SUSTAINABLE DEVELOPMENT: The Economic Model of the Future Presented at the New Mexico Conference on the Environment Albuquerque, NM 25 April 1994 by Roy F. Weston, P.E., DEE Chairman Emeritus ©Roy F. Weston, Inc. 1994 I intend to present an engineer's perspective and approach for defining the issues, the strategies and the guidance principles needed to understand and to implement Sustainable Development. The term Sustainable Development implies the indefinite continuation of change for the better. As such, it appeals to our hope for a good and eternal life. The term has attracted attention from all walks of life. It can impact all aspects of all lives. For most of us, development implies "progress" or betterment in the way in which we use our resources. The way we use resources involves economics. Thus, for me and I believe most of us, Sustainable Development is an economic concept. The concept of Sustainable Development is idealistic, it consists of two interrelated but separate ideas. The concept refers to: "Meets the needs of the present without compromising the ability of future generations to meet their own needs." The idea of meeting "needs" defines the goal for development. The idea of meeting both current and future "needs" establishes the goal for sustainability. The two goals are interrelated and have common elements, but they require different considerations for achievement. Sustainable Development should be considered an operational concept for achieving the objective of sustaining human life on Earth. It should be thought of as a new paradigm for managing all of the Earth's resources. Before addressing the different considerations for achieving the goals of Sustainable Development, let me quickly summarize why it is believed that there are development problems. The following is a list of the classical symptoms of inherent problems: ¡Overharvesting of renewable resources. ¡Exhaustion of nonrenewable resources. ¡Mismanagement of natural capital. ¡Degradation of environmental quality. ¡Extinction of species. ¡Greater risks to human health and safety. ¡Increasing disparity in living standards. ¡Terrorism and widespread local warfare. Each of these symptoms is the result of human behavior and is avoidable. Probably the most significant symptom is not shown. It is the rate of change, particularly the rate of change in world population. In the two million years prior to the Industrial Revolution, humankind population grew to approximately one billion people. Since the Industrial Revolution, the population has grown to about 5.6 billion. A billion people can be added in about 11 years. Today, there is evidence of overpopulation and inadequate capacity to meet requirements in numerous countries. As an engineer reflects on the subject of development and the list of symptoms, two questions come to mind. What is the role of the engineer in the overall scheme of things, and is what has occurred, what is, and what is about to be logical? I believe that engineers, more than any other profession, have contributed towards the Earth's current circumstances. Engineers provide the bridge between mathematics and science and society's needs and aspirations. Engineers are the practitioners that integrate science, technology, resources and economics to create things that never were. Engineers abide by natural and human law to overcome constraints so as to meet requirements. The outcomes from engineering endeavors have contributed significantly towards human well-being. However, the tools of engineering endeavors, science, technology and economics, have made it possible for humankind to behave naturally without the normal natural constraints. In the belief that they were doing good, engineers have made it possible to accelerate the rate of use of resources, to concentrate populations, to remove constraints to populating the Earth, to escalate human aspirations and to acquire wasteful attitudes and habits. As a consequence, engineers have made it easier for humankind to actualize its attributes towards short-term gratification, reproduction, enhancing its quality of life and extending its span of life. These outcomes have created the symptoms referred to and the need for protection of the environment and Sustainable Development. Engineering experience with natural law, human law and human attitudes has revealed that natural law cannot be changed. Humans do well in discovering and abiding by law they cannot change. Humans tend to self-optimize law that must be enforced, generally inconsistently, by other humans. However, engineering experiences confirm that humans can be educated and/or trained to abide by "rules of the game" (i.e., law) tailored to achieve specific outcomes. If, while abiding by natural and human law, the outcomes of engineering endeavors create circumstances that are not in humankind's best interest and require command/control regulation and other activities to mitigate those outcomes, as is the case, there can be but two types of issues. Either additional knowledge is required to understand and apply natural law, or there is need to alter human law so as to modify human behavior, as required, to achieve the preferred outcome. Engineers have a moral obligation to determine the cause and the most economical means for avoidance of unsatisfactory