The sustainability of welfare : physical and economic aspects of intertemporal resource allocation

This thesis is concerned with the sustainability of overall welfare or quality of life. Biological, physical and economic concepts are brought together in a multi-disciplinary attempt to discern what factors influence welfare sustainability and how it can be enhanced. Non-human life has existed for so long that it provides a model of essentially ultimate sustainability. Four characteristics of life which make it a sustainable system are discussed. The "Limits to Growth" school had adopted the biological model of a steady state economy as the only route to sustainability. The Growth school suggests that sustained growth is in fact possible through technological advance. These competing claims prompt a reassessment of the theoretical potential and practical constraints to physical production and overall welfare. Technology is indeed seen as the crucial factor. Despite great theoretical potential, it is not certain that technological advance will proceed rapidly enough for physical limits to be avoided. Even if physical production or the utility derived from it were unlimited, declining environmental quality may effectively limit overall welfare. Welfare sustainability is seen to be closely related to the concept of intertemporal equity in resource allocation. Although natural resources are not the only determinant of welfare, their importance means that equitable intertemporal resource distribution is crucial to welfare sustainability. It is impossible to determine with certainty whether a given level of welfare is sustainable. However it is possible to judge relative improvements in an economy's sustainability. Optimal resource exploitation strategies are discussed and seen to be achieved in suitably defined perfectly competitive markets. A class of market failures are discussed which result in resource allocations biased against the future relative to the outcome in the "competitive ideal". Policies to counter these problems are considered, the important point being that these market interventions, even if only done in the name of social efficiency, would at the same time improve the relative sustainability of welfare. Those aspects taken as given in the discussions of efficient resource exploitation are examined in a search for policies which go further to enhance the future's welfare than does the pursuit of social efficiency. The thesis concludes with a statement of the responsibility politicians have to act on behalf of future generations