Sustainable Development in Practice: Sustainomics Methodology and Applications (Munasinghe Institute for Development (Mind) Series on Growth and Sustainable Development)

Cover......Page 1
Half-title......Page 2
Series-title......Page 3
Title......Page 4
Copyright......Page 5
Dedication......Page 6
Contents......Page 8
Foreword......Page 12
Preface......Page 14
Part I Framework and fundamentals......Page 20
1 Overview and summary......Page 22
1.1 Outline of the book......Page 23
Poverty, inequity and human well-being......Page 28
Globalization......Page 30
Environmental damage......Page 32
Conflict and competition for resources......Page 33
Poor governance......Page 34
1.2.2 Fulfilling major global agreements on sustainable development......Page 36
1.2.3 Avoiding worst-case future scenarios and learning from past experience......Page 37
1.2.4. Vision for a practical way forward......Page 38
Development stream (focused on human well-being)......Page 39
Sustainability stream (systems-science-oriented)......Page 40
1.3.2 Summary of basic principles and methods......Page 41
(d) Full-cycle application of practical and innovative analytical tools......Page 42
Brief review of key ideas......Page 43
1.4 Millennium development prospects and worldwide status......Page 44
Primary education......Page 45
Child mortality......Page 46
HIV/AIDs, malaria and other diseases......Page 47
Environmental sustainability......Page 48
2.1 Basic concepts and principles......Page 50
2.1.1 Making development more sustainable......Page 52
2.1.2 Sustainable development triangle and balanced treatment......Page 53
2.1.3 Transcending conventional boundaries for better integration......Page 54
Stakeholder viewpoints and operational focus......Page 55
2.1.4 Full-cycle application of practical analytical tools......Page 58
Economic sustainability......Page 59
2.2.2 Environmental aspects......Page 61
Environmental sustainability......Page 62
2.2.3 Social aspects......Page 63
Social sustainability......Page 64
2.3.1 Need for integration......Page 65
2.3.2 Optimality......Page 66
2.3.3 Durability......Page 67
2.3.4 Complementarity and convergence of optimality and durability......Page 68
Dimensions of equity and poverty......Page 70
Population and natural resource use......Page 72
2.4.1 Action Impact Matrix......Page 74
Basic procedure......Page 75
Analysis, prioritization and remediation......Page 76
Sustainable development assessment......Page 77
Issues–policy transformation mapping......Page 78
Cost–benefit analysis and multicriteria analysis......Page 80
Indicators and measures......Page 81
2.5.1 Harmonizing development with nature......Page 83
2.5.2 Changing the structure of growth......Page 84
2.5.3 Long-term growth and sustainable development......Page 86
General analytical frameworks......Page 89
Modelling applications......Page 90
3.1 Human activities and the environment......Page 91
3.2.1 Cost–benefit analysis and economic assessment......Page 92
3.2.2 Shadow pricing......Page 94
Common property resources and externalities......Page 95
3.3 Measuring costs and benefits......Page 96
3.3.1 Patterns of resource use......Page 97
With project condition......Page 98
First benefit term: P(Q – QA)......Page 99
3.3.4 Benefits that are difficult to value monetarily......Page 100
3.4.1 Categories of economic value......Page 101
3.4.2 Practical valuation techniques......Page 103
Actual defensive or preventive expenditures......Page 105
Property value......Page 106
Artificial market......Page 107
3.5 Multicriteria analysis......Page 108
3.6.1 Discounting and intergenerational choices......Page 110
3.6.2 Risk and uncertainty problems......Page 113
3.7 Economy-wide policies and the environment......Page 115
3.7.1 Macroeconomic policies......Page 116
3.7.2 Structural adjustment......Page 117
3.7.3 Public investment/expenditure reviews......Page 119
3.7.4 Sectoral policies......Page 120
3.7.5 National income accounts and macroeconomic performance......Page 121
Evolution of practical applications......Page 123
3.8.2 Economic efficiency shadow prices......Page 125
3.8.3 Adjustments for social (and environmental) shadow prices......Page 128
