Coalition for Christian Colleges and Universities

Global Stewardship Initiative

Markets, Ethics and Governments:

The Normative Economics Of Stewardship and Sustainable Development

Christopher B. Barrett

Department of Economics
Utah State University
Logan, UT 84322-3530
tel: (801) 797-2306
fax: (801) 797-2701

email: cbarrett@b202.usu.edu
http://cc.usu.edu/~cbarrett/

October 1996

This paper was prepared for the 1996 Global Stewardship Roundtable Discussion, held in Gloucester, MA, October 16-20, 1996. I thank Clara Barrett, Ray Grizzle and Dwight Israelsen for stimulating conversations that influenced this paper. This work was generously supported by the CCCU Global Stewardship Initiative, a Pew Evangelical Scholars Fellowship from the Pew Charitable Trusts and the Utah Agricultural Experiment Station. Approved as UAES journal paper number ####.

Markets, Ethics, and Governments:

The Normative Economics Of Stewardship and Sustainable Development

The concepts "stewardship" and sustainable development arise frequently in contemporary work on environmental protection and economic development. Discussions generally suffer, however, from considerable variation in the use of the concepts. In large part this stems from the markedly different and often hidden normative axioms commentators bring to the debate. These differences merit attention, for they point toward mutually agreeable paths of progress. This paper highlights several distinct normative traditions active in contemporary debates surrounding the economy and the environment, then explains how together these point toward multiple institutional channels for meeting contemporary environmental challenges.

In the interests of full disclosure, let me digress for a paragraph to explain my own perspective on the issues discussed in this paper. I am a development economist with particular research interests in agricultural development and poverty alleviation in low-income nations, above all in sub-Saharan Africa. Like all good economists, I take the virtue of efficiency as axiomatic. As a Christian I likewise place great stock in the virtues of compassion and humility. Despite my own daily failings at all three, these virtues efficiency, compassion and humility motivate my vision of environmentally sustainable development and of what we need to know and do to achieve that elusive goal. Moreover, my experience base circumscribes the range of applications about which I can competently comment. So please forgive me when I concentrate on low and middle-income countries although also keep in mind that they account for 85% of the world s population and 76% of its inhabited land mass particularly on the green issues of renewable resource management that disproportionately affect poor rural populations in the low-income world rather than on brown issues of pollution and waste disposal more pressing to urban folk and the industrial world.

I. Distinct Normative Approaches

Although economics, ecology and ecumenism all come from the same root word (the Greek oikos, meaning household), practitioners in those three fields by no means work from the same root assumptions of what is essential or desirable. We all remain pious to our disciplinary traditions, often failing to recall why we do things in such a way or to understand why others might reasonably take a different tack. This section briefly maps out some fundamental differences between economic, biological and Christian perspectives on sustainable development and stewardship. For reasons of brevity I necessarily do disservice to the richness of the literatures underlying these traditions. My defense is that the objective is to distill from these literatures their core normative principles not to provide a comprehensive survey.

A. Economics: Economists occupy privileged positions in contemporary policy debates, not least of which concerning the environment. This is perhaps nowhere more evident than in the area of sustainable development, which has become a central theme of the foreign policy of wealthy, industrial nations, of development lending by the World Bank (and, to a lesser extent, the regional banks), and of conservation strategies pursued by international environmental groups. Perhaps the most commonly cited definition of sustainable development is that of the Brundtland Commission, which defines the notion as development that meets the needs of the present without compromising the ability of future generations to meet their own needs (WCED 1987, p.43). This definition implicitly adopts intergenerational equity as a normative axiom, and questions of intergenerational distribution lie at the heart of a generation of economic thinking about environmental protection.