outcomes. In any event, it can be said that outcomes from human endeavors are dependent on human attributes and circumstances. The "rules of the game" can vary. Therefore, they must be considered a part of the circumstances. When other circumstances are equivalent, the "rules of the game" will determine the outcome. The human challenge for solving our earthly problems is to better: ¡Understand our attributes. ¡Understand the "rules of the game" and the circumstances under which they must operate. ¡Define the operational strategies and guidance principles required to meet our needs and achieve our aspirations. The circumstances are those of humans living on planet Earth. Planet Earth consists of an atmosphere, hydrosphere, lithosphere and biosphere. Together, they make up the physical and life systems of the Earth. The biosphere is a marvelous, complex, ubiquitous, productive, fail-safe system of life. Humans are a part of this life system. The physical components of planet Earth and its life system inhabitants comply with the Laws of Natural Economics. Natural economics is the science that deals with the production, distribution and consumption of the Earth's life, energy, matter, space and time resources. Its laws induce all circumstances. Natural economics consists of three, layered, interrelated, interdependent components as shown on Figure 1. These components may be termed the physical, the life, and the human system segments of the total system. The "rules of the game" for the physical component are self-enforcing and abide by the Laws of Physics and Thermodynamics. They control the entire system. The "rules of the game" for the life system component are self-organizing and self-regulating and abide by the Laws of Biology, particularly the Laws of Ecology and Psychology to control the survivability and behavior of life on Earth. The "rules of the game" for the human economics component abide by human law and institutional rules to satisfy human preferences in meeting individual "survival needs" and "aspiration exactions." Natural economic effectiveness or efficiency is the pro rata sum of the individual components. The natural economic system is driven by the decisions and actions (i.e., contributions) of individuals. Each individual has specific and universal attributes and each is constrained by the "rules of the game" and other circumstances. Those other circumstances may be the prior outcomes from individual or community decisions and actions. The specific attributes determine the role of the individual in the system. The universal attributes are the behavioral characteristics common to all individuals. In the natural economic system, energy and mass are mutually convertible (i.e., E = mc2)[1]. Mass is an attribute of atoms, atoms are the building blocks for elements, and elements are the building blocks for compounds, both inanimate and animate. Elements have combined to form the compound DNA. DNA is the key to the production of proteins. Proteins are the compounds that are the building blocks for all forms of life, both plant and animal. DNA can reproduce itself. Thus, DNA is the key to all forms of life. Life forms are the only things on planet Earth that can reproduce themselves. However, energy governs the interrelationships among elements and compounds and is essential to sustaining life. The circumstances of this integration of the energy, matter, and life resources, plus the resources of space and time, produce all the Earth's circumstances and make up all of the Earth's resources. The life system uses radiation from the sun, as a renewable source of energy. It uses recycled carbon and oxygen, virgin and recycled nutrients and recycled water to initiate a food chain that supports and sustains a hierarchy of life. The life system is composed of communities of individuals in which each individual is a member of one of an hierarchy of species. Each species is interrelated to and dependent on other species in support of their community. Each fulfills a niche in sustaining life on Earth. Individuals compete with other individuals to acquire the resources needed to survive and to sustain their species. The system emphasizes the individual within a community. The system is self-organizing and self-regulating and has sustained life on Earth for billions of years and has sustained life, as humans know it, for millions of years. The self-organizing and self- regulating features of the system support population fluctuation, in accordance with the circumstances, and thereby develop life as a renewable resource goods. The system provides goods and services that are absolutely essential to human survival as well as being economically beneficial towards meeting human "needs" and "aspirations." Actually, this system has changed the character of the Earth's environment to its present state. The system is striving to keep the environment compatible with its own and human requirements. The laws governing the human system are drafted and enforced by humans. While humans are subject to the constraints of the physical and life system laws, specific human law may be characterized as self-indulging. Specific human law should be characterized as self-indulging because humans have learned how to use self-enforcing physical law to their advantage, have