Natural Resource Economics, Planetary Boundaries and Strong Sustainability

Abstract

Earth systems science maintains that there are nine "planetary boundaries" that demarcate a sustainable, safe operating space for humankind for essential global sinks and resources. Respecting these planetary boundaries represents the "strong sustainability" perspective in economics, which argues that some natural capital may not be substituted and are inviolate. In addition, the safe operating space defined by these boundaries can be considered a depletable stock. We show that standard tools of natural resource economics for an exhaustible resource can thus be applied, which has implications for optimal use, price paths, technological innovation, and stock externalities. These consequences in turn affect the choice of policies that may be adopted to manage and allocate the safe operating space available for humankind.

Sustainable Use of the Environment, Planetary Boundaries and Market Power

“…In our modeling approach, we treat the safe operating space as defined by planetary boundaries as an economic asset. Our modelling approach is based on an analysis that we developed in a previous article in this journal [19]. We replicate this approach here to derive the conditions for efficient management of a safe operating space and show how this is also compatible with optimal management [19].…”

“…Once a planetary boundary has been established for critical Earth system resources and sinks, it is then important to determine the best way to manage the remaining safe operating space that is available for exploitation [14,18,19,39]. However, doing so requires understanding how the market conditions under which any safe operating space is exploited will impact its depletion over time.…”

“…In a previous article in this journal, Barbier and Burgess show how the environment and natural resources that occur within a "safe operating space" can be treated as an exploitable finite stock. By developing an optimal depletion model, the authors show how the extraction of these resources can be managed optimally [19]. However, many of the environment and natural resources that constitute key "safe operating spaces", as designated by planetary boundaries, are being exploited by a handful of large firms with considerable market [20].…”

“…In this article, we extend and elaborate the economic modeling approach developed by Barbier and Burgess to explore the stewardship of the environment and natural resources that constitute key "safe operating spaces", as designated by planetary boundaries [19]. We treat these natural resource and environmental assets as an exploitable finite stock and focus on the growing market concentration and monopoly power in the key economic sectors that exploit many safe operating spaces.…”

“…If our use of the global environment is limited by planetary boundaries, it is important to determine how to best manage the natural resources and environment available for use in the safe operating space [19]. In Section 3.2, we present an optimal depletion model to show how the extraction of these exhaustible assets can be managed optimally over time.…”