Economists point out that WCED-style definitions of sustainable development depend on a nondeclining capital stock, which is necessary for nondeclining future per capita incomes and standards of living. In so far as some of the capital stock depreciated in consumption and production processes is natural rather than manmade, sustainable development depends on the existence of substitutes for consumed environmental resources and investment in those substitutes at a rate equal to or greater than the rate of simultaneous depletion of environmental resources (Perrings 1995). As we have learned more from and with biophysical scientists about the complex fabric of ecosystems, economists' confidence in the substitutability between forms of capital has ebbed. While there remain feasible substitution possibilities (e.g., solar energy from photovoltaic cells in place of energy produced by burning fossil fuels), we have become increasingly aware of our ignorance and more cautious about environmental destruction as a sustainable pattern of resource use. In this worldview conservation of natural capital is important because it is central to intergenerational equity.

Why give primacy to intergenerational equity over intragenerational equity? If the normative axiom is essentially the golden rule to make possible for others what is possible for you I can think of no reason not to endeavor to apply this within contemporary society as much as across sequenced societies. Yet a disturbing amount of contemporary writing on sustainable development ignores this point. The sustainable development ethic of mainstream economics, based on intergenerational equity, seems an arbitrary and incomplete social philosophy.

Economics nonetheless has important normative foundations to offer the design of environmental policy. The default normative axiom implicit in neoclassical economics is efficiency: we must not waste resources. Conditional on satisfying other normative axioms, there is no justification for wasting resources of any sort. This principle is enshrined in the economists' concept of Pareto efficiency. A distribution is Pareto efficient if and only if no one could be made better off without making at least one person worse off.[1] Pareto efficiency and competitive market equilibria are logically equivalent under particular, common assumptions.[2] This equivalency between competitive market equilibria and efficiency motivates economists heavy reliance on markets, not least of which for normative inference.

Historically, economists viewed the environment as a source of physical and biological inputs to production and as a costless sink for disposal of waste. Indeed, the traditional name for the subdiscipline "resource" economics reveals a vision wherein the pressing environmental challenge is optimal allocation of natural capital. Prices play a central role in efficient allocation across space and time, not least of which the interest rate, which heavily influences market-based time discounting. When one's use of a resource impacts on others indirectly but materially a phenomenon known as an "externality" individually optimal decisions are not socially optimal. Then governments are sometimes needed, either to regulate the externality producer or to establish and defend a system of property rights that permits all parties to trade freely and in so doing to extinguish externalities.

Economists' gradual recognition that most people also enjoy and "consume" natural amenities that are not priced in a market place clean air, beautiful vistas, biodiversity led to emergence of new methods of inquiry based on nonmarket valuation and the rise of the label "environmental" economics to classify the subdiscipline. Yet environmental economists depend just as exclusively on Pareto efficiency standards and corresponding market signals, especially the price-equivalents "willingness to accept" and "willingness to pay".

A more recent intellectual tradition, ecological economics, takes a somewhat different approach. It emphasizes that imperfect substitutability between different forms of natural and manmade capital imposes physical limits on economic activity (Georgescu-Roegen 1971, Daly and Cobb 1989, Daly 1990), the uncertain environmental impacts of irreversible development (Arrow and Fisher 1974, Henry 1974, Bishop 1978), and the interdependence of economic and ecological systems (Costanza 1991, Norgaard 1985; Perrings 1996).

While the gradual refinements of environmental and ecological economics contribute substantively to our understanding of human relationships to ecosystems, the core principle of efficiency remains unchanged. The absence of markets and observable prices, uncertainty, imperfect substitutability, and the dynamic interdependence of systems all make analysis harder but not fundamentally different in method. The unique normative axiom of efficiency remains. These refinements merely adjust the computation of costs and benefits. The key normative criterion to take away from the economics literature on the environment is thus not the notion of intergenerational equity advanced in mainstream writing on sustainable development, but the more fundamental axiom of efficiency.