learned how to evade the self-regulating laws of the life system and have not seen fit to restrain themselves to compensate for their deviations from natural physical and life system constraints. Humankind, Mother Nature's superior being, is born with endowed knowledge and values, the capacity to acquire additional knowledge and values, and the ability to modify behavior, to ensure survival, based on the circumstances. Individuals have a conscience to aid them in getting along with others but have strong instincts towards self-interest and short-term selfishness. Individuals react to emotion but can reason and can be logical and wise. In the United States, there is universal support of the ideas and values of freedom, equality, equity, security, caring beyond self, democracy, and the sacredness of human life. There is support of the concepts of win/win and tit-for-tat. Each individual is different and each differs from day-to- day. Each faces dilemmas, daily. Human nature cannot be changed, but it can be influenced by leadership, sound "rules of the game," and fair and equitable enforcement of those rules. Nature needs human individuals that have the drive and persistence required to mature, to reproduce and to enhance their lot. Humans need philosophies and beliefs to support the self-serving, self-exalting, self-deluding, self- forgiving, self-doubting, and accountability-denying traits of individuals. These needs, plus human inconsistencies and individual capacity to acquire and apply knowledge, for their own and their community's advantage, have contributed, individually and collectively, towards the good and the bad of the current human condition. Examination of the "rules of the game" reveal that there are system laws significant to Sustainable Development, that may not be clearly presented under the physical and biological disciplines. Applicable system laws are shown on Tables 1, 2 and 3: On the basis of natural, human and system law, I believe that, if all the circumstances are known, all that has occurred, all that is and all that is about to be is logical. Outcomes may not be correct, but they will be logically explainable. If humans put together a blue ribbon team of scientists, engineers and economists to design a logical, fail-safe system to sustain life on Earth, that team could not improve on what exists. However, they may strive to alter the attributes of the life forms at the extremes, at the boundary circumstances. They may strive to alter the "rules of the game" so that humans could be more wise and disease-producing microbes would be less adaptable to changing circumstances. On the basis of my perception of the Earth's systems functions, I have endeavored to simplify the complex and to define a global, operational strategy for Sustainable Development. Also, I have prepared Guidance Principles for implementation. I have presumed that humans want to sustain human life on Earth. DEFINITION of strategy Sustainable Development[2] is a concept for a process of change in which human attitudes and behaviors are modified so that, in endeavors to meet needs, achieve aspirations and preserve options for future generations, individuals and communities[3] will enhance and maintain their well-being by: ¡Maximizing natural economics'[4] effectiveness and efficiency through: - Conceiving development as an integral and compatible part of the Earth's systems. - Emulating the economics of nature in the production and use of resources. - Removing barriers to human goodwill, cooperation and capacity enhancement. ¡Attaining necessary balance among: - Resources[5] accessibility. - Requirements of communities. - Capacity of communities to meet their requirements. ¡Implementing Guidance Principles in establishing goals, strategies, tactics and the plans needed to meet the effectiveness, efficiency and balance requirements of subject communities. The defined strategies for achieving Sustainable Development include two concepts. The concepts are: Maximize natural economic effectiveness and efficiency and attain and maintain a necessary balance. Maximizing natural economics effectiveness and efficiency in the use of resources is required to attain the highest productivity and best use among alternative uses and to attain the highest utility from that which is used. Thus, maximization of effectiveness and efficiency can achieve the best use of accessible resources and can better insure sustainability. Attaining and maintaining a necessary balance among resource accessibility, requirements and capacity to meet requirements, plus maximizing economic effectiveness and efficiency is essential for meeting individual "needs" and "aspirations" and community requirements. The necessary aspect of balance is to ensure that requirements to meet survival "needs" do not exceed resource accessibility or the capacity to meet requirements. Such balance is necessary if humans truly believe in the sacredness of human life and aspire to voluntary rather than life system self-regulation of population. Thus, population size, individual requirements, and population fitness to meet requirements, through use of locally-accessible resources or trade, become major factors for community decision in implementing Sustainable Development. Obviously, Sustainable Development