4.1 Conceptual framework linking ecological and socioeconomic systems......Page 130
4.1.1 Ecosystem services and human well-being......Page 131
Provisioning services......Page 132
Major issues......Page 133
Policy options and remedies......Page 134
4.1.3 Dynamics of interlinked living systems......Page 136
4.2 Property rights, governance and ecological–social linkages......Page 137
4.2.1 Sustainability, sustainable development and property rights regimes......Page 138
4.2.2 Governance systems......Page 140
4.2.3 Equity, stewardship and environmental resilience......Page 141
4.2.4 Traditional knowledge......Page 142
4.2.5 Mechanisms linking humans and environmental resources......Page 144
4.2.6 Poverty, population and natural-resource use......Page 145
Equity, stewardship and environmental resilience......Page 146
4.3 Environmental and social assessment......Page 147
EA process......Page 148
Environmental auditing......Page 149
Strategic environmental assessment......Page 150
4.3.2 Social assessment......Page 151
Part II Global and transnational applications......Page 154
5.1 Climate change and sustainable development......Page 156
5.2.1 Economic, social and environmental risks and opportunities......Page 159
5.2.2 Relevant principles for policy formulation......Page 160
5.2.3 Equity, ethics and climate change......Page 161
Procedural and consequential equity......Page 163
Intragenerational (spatial) equity......Page 164
Wealth and consumption......Page 165
Equity within countries......Page 166
Climate change negotiations, ethics and equity......Page 167
5.3.1 Sustainable development and adaptation to climate change......Page 169
Adaptation options......Page 170
Mitigation options......Page 171
5.4.1 The interplay of optimality and durability in determining appropriate global GHG-emission target levels......Page 173
5.4.2 Combining efficiency and equity to facilitate South–North cooperation for climate-change mitigation......Page 175
5.4.3 Equity and efficiency in emissions trading......Page 176
5.5 Greenhouse-gas-mitigation prospects in Sri Lanka......Page 178
5.5.1 Baseline emissions......Page 179
5.5.2 Base case or business-as-usual scenario......Page 180
5.5.3 Reform scenario......Page 181
Small hydro......Page 183
Dendro-thermal power......Page 184
Solar photovoltaic systems......Page 185
Conventional hydro......Page 186
GHG emission reduction scenarios......Page 187
5.5.6 Developing the standard abatement cost curve (SACC)......Page 188
Standard and dynamic abatement cost curves......Page 192
Oil–steam (+FGD)......Page 193
Dendro-thermal......Page 197
6.1 Global transdisciplinary scientific dialogue on climate change and sustainable development......Page 199
6.1.2 Guidance paper on development, equity and sustainability......Page 200
6.1.3 The internal debate, outcome and lessons learned......Page 201
6.2 Multilevel integration of millennium ecosystem assessment results and millennium development goals......Page 203
Global-level mainstreaming through MA–MDG linkage......Page 204
Key policy-relevant issues......Page 206
6.2.3 Applying the Action Impact Matrix methodology......Page 207
Step (c): Identify how development goals/policies might affect ecosystems (DE-AIM)......Page 208
Step (e): Prioritize the most important interactions and determine appropriate remedial policies and measures (preliminary AIM)......Page 210
6.3.2 Application to global and sub-global levels......Page 211
6.4 Dams and development: multilevel, multistakeholder dialogue......Page 212
Main WCD findings......Page 213
DDP Secretariat......Page 214
Partners and network......Page 215
Dissemination......Page 216
6.5.2 Survey results......Page 217
Multistakeholder process......Page 219
Regional level......Page 220
Assessment of DDP first phase......Page 221
Recommendations......Page 222
6.6.3 Response to evaluation recommendations......Page 226
Objectives......Page 227
Part III National and macroeconomic applications......Page 228
7 National economy-wide applications......Page 230
7.1.1 Tracing macroeconomy–environment linkages......Page 231
7.1.3 Mathematical modelling......Page 232
7.1.5 Green national income accounting......Page 233
7.2.1 Environmental and social impacts of structural adjustment......Page 234