B. Bioethics: The anthropocentric line of economic reasoning above of whichever stripe disturbs many biologists and ethicists who find intrinsic value in nature, not just instrumental value due to nature's capacity to satisfy human needs and wants. These commentators rightly point out that environmental management based solely on human valuation of natural resources depends solely on human preferences and technologies, i.e. it is fully vulnerable to original sin. Many bioethicists thus consider the strong anthropocentric line of mainstream economists shamefully arrogant. In the words of Sagoff (1995, p.618), "[t]he reasons to protect nature are moral, religious, and cultural far more often than they are economic." Most fundamentally, bioethicists emphasize that humans are merely a part of a complex ecosystem that influences us as much as we influence it. Simply put, mankind needs to accept a rightful place in, not above, creation. Humility is appropriate.

While sympathetic to the bioethics paradigm, it nonetheless warrants four caveats. First, it is redundant in the face of ecological economic notions of the instrumental necessity for environmental protection. Each of us may have our own reason for wanting to protect the environment, but so long as mine and yours yield the same prescriptions it really doesn't matter which one prevails; we will both be satisfied. This consequentialist approach might not sit well with deontologists, probably including most deep ecologists, but we will have to agree to disagree.

Second, the bioethics paradigm is naive in that, irrespective of the rights of extra-human creation, humans must carry out the design and implementation of efforts to steward creation and thus we must motivate if not elevate our own species above all others as a practical matter. This simple observation is the basis for what Ray Grizzle and I term "humble anthropocentrism" (Barrett and Grizzle 1996; Grizzle and Barrett, 1996).

Third, more extreme variants of the bioethics paradigm would subordinate all instrumental value to intrinsic value, maintaining that "human society has to operate with technologies and products which use only the minimum of resources in order not to deplete intrinsic value more than is absolutely necessary. Such minimum intrinsic depletion rules risk wholly inequitable 'trades', such as conserving intrinsic values now at the expense of social justice, and even survival if the context is that of poor developing countries" (Turner and Pearce, 1992, p.179).

Fourth, the anthropocentric arrogance rightly challenged by many operating within the bioethics paradigm is too often mirrored by "green imperialism" on the part of conservation groups. The CITES ivory trade ban, the gazetting of many new parks in the low-income world, and various other initiatives born of western environmental campaigns too often amount to little more than the imposition of the values of a wealthy population of humans on a distant poor population that bears most of the costs of conservation.[3] As David Cumming of the Worldwide Fund for Nature recognizes, Only in Britain and America do people mistake animal welfare for conservation. To force western values on African culture is cultural imperialism (as quoted in The Economist, Sept. 7, 1996, p.15).

Humility is reflected in method as well. Mainstream economists tend to build universal models based on the microeconomic (i.e., small-scale) theories of the consumer and of the firm. Ecologists, on the other hand, are more inclined to deemphasize individual members of species and to express concern about large-scale systems (Norton and Toman, 1995). Without denying the intrinsic worth of individual species, the ecology perspective on hierarchical systems, which nests smaller-scale systems within larger-scale ones (Common and Perrings 1992, Holling 1992, 1994; Norton 1992), explicitly rejects the arrogant fallacy that the macrocosm mirrors the microcosm. Contemporary ecological modelers emphasize that an understanding of small-scale dynamics does not imply an understanding of large-scale ones, nor vice versa.

The crucial normative axiom that all of us should accept from the bioethics paradigm is humility, regarding our place in both human society and creation more generally. The very dependence of humanity on the rest of creation and the intrinsic worth of nature should imbue us with appropriate caution. An axiom of humility does not, however, impose a nonanthropocentric approach to environmental challenges.

C. Christian: There is no single Christian environmentalism today, but rather a rich diversity of approaches. These are perhaps best recognized as the embodiment of St. Paul s (1 Corinthians 12) insight that we are many parts of one body (Grizzle and Barrett 1996). The economic and bioethics paradigms crudely mapped above offer distinct, fundamental truths, but neither can stand fully on its own. Christian environmentalism is gradually evolving toward a more holistic approach incorporating the efficiency and humility ethics and adding to these the cornerstone axiom of Christianity: compassion. Christ directs His followers to attend to all who suffer. Simply put, Christians must heal the suffering of creation, both its human and non-human components.