is more than doing a perceived good. Engineers can contribute significantly towards sustainability and maximization of productivity. Population size and individual needs and aspirations (i.e., need and aspiration requirements) are a community matter. Engineers can contribute towards this issue only as informed and model members of the community. GUIDANCE PRINCIPLES are advantageous for implementing the strategies. Five Guidance Principles are listed below: ¡Be accountable, personally; practice enlightened self-interest; and acknowledge that every individual's decisions and actions make a difference. Contribute toward the sound governance and maximization of the common good[6] of relevant communities. Be circumspective and caring. Behave ethically and prudently. Anticipate, set goals, strategize, plan, implement, monitor, reassess and react. ¡ Accept custodianship of the Earth's life system and the systems on which it depends. ¡Acquire and diffuse the knowledge needed to understand fundamentals, to achieve goals and to ensure informed risk taking. ¡Emulate the economics of nature: - Maximize system productivity and efficiency in the conversion and use of energy. - Minimize losses and wastage[7] in the use of essential nonrenewable resources. - Optimize overall effectiveness and efficiency in the production and use of renewable resources. ¡Alter humankind's cultural and institutional rules of the game to ensure attainment of the above. While each of the Guidance Principles is highly important, I believe that the last, "alter humankind's cultural and institutional 'rules of the game,'" offers the opportunity for the biggest return for the effort. I say this because of the power and the self-organizing and self-regulating features of our free market economic system. I believe that most problems associated with engineering outcomes exist because of deficiencies in that system. I say this not to absolve engineers of blame, but to justify examination of the free market economics "rules of the game." Alteration of this system is neither an original nor new idea. Much thought has been given to the subject. The free market economic system is based on the premise that the basic elements influencing economic efficiency are: ¡The system of accounts and accounting concepts, principles and standards for: - Determining value or wealth. - Measuring the success of performance. ¡Price, factors influencing price, and the relationships among cost, price and value. Criteria for maximizing economic system efficiency relative to price are: ¡Voluntary exchanges in a competitive market must establish a price such that all participants consider it to their advantage to engage in transactions (i.e., all participants gain). ¡Producer participants maximize their profit and the consumer participants maximize their satisfaction. ¡Nonparticipants in the transactions neither gain nor lose as a result of the transactions. These are sound philosophical concepts. Unfortunately, there are acknowledged deficiencies in the system. "Economics 101" tells us that criteria deficiencies of the system are: ¡Theory and practice excludes some elements that influence the transactions. ¡Theory presumes coverage of some factors that in practice must be treated as externalities. ¡Theory is based on hypotheses that are inconsistent with the real world. ¡Real world practices are inconsistent with the earlier stated three objectives. As humankind strives to attain a better quality of life, it must recognize the inherent need for wise self-governance; i.e., for sound "rules of the game." Western humankind continues to follow the philosophies developed during a period of relatively small population, perceived infinite resources and a sense that competition for survival was with nature rather than other humans. Circumstances have changed. There is need for a new paradigm. That paradigm must recognize that there are limits to population growth, that accessible resources are limited spatially and finite quantitatively, and that nature's life system is essential to humankind's well-being and therefore should be nurtured for humankind's advantage. That paradigm should take advantage of the good and govern the bad attributes and systems of humankind. Experience has proven that humans cannot rely on morality alone. Experience has proven that humans can rely on systems in which the objectives, goals and circumstances are known and understood, in which the "rules of the game" are clear and strictly and wisely enforced and in which the participants are empowered to use their knowledge, creativity and energies as they see fit to achieve the goal and objective outcomes. Humans can rely on systems in which the "rules of the game" are highly self-enforcing, self- organizing, and self-regulating. Our free market economic system can be made to satisfy these criteria. In my opinion, the best prospect for implementing Sustainable Development is the wise alteration of the current economic system. That system is the best cross-cutter and the best integrator of the natural and social sciences factors that affect humankind's well-being. That system is highly self- organizing and self-regulating. The philosophy for approaching change in this system can be oversimplified to read as follows: ¡If the accounts and the accounting