1) Sustainable development: meaning
Sustainable development means meeting present needs without compromising the ability of future generations to meet theirs.
Economic interpretation:
- manage natural resources and environmental quality as productive assets,
- ensure growth does not create irreversible ecological damage.
2) Environment as an economic issue: externalities (high-yield)
2.1 Negative externality
When an activity imposes costs on others not reflected in market price. Example: industrial pollution affecting health.
Result:
- private cost < social cost
- market produces “too much” pollution-generating output.
2.2 Public goods and common resources
- Clean air is non-excludable and non-rival (public good characteristics).
- Commons (like groundwater, fisheries) can face overuse (“tragedy of commons”).
3) Policy instruments for environmental management
3.1 Command-and-control
- emission standards,
- technology mandates,
- bans and regulations.