Beneficial impacts......Page 235
Market failures......Page 236
Fiscal policy......Page 237
7.3.1 Linking micro- and macroeconomic views of environmental harm – magnitude and structure of growth......Page 238
7.3.2 Modifying macropolicies to avoid environmental harm......Page 239
Timing and sequencing of policy reforms......Page 240
7.3.3 Extending the conventional IS-LM macroeconomic analysis......Page 241
7.3.5 Action Impact Matrix and tunnelling policies to restructure growth paths......Page 243
7.4.1 Introduction......Page 244
7.4.2 Economic growth and the challenges of social equity and environmental conservation......Page 245
Growth, poverty and environmental issues......Page 251
Income distribution and pollution generation......Page 252
Growth and deforestation trends......Page 254
Poverty and income inequality......Page 255
Economic incentives and deforestation in the Brazilian Amazon......Page 256
Industrial growth, external trade and pollution......Page 259
Deforestation in the Amazon and production patterns......Page 260
8.1 Optimal growth models and sustainable development......Page 262
8.2.1 Linking sustainability with costs and benefits of growth......Page 263
8.2.2 Making macromodels more sustainomics compatible......Page 264
8.3.1 Sustainomics-compatible optimal-growth model......Page 265
General conceptual version of the optimal ecological model, data, boundary conditions and transversality......Page 266
Growth and ecological scenarios......Page 267
8.4 Ecol-Opt-Growth-1 model conclusions......Page 272
8.5.2 A simple case involving monetary policy and wage stickiness......Page 273
8.5.3 Effects of taxes......Page 274
8.6 Developing country case studies......Page 275
8.6.2 Ghana......Page 276
8.6.3 Morocco......Page 278
8.7 Appendix A: The Ecol-Opt-Growth-1 model......Page 279
Flow variables......Page 282
Functions......Page 283
8.8 Appendix B: Second-best nature of macroeconomic policies when environmental externalities are present......Page 284
9.1 Economy-wide cross-effects of social and environmental policies in Chile......Page 288
9.1.1 CGE approach......Page 289
9.1.2 Linkages with the environment......Page 290
9.2 Review of economic, social and environmental issues and policies......Page 291
9.2.1 Economic issues and policies......Page 292
9.2.2 Social issues and policies......Page 293
9.2.3 Environmental issues and policies......Page 295
9.3 Interactions between social, environmental and economic policies......Page 299
9.3.1 Environmental policies......Page 300
9.3.3 Joint policies: social and environmental......Page 304
9.4 Chile case study conclusions......Page 307
9.5.1 Background......Page 308
9.5.2 Status of forests in Costa Rica......Page 309
9.6 Modelling approach......Page 311
9.6.1 Relevant past research......Page 312
Technology, costs and producer behaviour......Page 313
Prices, domestic demand, foreign trade and market clearing......Page 314
Squatters......Page 315
9.6.3 Base case data, assumptions and limitations of the model......Page 317
9.7.1 Numerical results......Page 318
9.7.2 Conclusions......Page 321
9.8.1 Characteristics of the model......Page 322
Public finances......Page 323
9.8.2 Reduction of emissions in the model......Page 324
9.9.1 Factor market equilibrium and the stock of forested land......Page 325
9.9.3 Prices, domestic demand, foreign trade and market clearing......Page 326
Squatters......Page 327
Well defined property rights......Page 328
Part IV Sub-national sectoral and system applications......Page 330
10.1.1 General background......Page 332
Recent trends......Page 333
Oil markets......Page 334
10.1.2 Environmental and social issues......Page 335
Nuclear plants......Page 336
Geothermal energy......Page 337
Transnational and global issues......Page 338
Electricity in developing countries......Page 339
10.2 Framework for sustainable energy development......Page 340
10.2.1 Integrated approach......Page 341
10.2.2 Improving energy efficiency......Page 342
Demand side improvements......Page 343
Renewable-energy sources......Page 344
10.2.4 Institutional and regulatory reform......Page 347
10.2.5 Sustainable energy pricing policy......Page 350
