmental quality was at the centre of this notion because so many current-day activities are characterized by exactly this inter-generational impact. The benefits of fossil fuel use are secured at the expense of damaging health and ecological effects now and well into the future, and perhaps especially so because of the contribution to climate change. Land-use change now secures benefits in the form of extra agricultural land, but deprives future generations of the life-support functions provided by biological diversity. These ‘trade-offs’ are by now well known. Brundtland's challenge to national governments was to explain how they were going to tackle these formidable problems.

Already in 1988 Prime Minister Margaret Thatcher had made an historic speech to the Royal Society in which she raised the global warming issue to a national priority for the UK. Less well remembered is that she also espoused the notion of sustainable development – ‘the health of the economy and the health of the environment are totally dependent upon each other.... Protecting this balance of nature is therefore one of the greatest challenges of the late Twentieth Century’. But if the government of the day was, albeit cautiously, committed to sustainable development, what was it that they were committed to and what did it entail for economic and social policy? The request to provide a framework within which government could answer these questions came in 1988 to IIED from the then Department of the Environment (DoE).

Shortly before this, IIED and University College London's Economics Department had set up the London Environmental Economics Centre (LEEC), taking advantage of UCL's major research efforts in environmental economics, and IIED's own economics unit. I was joined by Ed Barbier (IIED) and Anil Markandya (UCL) to form the team that was to deliver a report to the DoE. (Ed Barbier is now Professor of Economics at Wyoming University, and Anil Markandya is Professor of Economics at Bath University. We had valuable assistance from Joanne Burgess, now Dr Joanne Barbier, and Sue Pearce.)

The resulting report, produced in August 1989 and known somewhat embarrassingly as ‘the Pearce Report’,² as if there was only one author, was long and detailed. We had set out a framework for the analysis of sustainability and we also set out the implications (as we then understood them) for policy. A review of the first draft by the authors suggested that it did not tell a complete story. More was needed. We added chapters on ‘valuing the environment’, ‘discounting’ and ‘prices and incentives’. These afterthoughts were to have political consequences none of us foresaw. Because the report was intended as an input to government thinking it became the subject of a press report and a small meeting at the DoE. Quite why the press were invited to hear about a report that was still fairly technical, despite considerable efforts to make it readable, remains an open question.

The Pearce Report did not contain much that was unfamiliar to environmental economists, but perhaps it brought those familiar findings into the public arena for the first time. There is some suspicion that the Report was being used to ‘test the water’ for potential policy changes. After all, the Prime Minister had already placed the issue of climate change on the agenda, and there must have been many inside government who had thought about the implications of doing that. Since carbon is pervasive to the working of all economies, ‘decarbonizing’ the economy was not going to be easy. It was extremely unlikely that it would happen with the traditional regulatory policies. The Report addressed those issues and perhaps it served the purpose of seeing how the public, and, probably more importantly, the media would greet the policy change.

The press meeting was, in retrospect, odd, although we did not think so at the time. The Report had quite openly said that we needed to revise the way we accounted for economic progress. We recommended a ‘green’ measure of gross national product (GNP). There were not many questions on that issue. The Report also called for more economic appraisal of policies using cost-benefit approaches in which environmental impacts were ‘monetized’, using techniques we described and illustrated. There were more questions about that. But most of the questions were about the ‘prices and incentives’ chapter. While that chapter set out a short menu of policy instruments, the one that attracted most attention was the notion of an environmental tax. What kinds of things would be subject to taxes, we were asked. We listed energy, emissions, pesticides, fertilizers, and so on. The DoE press officer was showing signs of unease as the questions continued, and the meeting was called to a close.

In the meantime, Chris Patten succeeded Nicholas Ridley as Secretary of State for the Environment. Within a day of this, I was asked in to discuss an advisory position. So it was that I became Special Adviser to Patten. In turn, Patten gave a fairly enthusiastic endorsement of the Pearce Report. The result was an explosion of press interest in the Report. The Today newspaper spoke of a ‘Green Tax Shock’. The Daily Mail's headline was ‘Tax the Polluters’. Charles Clover of the Daily Telegraph ran a long article headed ‘This man is working out the bill for saving the planet. And he wants you to pay for it’. The Sunday Express declared ‘Tax the polluters and save the world’. Economics and financial correspondents spoke of the ‘greening of economics’. Some local newspapers went over the top: ‘Boffin plans to save the world’ said the Bedford Herald! (I lived in Bedford at the time.) Looking back, Patten did promise a sea-change in how environment was to be treated and he had taken a calculated risk in backing the Report. The press attention was therefore largely under-standable. But it was also August, the ‘silly season’ when newspapers are usually starved of news. So, how far it was stage-managed and how far accidental I don’t think we will ever know.