are right, the costs will be right. ¡If the costs are right, the prices will be right. ¡If the prices are right, the behavior will be right. ¡If the behavior is right, the individual and community outcomes will be right. Our science and technology systems are highly productive because they are a part of the economic system and are highly self-regulating. In addition, the self-enforcing features of natural law help self-regulation because they keep humans honest and accountable. In my opinion, science and technology has been the primary tool that has helped to position humans where they are. Science and technology can help towards improving natural economic effectiveness and efficiency. However, it must be recognized as just a tool. The solution is in the hands of the users. The real issue is how do we control the way Mother Nature has programmed us when our capacity to discover and use science and technology makes it so easy for us to abide by our instincts instead of our better judgment? How do we protect ourselves from ourselves? I believe that implementation of Sustainable Development concepts are necessary and are doable. I believe that our core values are sound. I believe that we must strive to diffuse existing knowledge and acquire new knowledge so that all can better understand the traits of humankind and the behavior and circumstances that determine our well-being. As a race, we must better understand our position in nature's scheme of life. We must better understand the role that we have played and the role that we must play to avoid the fate of some prominent but now extinct members of the Earth's life system. I believe my global-oriented defined strategies and guidance principles can be helpful towards identifying and setting goals for resolving the hierarchy of local to global problems. Sustainable Development should be the economic model of the future. To be successful, Sustainable Development must be based on natural economics. It must be based on natural economics because natural economics will determine the outcome no matter how successfully we implement Sustainable Development. Natural economics has prevailed in the past and will prevail in the future. A new paradigm for managing the Earth's resources must be established. The new paradigm must use humanized natural economics instead of human market economics as the primary "rules of the game." Like nature, it must emphasize individual within a community. It must emphasize individual contribution and accountability instead of self-interest and individual rights as the primary system actuators. It must recognize the significance of the Earth's life system in sustaining human well-being. It must emulate the life system's resource economics. It must retain the good and alter the bad, of the human "rules of the game" and systems, towards self-organization and self-regulation for the common good. It must sponsor evolutionary rather than revolutionary change. It must neutralize politics with facts, leadership and practical demonstration. It must continue the concepts of freedom, fairness, equality and security. It must be logical. Our future and the future of our progeny is in our hands. We can influence the outcome from natural economic processes. Leadership is necessary. Leaders in all walks of life should strive to acquire and diffuse knowledge about what we must adapt to, what we must control, what we should alter, and what we should leave as is. The unnatural but logical and realistic behavior change required by Sustainable Development offers possibilities for achieving a better and more gratifying quality of life. Individuals of good will can successfully implement the concept. TABLE 1 APPLICABLE SYSTEM LAW (UNIVERSAL) ¡Resources are limited spatially and finite quantitatively. ¡Natural law will be logical, consistent, and as simple as practicable. ¡Simple concepts can create complex outcomes, and complex outcomes can be correctly explained using simple concepts. ¡Systems are constrained by limits and enhanced by balance. ¡The system is actuated by individuals within a community. ¡Outcomes from individual actuations are governed by individual attributes and circumstances. ¡The primary circumstances include the "rules of the game" and the natural, made, and communal environments. ¡Micro decisions and actions individually insignificant, collectively determine the outcome. ¡Individual rational actions can create collective irrational outcomes. ¡Individual and community outcomes are not certain; they are probable, with the probability dependent on the circumstances. ¡Outcomes alter circumstances, thereby sustaining a dynamic system. ¡Individual and community sustainability requires that nonrenewable resources essential to survival be kept accessible to the community's economic system. ¡Sustainable decisions and actions satisfy short- term needs while ensuring longer-term survival. ¡Individual preferences are directly related to the accessibility and usefulness of natural economics resources. ¡Free energy dissipates with time and circumstances. ¡ Natural economics resources are energy, matter, life, space, and time. ¡Natural economics includes physical, life and human system components. ¡Natural economics efficiency is dependent on laws of self-enforcement in the physical