The Handbook for Economics Lecturers

2. Getting Started

Teaching sustainability involves choices. All teaching does, of course, but given the relative novelty of the subject and the lack of established resource bases, say, compared with core microeconomic theory, there are fewer ready-made guides on how to design sustainability curricula and how to deliver them. That lack of pre-existing structure can be liberating, but also daunting. However, the choices are unavoidable. There are two main sets of choices to be made. One is whether to integrate sustainability across the curriculum (if it is possible within institutional constraints) or whether to create specialist niches within it. That choice is followed by others, about the depth of integration, and about the theoretical approaches considered. We shall return to those issues shortly. Before that, the tutor needs to consider what they understand by sustainability. This chapter is designed to help tutors make these choices.

2.1 What is sustainability?

A common sense definition of sustainability is that a thing can last. However, what is it that lasts? A firm, an economy, a society, a species, an ecosystem? And when it lasts, does it grow or improve, does it deteriorate, or none of these? In other words, is sustainable development possible? Is it possible to trade off one type of sustainability – say, ecological – against another – say, economic? Are human manufactured goods equivalent to those produced in the rest of nature? Given these questions (and others) it is perhaps not surprising that there are so many definitions of sustainability (see Box 1). Perhaps the dominant definition of sustainability is from the Brundtland Report:

Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs (WCED, 1987: 54).

If this definition is reformulated as: ‘Future generations should inherit a stock of resources such that they can enjoy a quality of life at least equal to that enjoyed by present generations’, it then becomes apparent that economics has at its heart the study of processes and behaviours that are also of paramount importance to moving towards sustainability. However, some authors from a strong ecological perspective have expressed dissatisfaction with such definitions. They argue that the whole notion of sustainable development is flawed, as they argue that growth and sustainability are fundamentally incompatible. They even hold (although the Brundtland definition is not guilty in this regard) that sustainability is incompatible with what might be described as ‘business as usual’. Others, such as Birkeland (2008) argue for positive development, in which for instance new buildings or eco-retrofitted buildings are carbon-negative (i.e. the carbon emissions used in their production and operation is less than that produced by them via plants, solar panels, etc.). Recently, from an ecological economics perspective, Jackson (2009) has also discussed resilience of economies (and communities) as being able to withstand external shocks, such as swings in the oil price. However, this notion is not a replacement for sustainability.

Box 1: Some views of sustainability

Most views of sustainability are concerned with the resource stock left for future generations. There are two common classifications of resources – the Five Capitals model (see below) and the conventional traditional classification into natural, human and man-made resources. Most discussion of sustainability by economists is in terms of the familiar three-resource model.

The Five Capitals

Manufactured Capital, Financial Capital, Natural Capital, Social Capital, Human Capital
Source: Forum for the Future

Much of the discussion of sustainability amongst economists is concerned with the relationship between economic activity and the natural environment. This reflects the existence of a large body of environmental economics research and literature and a less extensive oeuvre within ecological economics. It also reflects the urgency of issues surrounding climate change, resource depletion and pollution. It should be emphasised that any consideration of sustainable development should also discuss the conservation of all five capitals. Manufactured, financial and human capital are central to the conventional economics curriculum and not considered further here. Natural capital is the main focus below; however social capital should also be considered, albeit briefly, as it has escaped the attention of most economists. The concept of social capital originated in sociology (see, for example, Putnam, 2000) but has considerable currency in regional economics and is one of a multitude of diverse factors explaining differences in the performance of nations, regions and cities (Dasgupta, 2002). Social capital includes dimensions such as the strengths of institutions, behavioural tendencies towards collaboration, co-operation and mutual support, and strong community and interpersonal networks.

Various views of sustainability are discussed below, starting with the weakest formulation, in the sense that it imposes the least restriction on economic activity.

Very weak sustainability

The aggregate quantity of all resources is constant or increasing such that

ΔKn + ΔKp + ΔKh ≥ 0

Where there is substitutability between natural capital, Kn, manmade capital, Kp, and human capital, Kh. Under this view, Kn can be destroyed as a result of development providing one or both of Kh and Kp are increased to compensate. This represents a very limited view of the benefits that flow from the natural environment and incorporates little understanding of the life-supporting role of ecosystem services.