The Pearce Report was quickly published as Blueprint for a Green Economy³, through IIED's publishing arm, Earthscan. This served only to magnify the press attention as the original report had proved difficult to obtain (I think we printed only about 20 copies). My role for the next few years was to expand on the messages, but mainly to communicate the ones already in Blueprint. It is interesting to note how the system works: I became an ‘opinion former’ in the eyes of the media and, for that matter, industry and commerce too. I took on various advisory roles for corporations and public relations companies, all of which helped get the ‘green economics’ story across to a wider public. Convincing politicians was harder since they perceived the real problems in advocating a new economic approach to the environment: the public does not like the word ‘tax’ and much of what was being argued for would require that households and corporations should pay the full social cost of production, ie a cost that included the value of the environmental resources also being used up. The message also went international and was picked up by environ-mental economists on the continent. Bodies like the OECD in Paris had long advocated solutions of the kind envisaged in Blueprint, so there was a sound base for extending the audience for the notion of using market signals to improve the environment.

Some sustainability economics

The irony of Blueprint is that it did set out the beginnings of a coherent approach to sustainability. What the media focused on, fairly understandably, were the policy implications. The underlying theory was quickly passed over. Yet that has proved to be extremely productive and has been explored in much more detail in the subsequent Blueprint publications.⁴ The essence of the argument is that future generations will indeed be worse off than current generations if they have less capacity to generate ‘well-being’ than we have. That capacity depends on the assets available to them. Traditionally, economists would have defined this capacity in terms of human-made capital, labour and land – the famous three ‘factors of production’. A more modern classification would be human-made capital, natural capital (environmental assets), human capital (skills and knowledge, as well as labour), and social capital.

Social capital refers to the sets of relationships between individuals and institutions, relationships which cement contracts and understanding, thus reducing the need to have costly arrangements for guaranteeing contracts. So, one basic rule for sustainability, which in turn is defined as increases in well-being that last through time, is the ‘constant capital’ rule. This says that sustainability is more likely (it is not guaranteed) if the sum total of all forms of capital increases through time. This generation's obligation to the next one is to pass on that increased stock of capital assets. Some obvious modifications to the rule (which should be ‘constant or rising capital’ but is usually abbreviated to ‘constant capital’) involve making sure that it is per capita stocks that increase over time, and allowing for technological change. If population is growing, increases in per capita stocks are likely to be harder to achieve – hence the importance that the theory places on the negative consequences of population change. If technology raises the well-being that can be secured from any single unit of capital, it follows that capital stocks could decline and well-being could simultaneously rise. Population and technology therefore tend to work in opposite directions.

As Blueprint made clear, one could have a variation on the constant-capital rule. This would involve paying special attention to natural capital. The idea is that ‘too much’ environmental degradation has already taken place, so that further reductions should not be countenanced. If so, the constant-capital rule becomes a two-part rule: first ensure overall per capita asset stocks rise through time, and then ensure that the stock of environmental assets does not decline. In its general form the rule is known as ‘weak sustainability’. In its two-part form it is known as ‘strong sustainability’. A huge literature has grown up debating the merits of the two approaches, much of it unfortunately not very enlightening. But the basic distinction is that weak sustainability allows environmental capital to decline as long as overall capital increases (and, of course, vice versa: weak sustainability could also involve substituting natural capital for other forms of capital). Strong sustainability requires overall capital to rise (though this is often forgotten in the literature) and, in addition, environments must not degrade.

The economic approach to sustainability is at least coherent. Far too little of the literature on sustainable development has any theoretical underpinnings. The result is a mass of confusing and confused statements whereby almost anything passes for acceptable policy on sustainability. Not only is the theoretical foundation of the economic approach fairly rigorous, but it lends itself to measurement. Procedures for measurement were set out in Blueprint 3 and had been hinted at in the original Blueprint. The essence of the procedure is as follows.

