Roefie Hueting

Three persistent myths in the environmental debate

Abstract Throughout the last three decades of working on environmental and resource problems I have encountered three persistent myths: (1) environment conflicts with employment; (2) production must grow to create scope for financing environmental conservation; and (3) although society would like to save the environment, it is too expensive. Testing these three propositions, individually and mutually, leads to the conclusion that as long as they dominate the environmental debate, the world will drift ever further away from environmental sustainability.

Environmental valuation and sustainable national income according to Hueting

The notion of what some now refer to as the sustainable national income according to Hueting (SNI, see Van Ierland et al (eds.), Verbruggen et al., Edward Elgar (2001)) has a relatively long history that goes back to the mid-1960s. Most of the work has appeared in print. In this chapter we therefore restrict ourselves to our main lines of argument, referring the reader back to earlier publications where appropriate. Such a procedure is necessary, experience has taught, for our treatment of SNI involves concepts and insights from diverse fields of research, and for a proper overall understanding there must be careful elaboration of each. What is terra incognita for one reader may be self-evident to another, however, and we have therefore structured this chapter in a way that allows us to concentrate on the key steps of our approach while retaining the quality of our argument, at the same time allowing the reader to decide which sections are relevant to him or her and which can be skipped over. To assist the reader, in this introduction we will therefore briefly summarize the basic principles and their consequences before substantiating them in subsequent sections. The most important principles are the formal concept of welfare and the concept of competing functions. On the road to the SNI, a series of theoretical problems had to be solved, notably with regard to environmental valuation. The solutions found follow from the principles adopted, and are thus consequences thereof. Arranging the principles and their consequences in fact provides an overview of the chapter. This procedure has allowed us to restrict the scope of Section 8 (Conclusions) of this chapter to the status of the SNI according to Hueting within so-called general growth theory and the reasons for the pronounced differences between this SNI and estimates of other green national incomes, based on other principles and assumptions. One further introductory note is in order. In Hueting (1974a) and later publications it is consistently argued that one problem is unresolvable: establishing shadow prices for environmental functions and, consequently, correct prices for goods produced and consumed at the expense of those functions. The strategy adopted to get round this problem in fact constitutes a crucial element in estimating an SNI as well as other green national incomes.

The parable of the carpenter

When valuing environmental functions in a neo-classical framework, both data on opportunity costs, reflected on an elimination costs or supply curve, and data on preferences, reflected on a revealed preferences or demand curve, are indispensable. It is, in principle, always possible to estimate the opportunity costs, be it sometimes with great uncertainty margins. This is not the case with data on preferences, such as expenditure on compensation resulting from losses of function (compensation costs). Therefore, making assumptions about preferences is inevitable. Consequently, there are as many values for functions and green national incomes as (reasonable) assumptions can be made. In the latter case, a comparative static general equilibrium model has to be used, because of the major changes occurring. Preliminary results of the elaboration of the Sustainable National Income according to Hueting make it plausible that the distance to sustainability is substantial. Carpenters and economists should be judged in the same way.