Christian compassion is an important addition. Humility stops short of motivating action to remedy identifiable problems. Pareto efficiency, which takes initial endowments as given, depends entirely on procedural justice associated with willing buyer-willing seller transactions in competitive markets. The economic concept of efficiency completely ignores issues of ex ante distributional justice (are the initial endowments fair?) and, as a consequence, ex post distributional justice also.[4]

The Christian tradition is explicitly pluralistic. A pluralistic method explicitly admits multiple principles to guide behavior. Jesus explicitly rejected moral monism when challenged to single out the greatest of all commandments, replying instead that there are two fundamental principles (Mark 12:28-31). There is considerable and growing support for a similarly pluralistic approach to contemporary environment issues (Stone 1987, Norton 1995, Norton and Toman 1995, Barrett and Grizzle 1996, Grizzle and Barrett 1996).

Pluralism poses special challenges. First, all parties must maintain a commitment to open, respectful dialogue. Pluralism thus favors participatory methods to identify and analyze challenges, and to propose, design, implement and evaluate prospective solutions. Environmental policy is becoming more participatory, perhaps especially in low-income agrarian communities in which global environmental challenges of biodiversity loss and deforestation are paramount (Wells, Brandon and Hannah 1992). The dictum think globally, act locally encourages community-based activism, and the evidence in the social sciences is that pluralistic approaches are far more effective than monistic ones in combating serious problems (Barrett and Csete 1994).

The second major challenge of pluralistic processes is the need for multiple accounting systems and decision rules corresponding to multiple axioms underpinning choice (Norton and Toman 1995). This necessarily requires parallel efforts at understanding the same phenomena or alternatives from different perspectives. A pluralistic system will not likely be a least cost means to make decisions about the environment, but it is perhaps best suited to the adaptive management paradigm of Holling (1978). This approach explicitly recognizes both the depth of our ignorance about inherently uncertain ecological relationships and the high value of information that can help reduce that uncertainty.

D. Creation Stewardship: The concept of creation stewardship offers a helpful means to reconcile the potentially complementary axioms of efficiency, humility and compassion. Stewardship holds that the possessor of a natural resource should behave as a custodian, using the resource wisely but enjoined from destruction or disposal. Stewardship of creation, i.e., of the full array of human and nonhuman species, combines efficiency and compassion, in its mandate of wise resource use on behalf of all creation, with humility in its denial of individual ownership of all possible rights in property. Stewardship identifies possessors as managers and servants rather than masters.

Stewardship is an unorthodox concept to economics because it limits property rights to usufructure rights. Stewardship strongly denies the Lockean tradition of ownership that lies at the core of western market economies, wherein a full suite of property rights (i.e., including rights to disposal) derives from the application of human labor effort to a hitherto unclaimed resource. Stewardship resembles more closely many communal tenure regimes wherein exclusive rights to use and even to transfer a resource but not to transfer or destroy the property accrue to the person who first domesticates it. Property rights are social constructions; ownership must be recognized and enforced within a society, whether by a state with police powers or an elder with moral authority. There is nothing fundamental to rights systems that necessitates ubiquitous private ownership of natural resources. This in no way denies the strong efficiency arguments favoring private property rights associated with possession (see section IIIA on markets). The point of the creation stewardship principle is simply to limit the extent of those rights to recognize that compassion and humility are normative axioms of equal standing with efficiency.

Operationalizing the concept of creation stewardship remains a challenge. Elsewhere I have argued for a foundation based on fairness theory, a body of theory devised in the 1970s (Barrett 1996, forthcoming).[5] While the jargon is not entirely consistent with colloquial use of the terms, fairness is founded on a no envy condition that is met if all agents have equal opportunities.[6] This does not mean all people enjoy equal budgets, equal skills, similar preferences or identical outcomes; they simply face Rawlsian ex ante equality of condition. Fairness theory explicitly integrates distributive justice into traditional, Paretian concerns, thereby combining the axioms of compassion (for humans of this and future generations) and efficiency.[7] Moreover, fairness elevates humility within the human population by mandating equality of opportunity.