Consider any corporation. It has assets upon which the production of the corporation depends. Those assets depreciate over time. Hence any sensible manager puts resources to one side to provide a depreciation fund. When, say, a machine wears out, the fund is available to replace the machine and production can be sustained. Call the resources put to one side ‘savings’. Then the ‘sustainability’ rule for the corporation is that savings must exceed depreciation. The analogous idea for the nation (or region or, indeed, the world) is that nations must save more than the depreciation on their capital assets, but this time the assets in question are all of the forms of capital described above. In this way, a nation correctly accounts for its demands it makes on the asset base of sustainable development.

Savings can be measured directly by looking at the national accounts. Depreciation on human-made capital is also recorded in the national accounts. Human capital tends not to decline because knowledge and skills are added to every year – so in this case there is an appreciating asset. Natural capital tends to depreciate (but not necessarily so) and, provided it can be valued in monetary terms, that depreciation can also be recorded.⁵ Environmental economists have made great strides in placing money values on environmental assets, so it is possible to get some estimates. Social capital has yet to be studied carefully in terms of measurement, and this remains a challenge for the future.

The consequent rule for sustainability can now be stated. If S is savings, d_M and d_N and are depreciation on (human-)made and natural capital accordingly, and a_H is appreciation on human capital, then we require that:

This can be rewritten in terms of a rule that ‘genuine savings’ – SG –(savings plus appreciation minus depreciation) should be greater than zero for sustainability to be (probably) guaranteed:

Since all the elements are now measurable, we have a measure of sustainability. Since this idea was produced back in 1993, considerable advances have been made in measuring genuine savings for many different countries, and the procedure has been adopted by the World Bank.⁶ Measures of genuine savings are published annually in the World Bank's World Development Indicators and are available on the World Bank's web page.

As one would expect from such a rule, countries that fail to save significant portions of their GNP fail the genuine savings test. In other words, their genuine savings are below zero – they are ‘consuming capital’. Many developing countries thus fail the test. But, contrary to some commentaries, it is not the case that the genuine-savings rule divides the world into sustainable rich countries and unsustainable poor ones. Countries like the USA, which have notoriously low savings rates, also risk being unsustainable on the genuine-savings rule. Indeed, once population growth is introduced into the rule, as it has been in very recent work, the USA looks distinctly marginal in terms of sustainability. The UK also fails a genuine-savings rule for the 1980s, the period when oil revenues were being used to expand consumption rather than investing in the asset base of the economy.⁷ So, the genuine-savings approach turns out to provide considerable insights into policy. Countries that fail to reinvest the proceeds of natural resource exploitation can quickly risk being unsustainable, even if they are rich in the short term. Countries that fail to save also risk unsustainability, giving some rigorous meaning to that other much over-used and confused notion of ‘over-consumption’. Countries that fail to invest in technology, training and education also risk being unsustainable. While many people might think we already know these lessons – and one can take leave to doubt even this – there is virtue in having them revealed through a logical process.

Future challenges for the economics of sustainability

What are the remaining challenges to the economics of sustainable development? There are several, and four key challenges are outlined here. The first, and probably the most important, is to explore further the linkages between technological change and sustainability. Past approaches to technology have suggested that technological change just ‘happens’. If so, there is a temptation to conclude that it cannot be the subject of policy initiatives. Yet, technological change is of the utmost importance for sustainability since it provides the means of improving human well-being without depleting natural resources at unacceptable rates. In other words, it offers the mechanism for resource conservation.

There is a great deal of interest currently in this notion of raising the ‘productivity’ of resources, and Blueprint for a Green Economy actually highlighted the issue over a decade ago. The options are essentially three: continue to achieve economic growth and face a deteriorating environment; grow and decouple the environment from the growth process; or not grow. The last alternative is in fact not an option because what determines long-run growth is not short-run government policy but technological change and investment in human capital. The idea that any government would deliberately set out to reduce growth by reducing investment in education, training and R&D is not credible. Hence, the options are grow and suffer a reduced quality of life, or grow and decouple. Only the latter is acceptable.

To achieve this, there has to be a renewed focus on incentive measures for environmentally beneficial technology. The dismal state of initiatives to switch all of us out of carbon-dependent technology explains much of what is going on. Even environmental and energy economists have focused too much on taxes rather than payments to bring on new technology such as renewable energy. There are enormous external benefits to be obtained by jump-starting environ-mentally sound technology so that movements down very steep learning curves can be secured. Resource productivity means better and cleaner technology, and better and cleaner technology means a technology policy. No doubt some technological change will just ‘happen’ but modern theory suggests that most of it is the result of conscious decisions.