10.2.6 SED options matrix and conclusions......Page 351
10.3.1 Environmental issues......Page 352
Policy option definition......Page 353
Attribute selection......Page 354
10.3.4 Illustrative results and conclusions......Page 355
10.4 Energy policy options......Page 357
GHG mitigation......Page 358
10.4.3 Petroleum-sector issues......Page 359
10.4.5 Key power-sector priorites......Page 361
10.5.1 Status of energy and electricity in South Africa......Page 362
10.5.2 Analysis and results......Page 363
10.6.1 Background of the UK electricity system......Page 369
Main alternative (100% DE/renewables)......Page 370
10.6.3 Main results and conclusions......Page 371
Demand growth......Page 373
11.1.1 Key issues worldwide......Page 374
11.1.2 Economic, environmental and social aspects......Page 375
11.2.1 Health effects......Page 376
11.2.2 Valuation of local air emission damage......Page 377
The ‘Six Cities Study’......Page 379
Lead......Page 380
11.3 Traffic congestion – economic and environmental sustainability......Page 383
11.3.1 Price elasticities......Page 384
11.3.2 Theoretical model......Page 389
11.3.3 Estimating the value of time......Page 390
11.3.4 Impact of a congestion toll......Page 392
11.3.5 Economic analysis......Page 393
11.4.1 Katunayake airport expressway......Page 396
Theory......Page 397
11.4.2 Railway electrification......Page 398
11.4.3 Dry container port......Page 401
11.5.1 Fuel and vehicle taxes......Page 404
11.5.3 LPG conversion of petrol cars......Page 405
11.5.4 Transportation infrastructure projects......Page 406
11.5.5 Local environmental impacts......Page 407
12.1 Hydrological cycle and human actions......Page 410
12.1.1 Basic hydrological cycle......Page 411
12.1.2 Human modifications and their impacts......Page 412
12.2.1 Status of water resources......Page 414
12.2.2 Water shortages and rising supply costs......Page 416
12.2.3 Water and the poor......Page 418
Role of ecosystems in supporting livelihoods of the poor......Page 419
12.2.4 Sustainable livelihoods and water......Page 420
Social risks due to inadequate water quantity and quality......Page 421
12.3.2 National approach to SWAMP......Page 422
Scope of SWAMP......Page 423
Sector financing......Page 425
Groundwater use......Page 426
Groundwater-depletion model......Page 427
Quantification of economic externality costs......Page 428
Policy implications......Page 429
Precedents for groundwater management and existing measures......Page 431
12.5.2 Conservation, redistribution and recharge......Page 432
Household users......Page 433
12.5.4 Conclusions......Page 434
12.6.1 Problems of water contamination and disease......Page 435
12.6.3 Results......Page 437
12.6.4 Sustainable development assessment of sari-based filtration......Page 438
12.7 Appendix: Economic costs of producing water......Page 439
13.1.1 Deforestation issues......Page 443
13.1.2 Forest benefits......Page 444
Natural systems......Page 447
Biodiversity......Page 448
Socio-cultural issues......Page 449
13.1.4 Causes and symptoms of deforestation......Page 451
13.2.1 Madagascar and the Mantadia National Park......Page 453
13.2.2 Methods of valuing biophysical resources......Page 454
Contingent-valuation method......Page 455
Empirical results......Page 456
Policy implications and conclusions......Page 459
13.3.1 Background......Page 460
13.3.2 Ricardian theoretical model......Page 462
13.4.1 Sri Lanka overview......Page 463
Regression estimates 1......Page 465
Future climate impacts 1......Page 467
Meteorological data in 2003......Page 470
Future climate impacts 2......Page 471
13.4.4 Conclusions......Page 473
13.5.1 Household production model for impacts on villagers......Page 475
13.5.2 Travel-cost model of impacts on tourism......Page 477
14.1 Sustainable pricing policy (SPP)......Page 479
14.1.2 Scope and objectives of sustainable pricing policy......Page 480
Two-stage approach......Page 482
Economically efficient prices using marginal opportunity cost......Page 483
Demand-side considerations......Page 484
14.2.1 Dynamic effects – resource depletion......Page 486
14.2.2 Dynamic effects – shifting demand......Page 488
14.2.3 Capital indivisibilities......Page 489