III. Information Channels and Incentive Mechanisms

Articulating normative axioms is necessary but insufficient. The next (and generally most difficult) task is implementation. Since implementation must be carried out by humans, only anthropocentric approaches are practical. Actors must have reliable and timely information available on which to base decisions and there must be incentive mechanisms to induce individuals to behave in a manner consistent with agreed upon normative axioms.

Human decision-making is framed by three broad classes of institutions: markets, ethics, and governments. Each of these three institutions employs a different enforcement mechanism to influence individual choice. Ethics invoke conscience and peer pressure, government relies on police and taxation powers, and markets employ ambition, greed and pride. Ethics, governments and markets are thus best viewed as complementary institutions that society can shape so as to facilitate economic development and environmental protection (Barrett 1995, Barrett and Grizzle 1996). As Arrow et al. (1995, p.520) put it, The solution to environmental degradation lies in such institutional reforms as would compel private users of environmental resources to take account of the social costs of their actions. This section discusses each of these three broad institutions and why a pluralistic approach based on all three is necessary to advance creation stewardship.

A. Markets: Markets are inherently pluralistic institutions. Indeed, markets are interesting and important precisely because they encourage interaction and coordination within a society in which individuals possess different information and abilities, exhibit different preferences, and so forth. Minority viewpoints have as much standing in a market as majority viewpoints. By offering mutually beneficial exchange, markets provide a means to articulate and accommodate heterogeneous interests.

The pluralism intrinsic to markets imposes an important degree of humility on participants. By definition, consumers and firms are individually powerless to influence others decisions in competitive markets. Individuals are part of a complex system of production, consumption and exchange, an ecosystem of sorts. Economists celebrate the humility inherent to competitive markets, uniformly deeming market power socially undesirable. Competitive markets are one of the best known means to limit the concentration and abuse of individual power.

Perhaps markets most important function is to provide information essential to prudent management of resources, in the form of price signals of relative scarcity. Efficiency dictates allocating resources to their most valuable uses. The need to uncover value motivates the use of markets. In a competitive market, resources flow from those who value them least to those who value them most, reflecting differences in resource access and heterogeneous preferences that inform subjective assessments of relative scarcity. The prices people and firms are willing to accept and pay offer a useful summary statistic for relative value in markets in which information flows freely. The first theorem of welfare economics hold that competitive markets generate price signals that yield Pareto efficient equilibria.

Improved environmental management regimes and resource-conserving technological and institutional change develop primarily because individuals become aware of the scarcity of natural capital and undertake useful innovation. This is the implication of the economic theory of induced innovation : the process of technological advancement and scientific discovery is not purely random, but is heavily influenced by information flows, including price signals (Binswanger and Ruttan 1978). When markets function properly, increasing resource scarcity naturally increases the returns to inventions that conserve, substitute for or discover new stocks of threatened natural capital.

Increased relative scarcity occurs either because of increased demand or decreased supply. As incomes and public awareness of limited ecological resilience increase, more people place greater intrinsic value on environmental protection and demand for natural resources increases, driving up their prices. The same results emerge from increased perceptions of resource scarcity, caused by new scientific findings that increase estimated minimum sustainable stocks (ecological resilience) or by depletion. Both demand and supply-side impulses encourage creative innovations (e.g., solar energy design, recyclable packaging).

Increased demand also creates incentives for those who possess resource use rights to conserve or transfer those rights to others who will conserve the resource. This is apparent in the rapid and widespread emergence of wildlife ranches in southern Africa, and in the increasingly common purchase of land by environmental nongovernmental organizations (NGOs) that subsequently convert the area into reserves. Competitive markets facilitate conservation.