The second key challenge concerns population change. Some have argued that population change is itself a stimulus to economic growth. It creates demand and increases the labour supply. Potentially more important, it pushes societies to their ecological limits, and this induces technological change. Ester Boserup⁸ is the name most closely associated with this view, but it has surfaced more recently in the work of Mary Tiffen and others.⁹ The problem with this view is that one can find as many, if not more, examples of population change causing decreased well-being as cases where it has generated increased well-being. Nor is it clear that the gains in well-being that occur in the relevant cases would not have occurred without population change. The opposite is hard to demonstrate.

The sustainable development literature is very clear that the dominant effect of population growth is to dissipate the capital assets on which sustainable development depends. Only if capital assets are ‘public goods’ can population growth be compatible with rising levels of services from the available capital stock.¹⁰ The negative effect of population change on indicators of sustainability is, for example, firmly demonstrated in the work of Kirk Hamilton at the World Bank,¹¹ work that had as its stimulus an original paper by Pearce and Atkinson¹² which in turn arose from the original Blueprint work.

Yet there is an unnerving reluctance on the part of policy-makers to emphasize the destructive features of population change. As an example, the issue is barely mentioned in the UK Department for International Development's strategy papers for poverty alleviation and sustainable development.¹³ One clear implication of the economic models of sustainable development is that sustainability is most threatened by even modest changes in population. As is well known, there is little or nothing to be done to prevent world population rising by 50 per cent in the next 50 years, but everything should be done to prevent it rising further than that. Political correctness involving silence on the issue spells disaster for sustainability.

The third challenge is to improve our approaches to valuing the environment. While controversial, the monetary approach remains the most promising. Critics of the approach appear to invest little time and effort in understanding what economists are doing when they derive such values. They are essentially measures of human preference for environmental quality. Somehow, this fact gets lost amid claims that money is ‘evil’, a confusion of the commodity with a measuring rod. As the techniques are improved, we can get better and better indicators of sustainability, centring on the genuine-savings concept. The insights from this measure contrast starkly with the almost endless array of environmental indicators which masquerade as sustainability indicators. They are nothing of the kind, useful though they might be for other purposes.

The final challenge concerns social capital. While much of the discussion about sustainability has emphasized the importance of environmental quality, there are disturbing signs that what we might call social sustainability is under threat through the destruction of social capital. Social cohesion appears to be threatened from many sources – crime, family break-up, drugs, for example. The question is how far the creation of social capital is a policy-relevant issue. Governments have been notoriously bad at creating socially cohesive values, not because they are incompetent but perhaps because it is not something that governments can do. It can be argued then that some of the focus on sustainability should shift to social issues, and to the particularly perplexing issue of how social capital might be measured.

Apart from the social capital issue, these challenges were all raised in the original Blueprint. While one could look at the half-empty glass and say that, more than a decade later, we still have a lot of work to do, I prefer to look at the half-full glass and say that in only a decade we have come a very long way in our thinking about sustainability. IIED's brief but productive alliance with UCL on this issue changed the language of environmental politics. There is more to be done.

ECONOMICS OF ENVIRONMENT AND DEVELOPMENT: IIED's CONTRIBUTION BY EDWARD BARBIER

Twenty years ago, the application of economics to the environmental problems of developing countries was virtually unheard of. In 1984, I was made painfully aware of this fact as a result of two incidents, both of which occurred while I was working that academic year as a temporary lecturer at the Geneva campus of a US college, Webster University of St Louis, Missouri. During this time I was also completing my PhD thesis, which among other things was exploring the role of environmental economics in economic development.¹⁴

The first incident occurred when I was asked to give an economics lecture at another US university with a campus in Geneva. After the lecture, the director of that campus's economics programme asked me about the topic of my thesis. Upon hearing my interest in the economics of environment and development problems, the director remarked that in his opinion – which he considered to be the conventional view of the economics profession – not only was the topic too obscure for a PhD thesis but it was also largely irrelevant to economics.

The second incident occurred when I tried to sign on to a register of consultants for a well-known international non-governmental organization (NGO) based in Geneva, which was working on conservation and development issues worldwide. When asked by the person in charge of the register to list my main area of expertise, I explained that I was an economist interested in the analysis of environmental problems of developing countries. The person replied that her organization did not need any consultant with that area of expertise. When I suggested sending in my curriculum vitae in the hope that the situation might change in the near future, she said not to bother as they did not include on their register any consultant without a PhD degree (not surprisingly, I found out some time later that this was untrue).