component; laws of self-organization and self-regulation in the life component; and unnatural, and wise, personally accountable, decisions and actions in the human component. ¡Natural economic efficiency is maximized through pro rata summation of the efficiencies from its physical, life and human system components. ¡Status quo will not persist. TABLE 2 APPLICABLE SYSTEM LAW (LIFE SYSTEM) ¡Only life can reproduce itself. ¡Primary individual attributes for ensuring survival include endowed knowledge, capacity to acquire knowledge, and ability to adapt to changing circumstances. ¡Individuals have self-interest traits for economizing, seeking advantage, exercising preferences, taking risks, denying accountability, enhancing well-being. ¡Individuals are programmed to maximize productivity and reproduction from accessible resources and other circumstances. ¡Individuals contribute towards and are dependent on the collective outcomes of their community. ¡The profit motive is an essential attribute of life. ¡Individuals convert energy and matter from one form to another to suit their own and the system's purposes. ¡Individuals are a renewable-resource goods for the system. ¡All individuals are born to mature, to reproduce, to age, and to die, thereby creating the potential for evolution. ¡All individuals are subject to genetic, microbial and environmental diseases, thereby influencing evolution. ¡No disabled or chronically ill individuals exist in the life system; only the most fit reproduce and survive. ¡Offspring are created in the likeness of their immediate ancestors, thereby contributing towards evolutionary change. ¡Offspring, of the same parentage, are not created equal in either physical or intellectual attributes or capacity to contribute to the community well- being. ¡ All laws contribute towards system self- organization and self-regulation. ¡Self-organizing and self-regulating systems naturally tend towards population cycling. TABLE 3 APPLICABLE SYSTEM LAW (HUMAN SYSTEM) ¡Freedom, equality, equity, and security stabilizes relationships between individuals and their community. ¡Initiative, freedom, and fairness enhances the chances of a private community to meet its goals and objectives. ¡Leadership, objectives and goals, a sound economic plan, communication, and member participation is essential for achieving desired individual behavioral change for the common good of a public community. ¡Reliability, respectfulness and resourcefulness optimizes interpersonal relationships. ¡Unnatural and wise personal accountability is required of humans to overcome natural self- interest tendencies (e.g., overharvesting, exhausting accessible resources, over reproducing). FOOTNOTES 1 In which E is energy, m is mass, c is the velocity of light. 2 Development: Any change in conditions, materials, products, uses, services, structures, facilities, systems or activities associated with human endeavors. 3 Community: A group of people of common interest living under the same laws (e.g., Earth, nation(s), municipality(ies), business(es), vocation(s), society(ies) and neighborhood(s)) or a group of animals and/or plants living together in the same environment. 4 Natural economics: Involves the total system, including both natural and human subsystems. The concept uses all Laws of Mother Nature to provide the most effective and efficient way to achieve a desired outcome. It assesses full costs and benefits including factors excluded from or considered as externalities to the conventional financial-incentive free market economic system. Theory recognizes the impact of factors such as the limits and finiteness of natural resources, natural limits and balances, micro decisions and actions, interrelationships, interdependencies, self- regulation, human factor, instincts, heredity, variability, foreign to nature, resource irreplaceability, rate of change, prevention versus cure, risk and the need for a multigenerational planning horizon, a community-unit approach, the concept of "common good" and integration with religious, cultural, governance and human economic systems. It is based on reserves, input, output, and losses/wastage. It requires that proposed goals be performance-based and permit options for implementation and that accounting principles and standards provide consistency between the public and private sectors. It measures performance by using parameters such as: achieved standard of living and/or quality of life, human capacity to produce and trade, accessibility of resources for future use, non-human life system well-being and productivity, maximum sustainable yield, natural and made wealth, and "net" domestic income. Also, natural economics is based on the use of natural units of measurement for the quantification of energy, materials, space, life and time. 5 The Earth's resources are limited spatially and are finite quantitatively. They include energy, materials, space, life, and time. 6 Common good: Minimal disparity in well-being between individual members of the community consistent with maximization of the median of the well- being of all members. 7 Wastage: The controllable loss or transfer of energy and/or matter to the environment, such that natural or human economic constraints make such resources inaccessible to the community's economy for further use.