14.2.4 Peak-load pricing and structuring......Page 490
14.2.5 Shortage costs and capacity constraints......Page 491
14.2.6 Environmental considerations......Page 493
14.3.1 Estimating strict LRMC......Page 494
14.3.2 Marginal capacity costs......Page 495
14.3.4 Consumer costs......Page 498
14.4.1 Deviations from strict LRMC......Page 499
14.4.2 Social considerations – subsidized prices and lifeline rates......Page 500
14.4.3 Financial viability......Page 502
14.4.4 Environmental and other considerations......Page 503
Metering, billing and customer comprehension......Page 504
14.5.1 Joint-cost allocation......Page 505
14.5.2 Environmental impacts......Page 506
14.5.3 Marginal costs of water supply and prices......Page 507
14.5.4 Sewerage charges and pollution externalities......Page 508
14.6.1 Socially optimal prices......Page 509
Case 3: General subsidized price......Page 511
14.6.2 Dynamic version of marginal cost pricing rule......Page 512
14.6.2 Allocating capacity and energy cost to peak and off-peak users......Page 513
Case 2: Only off-peak demand increases by 1 kW (area CIJE)......Page 514
14.7.1 Introduction......Page 515
14.7.2 Time trend analysis and extrapolation......Page 516
14.7.3 Econometric multiple regression......Page 517
14.7.5 Practical application......Page 519
Part V Project and local applications......Page 520
15.1 Small hydro-projects and sustainable energy development in Sri Lanka......Page 522
15.1.1 Brief review of the Sri Lanka power sector......Page 523
Economic indicator – power-generation costs......Page 524
Environmental indicator – biodiversity index......Page 525
15.2.1 Analysis of results......Page 527
15.2.2 Conclusions......Page 530
15.3 New and renewable energy projects: case study of solar photovoltaics......Page 531
15.3.1 Economic and financial methodology......Page 532
15.3.2 PV energy for agricultural pumping......Page 534
15.3.3 Investment decision......Page 535
15.3.4 Implementing the investment policy......Page 537
15.4 Sustainable rural electrification based on renewable energy......Page 538
15.4.1 Measuring economic benefits of rural electrification......Page 539
15.4.2 Solar homes programme in Sri Lanka......Page 541
15.4.3 Village hydro......Page 543
15.5 Evaluating a typical water supply project in a poor African village......Page 554
15.5.1 Water-demand forecast......Page 557
15.5.2 Least-cost investment programme......Page 558
15.5.3 Costs, benefits and IERR......Page 560
15.5.4 Average incremental cost of supply and pricing policy......Page 561
16.1 Sustainable hazard reduction and disaster management (SHARM)......Page 563
16.1.1 Hazards, vulnerability and disasters......Page 564
Impacts......Page 566
Poverty issues......Page 568
Hazards and sustainable development......Page 569
Analytical framework......Page 570
Economic, social and environmental aspects......Page 571
Some policy implications......Page 572
16.2 The 2004 Asian Tsunami – a preliminary assessment......Page 573
16.2.1 Macroeconomic impacts and the insurance market......Page 574
Inflation......Page 575
Fisheries and aquaculture......Page 576
Infrastructure......Page 577
Tourism......Page 578
Recovery efforts......Page 579
Recovery scenarios......Page 580
Recovery and reconstruction......Page 581
The Asian Tsunami......Page 582
Some research questions......Page 584
16.2.6 Impacts on women and children, and psychosocial impacts......Page 585
16.2.7 Impact on the environment and ecosystems......Page 586
Impacts by country......Page 587
16.3 Sustainability of long-term growth in Asian cities......Page 588
Overall development......Page 589
16.3.3 Environmental issues......Page 590
Air......Page 591
Water......Page 592
Land......Page 594
16.3.4 Implications for Asian researchers......Page 596
16.4.1 General policy issues and options......Page 597
16.4.2 Rio de Janeiro case study – the 1988 Flood Reconstruction and Prevention Project......Page 598
Poor environmental management and disaster planning......Page 600
Response......Page 601
Waste disposal......Page 602
Ecological conservation......Page 603
16.5.2 European Union urban strategy......Page 604
Synergies with other policies......Page 605
References......Page 607
Index......Page 650