My main aim in recollecting these two incidents in this introduction is not to try and prove how wrong these two individuals were. Rather, I see these two events as important reminders of how much and how fast attitudes have changed in less than 20 years. Today, the economics profession appears to have accepted that the application of economics to environment and development problems is a legitimate and important area of study. Perhaps the most tangible proof of this was the launching in September 1995 at the Royal Swedish Academy of Sciences of an academic journal, Environment and Development Economics, published by Cambridge University Press. Equally, virtually every major bilateral and international donor agency in the world either has one or more full-time staff members engaged in the economic analysis of environmental problems in developing countries, or routinely contracts researchers and consultants to undertake such analysis. Many international NGOs and some NGOs within developing countries have also been sponsoring and conducting research into the economics of environment and development.

However, what is less well known in the international community is the important contribution that the International Institute for Environment and Development (IIED) has made to the rapid surge of research emanating from this new field. Having worked at IIED over the period 1986-1993, I was extremely fortunate to be involved in this contribution.

Hired by Richard Sandbrook and Czech Conroy in early 1996, I initially worked with Czech on setting up an international conference on sustainable development and on the World Resources Report, which IIED produced jointly with the World Resources Institute and the UN Environmental Programme. At this time, Richard Sandbrook and IIED were assisting the Commission on Sustainable Development headed by the former Norwegian prime minister Gro Harlem Brundtland to conduct its global enquiry. Published in 1987, the now-famous Brundtland Report Our Common Future was responsible for bringing the concept of sustainable development to the world's attention. As a result of the report, economic policy-makers and donor agencies globally began taking environment and development issues seriously, and were asking important policy questions concerning the practical implementation of sustainable development. Sensing this change, Richard Sandbrook encouraged me to set up a one-man Environmental Economics Programme at IIED to initiate policy-relevant economics research into environment and development issues. One of my initial aims was to try to understand both the economic and non-economic components of what the environment and development community was calling ‘sustainable development’.¹⁵

During this period Gordon Conway, who was setting up IIED's Sustainable Agricultural Programme, also asked me to work with him on integrating economic and ecological analysis in the study of the sustainability and development of agricultural systems, particularly in the marginal agricultural areas of the developing world. Through this work, we were able to demonstrate not only the importance of agricultural sustainability for alleviating rural poverty but also a role for economics in assessing the trade-offs between the sustainability and productivity of various agricultural systems.¹⁶

Meanwhile, an important process was occurring in Washington DC. Since the 1960s, the World Bank has generally been viewed as the premier global agency concerned with economic development, and along with the International Monetary Fund, the Bank has generally led donor policy thinking on development. In the late 1980s an economist at the World Bank, Jerry Warford, among others became increasingly successful in convincing the Bank hierarchy that the economic analysis of environmental problems in developing countries should feature in Bank policy thinking. The so-called ‘greening of the Bank’ led to the establishment of the Environment Department and several environmental divisions within the regional departments of the World Bank, as well as the launching of several Bank country studies incorporating economic analysis of environmental and resource problems in developing countries.

Other donor agencies were also ‘greening’: perhaps most notably and publicly, the US Agency for International Development (USAID) in Washington, but also the major UK, Scandinavian, Canadian and West European bilateral donor agencies were developing key environment and development programmes with substantial impacts. Again fortunately for me, the head of IIED's Washington office, David Runnalls, had been both following and encouraging the ‘greening’ of the North American donor agencies and, as a result, David got me involved early on in some of the environment and development economics studies launched by the World Bank and USAID.

Much of the initial policy research commissioned by Jerry Warford at the World Bank was also being conducted by David Pearce at University College London, who was based just around the corner from IIED at UCL's Economics Department. Another UCL economist, Anil Markandya, was also collaborating in much of the research. It became obvious that we would all benefit from pooling our ‘London-based’ research efforts. With the enthusiastic support of Richard Sandbrook and Johan Holmberg of the Swedish International Development Authority (SIDA), SIDA was persuaded to provide the initial seed money for the new venture. Thus in 1988 the IIED-UCL London Environmental Economics Centre was created, with David Pearce as Director, Anil Markandya and myself as Associate Directors, and Joanne Burgess as the first researcher.