Weak sustainability

Under this view, other resources remain substitutable for natural capital but keystone elements and processes are not substitutable. These are essential for the survival of ecosystems and must be protected. This position can be criticised on the grounds that it pays only grudging attention to the most obvious susceptible elements of ecosystems while accepting a general degradation and depletion of Kn.

Strong sustainability

There is recognition of the lack of understanding of complex ecosystems. The approach introduces uncertainty and responds by adopting the precautionary principle and incorporating safe minimum standards. Under this perspective, the reduction in Kn is limited.

Very strong sustainability

Most ecological economists support definitions of sustainability that can be classed as very strong. An example is Herman Daly's four operating principles:

  1. Renewable resources: the rate of harvest should be less than or equal to the population growth rate
  2. Pollution: waste discharges should be below assimilative capacity and cumulative pollutants reduced to as close to zero as possible.
  3. Non-renewables: the benefits from exploitation should be split between distributed profits and investment such that a renewable substitute is available at depletion
  4. Macroeconomic controls: minimise physical material and energy throughput in the economy and control population growth

The technological fix

It is easy to stimulate discussion of views of sustainability around one or two issues of wide concern such as climate change, water resource shortages or marine acidification. A starting point might be to set students in groups to prepare an assessment of one or more of these problems to present to the class. Then, after each presentation, ask the class as a whole 'what can be done about it?' Usually a range of positions emerges ranging from 'no growth' through to 'science will find a solution'.

Introducing sustainability to students can be done in a number of ways. One approach might start from an ecological perspective, which sees natural cycles that support ecosystems as the implicit foundation of any discussion of sustainability. An overview of these natural systems is necessary as the basis for exploring the impacts of different economic systems and activities. A few natural cycles could be introduced in early lectures or virtual material. These might include the carbon cycle, making connections with climate change; the hydro cycle, with a focus on areas of water shortage and the food chain, with discussion of the need for dietary changes if a growing population is to be supported. The advantage of exploring the ecological perspective from the outset is that the concept of sustainability is readily understood. If this approach is followed, the concept can be introduced as the preservation and encouragement of these natural cycles and ecosystems to maintain or increase bio-diversity. Another approach is to introduce ecological systems when relevant to particular economic topics. However, this leads to a fragmented understanding of what is essentially an interrelated set of natural systems. This might be heavy going for those students not particularly committed to sustainability and be perceived as ‘preachy’. Also, for economists the material might be somewhat inaccessible. An alternative approach therefore is to start from more familiar precepts. The concept of the Triple Bottom Line (Elkington, 1997) may help here. The traditional notion of a bottom line is profitability. The Triple Bottom Line concept suggests that for sustainability, profitability must be married to ecological and social sustainability. Thus, profitability may need to be sacrificed (to some extent) in a trade-off with the other dimensions. Such trade-offs ought to be familiar to economics students.

Top tip

Don’t moralise. Admit that a great deal of the discussion around sustainability is value-driven and stress the importance of various different positions on it.

The Triple Bottom Line relates to another useful concept, the ‘Five Capitals’ approach to sustainability (see Goodwin, 2003) shown in Box 1. Definitions of the economic problem in introductory courses almost always introduce scarce resources as the defining context of an economic system. The conventional approach is to present the three major categories of resources: natural, human and man-made. To these, entrepreneurship, financial capital and technological knowledge may also be added. This is very close to the ‘Five Capitals’. These are natural capital, human capital, manufactured capital, social capital and financial capital. The model is the basis of one definition of sustainable development. Goodwin suggests that for sustainability, the total stock of the five capitals should be maintained although the depletion of one type can be compensated for by the increase in others. For example, lost agricultural land (natural capital) could be replaced by a shopping centre (manufactured capital); or forests could be replaced by carbon capture and storage power stations. But, this substitutability is frowned upon by adherents to stronger views of sustainability. However, it should be noted that mainstream economics is concerned with the flow of resources into the economic system while the discourse of sustainability focuses on stocks and the rate of depletion or degradation. It is important that students are exposed to (at least some of) these different definitions, in order to demonstrate that sustainability is a contested concept. That understanding ought to make it clearer to them why there is so much debate about sustainability. However, the tutor clearly cannot juggle all of these balls in the air at once and must make some choices about how they define sustainability in their approach. This choice is also crucial, because it will condition the extent to which they might wish to integrate sustainability into the curriculum, whether they take a more or less interdisciplinary approach, whether they consider (for instance) economic sustainability alone, and to what extent they wish to incorporate approaches to sustainability which lie somewhat outside the mainstream (for example in ecological economics). Indeed, the definitions of sustainability help define the distinction between mainstream and ecological economics: the former favour very weak or weak sustainability, while the latter favour strong or very strong sustainability.