Controlled markets, by contrast, yield distorted prices that too often discourage conservation and promote unsustainable rates of resource exploitation. This is the experience of centrally planned economies including statist economies in much of Africa, Asia and Latin America where administrative pricing and restrictions on domestic and international trade seriously interfered with market signals that would likely have induced greater environmental protection. Industries in eastern Europe generated unprecedented air pollution because they were directed to produce a certain volume of manufactures, without competition from foreign imports, and using coal-generated energy priced below cost. Administrative pricing and regulated production and trade patterns failed to provide information or incentives to micro-level decision-makers that would induce resource conservation. When combined with appropriate ancillary interventions to ensure the most vulnerable and resource-dependent members of society can share in the benefits, market-oriented economic liberalization can thus be socially and environmentally beneficial (Barrett and Carter 1994).

Competitive markets do not emerge spontaneously. They are social constructions wherein individuals come together freely to transfer rights over the future value of an object or service (Polanyi 1957, Bromley 1991). Competitive markets thus require a well-defined and defended system of property rights and reasonably low transactions costs that encourage exchange. Hence the intrinsic interdependency between markets, ethics and government.

Markets depend on transferable usufructure rights permissible under a system founded on stewardship.[8] Property rights make individuals accountable for their actions, whether bad or good, and thus create appropriate incentives for resource conservation or transfer. It is because the principle of accountability underlies an effective system of property rights that state ownership generally fails, especially with a powerful state not beholden to its constituents. Property rights are most effective in a fair arena, in which all parties rights can be enforced and exchanged. Our familiar system of complete ownership rights is but one such mechanism, but by no means the only or best suited to all conditions. The mass of empirical evidence on resource management indicates that any of several kinds of tenurial regimes e.g., private property, co-management, etc. can offer clearly defined and protected private usufructure rights that are transferable and foster efficient and equitable resource management (Hanna 1996). And efforts to impose western-style property rights, for instance through land titling schemes in several Sub-Saharan African countries, have generally failed to mitigate preexisting property rights problems in the absence of governance reforms (to improve enforcement) and reduced transactions costs.

The importance of transactions costs has long been recognized in economics (Coase 1960), and is the central theme of the new institutional economics (Bromley 1989, 1991, North, Platteau 1994a,b; Williamson). Hill (1994, p.124) points to transaction costs as the reason for the divergence between private actions and social consequences. ... If we think of transaction costs as the costs of defining and enforcing rights and carrying out exchanges, it obvious that these costs are much higher with some resources, such as air, than with others, such as land. We fail to have fully defined rights over certain resources because of high transaction costs, and in those cases the unfettered interaction of individuals will not produce the socially desirable amount of activity (emphasis in original). Higher transaction costs lead to less complete sets of property rights, with the consequence that more open access resources fall prey to overexploitation. Transaction costs are particularly high in the low-income agrarian nations of the tropics, leading to poorly defined and enforced systems of property rights, limited exchange opportunities, incomplete and noncompetitive markets, and a dangerously rapid rate of deforestation, desertification, biodiversity depletion, topsoil erosion, and air and water pollution.

Hill s definition of transaction costs highlights three distinct functions society needs to facilitate: definition of rights, enforcement of rights, and facilitation of exchange. These point toward reforms that persons concerned for creation stewardship should strongly advocate.

The definition of rights depends on knowledge and communication. Science and scholarship can contribute to this arena, but the most important elements are a well-developed and broadly understood body of law and a free press. A mature legal system ensures that all persons should be aware of their and others rights, sometimes aided by accessible legal experts. The press provides a popular medium to communicate challenges and refinements to a system of rights.

Rights enforcement likewise relies on the legal system, especially a clear body of contract law and an independent, honest judiciary. But the legal system should be an enforcement mechanism of last resort. All well-functioning market systems have depended on pervasive generalized morality in the human population (Bromley 1989; North 1990; Evensky 1993; Platteau 1994a, b; Barrett, 1995). Interpersonal trust and the social networks founded on trust permit low-cost transactions, efficient division of labor according to comparative advantage, and higher rates of investment and innovation.