Over the next few years, the four of us at LEEC, plus others who joined us on some studies such as Tim Swanson, set about producing numerous books, journal articles and research reports concerned with the economic analysis of environmental problems in developing countries. Most of this research was concerned with applied policy analysis, featuring sectoral, country and even global studies of key environment and development problems. One of the most influential – and controversial – studies we conducted was on the economics of the trade in African elephant ivory.¹⁷ Such studies quickly established LEEC's reputation for pioneering the application of economics to significant environment and development problems. Other studies that I personally participated in during this period at LEEC included: the economics of soil erosion in Indonesia,¹⁸ the economics of rehabilitating gum arabic systems in Sudan,¹⁹ technological substitutions for greenhouse gas emissions,²⁰ and various country studies of the economics of tropical deforestation.²¹

However, no matter how much we tried to accomplish at LEEC there was always a demand for more; these were the days when the sudden surge in demand for economists working in our area far outstripped the available supply. Ironically, however, the most widely influential publication from this period was Blueprint for a Green Economy, a report commissioned by the UK Department of Environment on how the UK might implement sustainable development.²² Written essentially as a sideline to what we thought was our main area of research at LEEC, the phenomenal success of Blueprint was perhaps partly attributable to the rapidly expanding interest worldwide in all aspects of economic analysis of environmental policy and sustainable development, and not just for developing countries. A companion book that we wrote based on our ‘bread and butter’ LEEC research of the time was Sustainable Development: Economics and Environment in the Third World.²³

In 1990 David Pearce left LEEC in order to devote his time fully as UCL's Director of the Centre for Social and Economic Research into the Global Environment. I agreed to become Director of LEEC, and Richard Sandbrook, Anil Markandya and I decided to return the Centre's focus exclusively to environment and development economics research. In this ‘second phase’ in LEEC's development, we tried to concentrate on more long-term applied economic studies of various key environmental problems in developing countries, both on our own at LEEC and in collaboration with other economics researchers world-wide. During this period, two additional researchers joined LEEC full time – Bruce Aylward and Josh Bishop, both of whom proved instrumental in the development of LEEC in its crucial second phase. Michael Collins also joined us in my last year as Director. Examples of the topics we studied at LEEC during this era include: the economics of the tropical timber trade,²⁴ the ecological economics of biodiversity loss,²⁵ the pharmaceutical value of bioprospecting,²⁶ the economics of land degradation,²⁷ tropical deforestation in Mexico,²⁸ and the environmental effects of structural adjustment.²⁹

It was at the end of LEEC's ‘second phase’ that IIED's long and distinguished record in contributing to the economics of environment and development was finally reaping dividends in the wider international community. Nowhere was this more important than at the 1992 UN Conference on Environment and Development (UNCED), held in Rio de Janeiro, Brazil. For example, in its Agenda 21 pre-conference declaration, the UNCED Secretariat made the following statement:

In the last two decades, there has been some progress through conventional economic policy applied in parallel with environmental policy. It is now clear that this is not enough, and that environment and development must be taken into account at each step of decision making and action in an integrated manner.³⁰

The economic analysis of environment and development problems had finally received the full support of the international policy community, and this could be seen in tangible terms by the community's continued support for the type of research we were conducting at LEEC, as well as the valuable work that continues to be pursued to this day by LEEC's successor, the Environmental Economics Programme at IIED, under the leadership of current Director, Josh Bishop.

NOTES AND REFERENCES

1World Commission on Environment and Development (1987) Our Common Future (The Brundtland Report), Oxford University Press, Oxford.

2Pearce, DW, A Markandya and E Barbier (1989) Sustainable Development, Resource Accounting and Project Appraisal: State of the Art Review, Report to UK Department of the Environment, London Environmental Economics Centre, IIED, London.

3Pearce, DW, A Markandya and E Barbier (1989) Blueprint for a Green Economy, Earthscan, London.

4Pearce, DW, E Barbier, A Markandya et al (1991) Blueprint 2: Greening the World Economy; Pearce, DW, RK Turner, T O’Riordan et al (1993) Blueprint 3: Measuring Sustainable Development; Pearce, DW (1995) Blueprint 4: Capturing Global Environmental Value; Maddison, D, DW Pearce, O Johansson et al (1996) Blueprint 5: The True Costs of Road Transport; Pearce, DW and E Barbier (2000) Blueprint for a Sustainable Economy, all published by Earthscan, London.

