Weak and strong sustainability indicators, and regional environmental resources

Weak and Strong Sustainability Indicators, and Regional Environmental Resources

approaching depletion, and higher prices, innovations will take place to compensate for these
losses. This viewpoint is also partly incorporated in Daly’s second sustainability criteria
which says that non-renewable resources are allowed to be depleted when new technologies
are financed to substitute these resources at the same time. Financing should take place by
levying a sort of scarcity fee (Daly, 1992).

The depreciation of natural capital in general can, as already mentioned, be compensated by an
increase in man-made capital. It is not necessary to calculate the total economic value (TEV)
respectively the total capital (K) to conclude whether an economy is on a sustainable devel-
opment path. The only thing which has to be known is a measure for the depreciation of capi-
tal as well as the savings per period (usually one year). This leads to a measurement of sus-
tainability by the „savings rule“ which is an expression for the „marginal sustainability“ of an
economy. If the parameter Z is positive, the economy tends to a higher degree of sustainabil-
ity:

Z > 0 if S > (δN + δM)                               (3)

where δ_N denotes the periodical depreciation (exploitation) of natural capital, while δ_M is the
depreciation of man-made capital. S denotes all savings of the economy (both in natural and
man-made capital). If total savings are higher than total depreciation, the economy is on a sus-
tainable development path because there are net savings which increase the total capital stock.
In this sense, abstracting from the rather difficult problems of measuring the depreciation of
natural capital, calculating Z in equation (3) becomes almost trivial. Pearce and Atkinson
(1993) have adopted this simple conclusion for their work on a group of economies. Compen-
sated for the different income levels, they found that those industrial countries (USA, Japan,
Germany) consuming relatively as well as absolutely the highest level of resources (energy,
raw materials etc.) are those facing a sustainable future while poor countries like Indonesia,

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