Further, if the tutor wishes to discuss sustainability in a broader sense (for instance via the Triple Bottom Line) they might use the different definitions as entry points into debates about policy, good business practice, etc. Some policy options (for example, some so-called ‘technological fixes’) would be ruled out if one took a strong sustainability approach.

Top tip

Engage students in real problems; including discussing openly the global challenge of sustainability.

2.2 Integrate or specialise?

If a tutor regards sustainability as of fundamental importance, they may wish to integrate it fully into the Economics curriculum. Whether they are able to will, of course, depend on institutional constraints and their own skills of negotiation. Those concerns are beyond the scope of this chapter. Given that one could integrate sustainability, there are different ways to do this. At one end of the spectrum, a programme might be designed according to problem-based learning (PBL) principles: the problem to be addressed would be achieving an economy that supports a sustainable world, and all the learning would be working towards a solution (see for example, Forsyth, 2010). PBL in its purest form allows the curriculum to unfold as the course progresses. That of course requires great skill on the part of the instructor. Witham and Mearman (2008) discuss some existing uses of PBL in ecological economics courses. That there are some examples of PBL in this area is perhaps not surprising, because sustainability lends itself to a PBL approach: clearly sustainability is a ‘big’, multi-faceted problem, meaning that the course could unfold in a multiplicity of ways. As discussed below (Assessment) one can design coursework assignments or exam tasks around specific problems.

If PBL is a step too far, a course could still begin with the problematic of a sustainable biosphere and then explore the implications of that for an economy via more conventional teaching. Alternatively, sustainability could still be the central theme (or one of a small number of themes) in a curriculum. Where appropriate, all modules would be organised with sustainability in mind. That would involve constructing examples, exercises and assessment that are all concerned with sustainability. Boxes 2 to 5 also discuss ways of delivering standard concepts such as the circular flow of income with added sustainability content. Such tools would be useful even if sustainability were not a central theme, but instead was a topic which needed to be included in all modules. This last form would be the weakest form of integration, in which sustainability is tacked on to a standard module, often at the end. Section 3 below discusses a standard introductory and one standard intermediate economics course into which examples and applications from sustainability are incorporated easily.

In the strongest forms of integration, students may learn all they need about sustainability simply by doing other modules. However, in those cases, and certainly in weaker forms of integration, students may have had their interest in sustainability stimulated and desire more specialised, detailed knowledge. So, even if a student has been on a programme that integrates thoroughly sustainability at level 1 (and/or 2), they might desire specialist modules at level 2 and/or 3. At this point, the choice for the tutor becomes one of which approaches to choose. Again, this may reflect their understanding of sustainability. Those who understand sustainability more narrowly may choose to deliver sustainability solely according to mainstream principles, as found in standard treatments of environmental and/or natural resource economics. Those who take a broader view of sustainability may wish to deliver an ecological economics perspective. In this latter group, as indicated above, it may be possible to begin with a discussion of a sustainable biophysical ecosystem and derive the economics from it. A third alternative would be to try to deliver the two approaches in parallel or debate. Such an approach presents many challenges but may also yield many benefits (see for instance Mearman, 2007 on heterodox economics; and Mearman, et al., forthcoming, for a discussion of this).

The main body of the chapter examines in detail how these different alternatives could be delivered. Section 3 explores ways in which sustainability may be taught in standard economics modules. Sections 4 and 5 discuss different variants of specialist courses on the environment or sustainability: Section 4 discusses a course on economics of the environment, with sustainability emphasised, in which environmental and ecological economics perspectives are compared. Section 5 discusses a course in the economics of sustainability.

Top tip

Don’t try to shoe-horn in too much material. The course you create must remain coherent, and varied.