5As it happens, monetization is not essential for some of the approaches to measurement, but the issues are technical and are not elaborated here.

6Hamilton, K and M Clemens (1999) Genuine savings rates in developing countries, World Bank Economic Review, 13(2), pp333-356.

7See Pearce et al (1993), note 4 above.

8Boserup, E (1980) Population and Technological Change, University of Chicago Press, Chicago.

9Tiffen, M, M Mortimore and F Gichuki (1994) More People, Less Erosion: Environmental Recovery in Kenya, Wiley, New York and London.

10A public good is one that, if made available to one person, is automatically supplied to other people. Moreover, the consumption of the good by one person does not diminish consumption by others. Some capital assets, such as clean air and much information, are public goods but many are not.

11Hamilton, K (2001) Sustaining Economic Welfare: Estimating Changes in Wealth per capita, Environment Department, World Bank, Washington DC.

12Pearce, DW and G Atkinson (1993) Capital theory and the measurement of sustainable development, Ecological Economics 8, pp103-108.

13Department for International Development (DfID) (2000) Achieving Sustainability: Poverty Elimination and the Environment, DfID, London.

14The published version of my PhD thesis (Barbier, EB (1989) Cash crops, food crops and agricultural sustainablity: the case of Indonesia, World Development 17(6), pp1378-1387) was updated during my early years at IIED, and owes a great deal to the research experience I gained at the Institute.

15Particularly influential was a meeting held at IIED in September 1986,in which we attempted to integrate a concept of sustainable development across economic, biological and social perspectives. This ‘IIEDdefinition’ is summarized in: Barbier, EB (1987) The concept of sustainable economic development, Environmental Conservation 14(2), pp101-10.

16Barbier, EB (1989b) Economics, Natural Resource Scarcity andDevelopment: Conventional and Alternative Views, Earthscan, London(223pp); Conway, GR and EB Barbier (1988) After the GreenRevolution: sustainable and equitable agricultural development, Futures20, pp651-671; Conway, GR and EB Barbier (1990) After the GreenRevolution: Sustainable Agriculture for Development, Earthscan, London (205 pp).

17Barbier, EB, JC Burgess, TM Swanson and DW Pearce (1990) Elephants, Economics and Ivory, Earthscan, London.

18Barbier, EB (1990) The farm-level economics of soil conservation: the uplands of Java, Land Economics 66(2), pp199-211.

19Barbier, EB (1992) Rehabilitating gum arabic systems in Sudan: economic and environmental implications, Environmental and Resource Economics 2, pp341-352.

20Barbier, EB, JC Burgess and DW Pearce (1992) Technological substitution options for controlling greenhouse gas emissions, in J Poterba and R Dornbusch (eds), Economic Policy Responses to Global Warming, MIT Press, Massachusetts, pp109-160.

21Barbier, EB, JC Burgess and A Markandya (1991) The economics of tropical deforestation, Ambio 20(2), pp52-54.

22See note 3 above.

23Pearce, DW, EB Barbier and A Markandya (1990) Sustainable Development: Environmental Economics in the Third World, Edward Elgar, London.

24Barbier, EB, JC Burgess, JT Bishop and BA Aylward (1994) The Economics of the Tropical Timber Trade, Earthscan, London.

25Barbier, EB, JC Burgess and C Folke (1994) Paradise Lost? The Ecological Economics of Biodiversity, Earthscan, London.

26Aylward, BA, J Echeverría, L Fendt and EB Barbier (1993) The Economic Value of Species Information and its Role in Biodiversity Conservation: Costa Rica's National Biodiversity Institute, LEEC Paper 93-06, London Environmental Economics Centre, London; Barbier, EB and BA Aylward (1996) Capturing the pharmaceutical value of biodiversity in a developing country, Environmental and Resource Economics 8(2), pp157-191.

27Barbier, EB and JT Bishop (1995) Economic and social values affecting soil and water conservation in developing countries, Journal of Soil and Water Conservation, March-April, pp133-135.

28Barbier, EB and JC Burgess (1996) Economic analysis of deforestation in Mexico, Environment and Development Economics 1(2), pp203-240.

29Reed, D (ed.) (1992) Structural Adjustment and the Environment, Earthscan, London.

30UNCED Secretariat (1992) Integration of Environment and Development in Decision Making, Report to the Preparatory Committee for UNCED, UNCED, New York.