Beyond defining and enforcing property rights through legal institutions, the press and generalized morality, an efficient society must facilitate exchange. Perhaps the chief means is by assuring free entry into and exit from markets, thereby checking the potential exercise of latent market power by individuals or oligopolies. If entry and exit are virtually costless, new firms will emerge to compete for profits based on the socially inefficient exercise of market power, and exit the industry when such profits are exhausted, thereby sharply limiting inefficiency. When entry into or exit from a market is controlled, whether by noncompetitive behavior by private monopolists or oligopolists or by government restrictions on market participation, market power and inefficiency persist and accountability declines. A strong competition (anti-trust) policy is prerequisite to the defense of free entry into and exit from markets. Governments can be thereby defend free entry and exit. Unfortunately, states have too commonly been prime violators of this principle.[9] In Sub-Saharan Africa, for instance, central governments granted themselves (and often ruthlessly enforced) monopoly powers in agricultural marketing, energy, bulk transportation and mining for decades. The resulting distortions in resource prices led to low rates of productivity growth, underinvestment in resource-saving energy sources or farming or mining methods, and unsustainable rates of deforestation, erosion, minerals extraction, and pollution.

The other means by which societies can permit free entry and exit is through the development of mature communications and transportation networks. Where communications and transport costs are high, markets become segmented, limiting opportunities for efficient trade and increasing the probability that relatively large operators can acquire and exercise market power. Segmented markets also subject participants to greater price risk associated with shocks to supply or demand, increasing the need for credit or insurance.

Financial markets as especially important in that they permit people to borrow and save so as to finance the purchase of durable property rights, and they permit individuals to insure against risks that might otherwise impede investment and resource conservation. The absence of well-functioning financial markets for saving, credit and insurance often fosters excessive resource exploitation. Pastoralists who cannot reliably save in or borrow from a banking system have a tendency to overstock pasture, leading to increasingly fragile range ecology and greater risk of livestock die-offs (Coppock 1994). Similarly, insufficient access to credit or insurance to allow peasant farmers to mitigate price risk in staple foodstuffs increases incentives to undertake destructive slash-and-burn farming (Barrett 1994). By contrast, debt-for-nature swaps executed by international environmental NGOs have protected millions of hectares of ecologically valuable forest and rangeland in the low-income tropics over the past decade only because secondary markets in sovereign debt emerged in a competitive international financial market.

Competitive markets have been and remain absent in much of the low-income world largely because transactions costs are excessive due to insufficient physical and institutional infrastructure investment, government interference, immature legal systems, controlled press, social divisiveness, and weak financial systems. Missing and imperfect markets are the distinguishing feature of low-income economies, especially agrarian ones, and the thing that makes development a challenge to economists. While this may appear a daunting list of fronts on which to push reforms, activating competitive markets is a necessary step toward fostering a global society in which the desirable goals of efficiency and humility can be attained. The broad scope of the potential interventions to assist the development of competitive markets to facilitate sustainable development also indicates the need to place and prioritize reforms in a specific context in space, time and culture. The considerable, undifferentiated emphasis placed by some influential organizations and individuals on asset privatization, land titling as a cornerstone to tenurial reforms, democratization, and government withdrawal from markets is as unwise as a previous generation s ill-considered distrust of private property and markets. Creation stewardship needs competitive markets. Competitive markets depend, however, on ethics and governments that keep transaction costs low.

Moreover, while competitive markets promote humility and efficiency and induce institutional and technological innovation that facilitates environmental protection, markets are not especially well-suited to advancing the goal of compassion. Competitive market processes ensure procedural justice but not distributional justice. This threatens the environment because the poor are both the principle victims and the primary destroyers of natural capital in the low-income tropics (Perrings 1989, 1996; World Bank 1992; Reardon and Vosti 1995; Barrett, 1996, forthcoming).[10] Deforestation, wildlife poaching that threatens biodiversity loss, overgrazing that facilitates erosion and habitat destruction, and other unsustainable exploitations of renewable resources too often result from one billion poor peoples daily struggle to survive. Attempts at resource conservation today may be futile in the absence of measures to combat poverty since "for the environment, destitution is far worse than economic development" (Sagoff 1995, p.616). More optimistically, the World Bank (1992, p.1) asserts, there are strong win-win opportunities that remain unexploited. The most important of these relates to poverty reduction; not only is attacking poverty a moral imperative, but it is also essential for environmental stewardship. The good news is that futile experimentation with state-directed resource allocation is now a thing of the past and there are widespread good faith efforts at building authentically competitive markets based on well-defined systems of property rights and low transaction costs. The movement toward markets in the low-income world is well under way and likely irreversible.

B. Ethics: Ethics are the standards of conduct and moral judgement adopted by individuals within a society. The cultivation and maintenance of ethics that celebrate the normative aims of efficiency, humility and compassion are thus obvious means by which contemporary society can operationalize stewardship. Ethics are necessary to creation stewardship because a wildly uneven distribution of decision-making power endows a small subpopulation of humans with virtually unchecked discretion over creation. Markets and governments can limit the damage done directly or indirectly by this cohort (of which we are certainly a part), but those formal institutions are rarely sufficient to prevent catastrophic, irreversible environmental damage. Moreover, governments and markets are weakest in precisely those parts of the low-income world where renewable resource depletion is of greatest concern.

Thankfully, many individuals and cultures already adhere to a strong ecological ethic. Individual conscience and social stigma can serve to enforce norms of efficiency, humility and compassion where economic and legal institutions cannot. The more social scientists study social behavior applied to common property resources, the more we realize the importance of what Cordell and McKean (1992, p.191) observe in Brazil to be an ethical code far more binding on individual conscience than any government regulations ever could be. [11] Thus, a central objective of environmental protection movements must be to define and promote a holistic ecological ethic so as to enlarge the population which values environmental protection and the satisfaction of basic human needs sufficiently to generate an environmentally and socially sustainable society (Barrett and Grizzle 1996, pp. 11-12).

Ethics have direct and obvious value to stewardship because they encourage individuals to exercise compassion and humility. Economic theory tells us that some public goods will be severely undersupplied by markets because the provider of public goods cannot exclude others from enjoying their benefits. Marginal private benefits are thus less than marginal social benefits of public goods investment, leading to socially suboptimal supply.[12] There are many examples, however, of public goods that are plentifully supplied by private donor-investors: e.g., community leadership, houses of religious worship, lighthouses in eighteenth and nineteenth century Europe. Individuals pay for such amenities because they think it the right thing to do, not because they are maximizing their own welfare.

Ethics underpin what might be termed the competitive market in charitable activities by NGOs. I term it a market because individuals exchange their rights over a donation for a commitment that the recipient organization perform some activity the donor supports. Within this market NGOs compete on the basis of cost and quality to provide services that others value. Moreover, the services NGOs provide often overlap or integrate to a degree with those offered by private firms, thereby fostering efficiency-enhancing competition and cooperation between the for-profit and non-profit sectors.[13] The good works done for social and environmental causes by the ever-expanding universe of NGOs cannot easily be overstated. They provide education, health, shelter, training, technology transfer and other services to human and nonhuman populations who haven t the material resources to fully provide for themselves, and they promote valuable research and experiential learning that helps people better appreciate the complexity and vastness of creation.

Just as the empirical evidence not fully support the prediction of neoclassical economic theory that public goods should always and everywhere be severely undersupplied, it also fails to support the well-known prediction that common property resources will always be overexploited. Overexploitation of open access resources certainly occurs, just as some public goods are distinctly undersupplied, but less so than traditional theory would predict. A better understanding of why individuals voluntarily exercise restraint is of potentially enormous importance to the task of creation stewardship.

Economists increasingly suspect that most individuals do not undertake the marginal analysis depicted in our theory, but rather follow more of an evolutionary approach, gradually refining their behaviors in response to payoffs. The emerging field of evolutionary game theory thus focuses on how the proportion of agents in a society playing a particular sort of strategy evolves over time and in response to exogenous shocks. Ethics can be understood as strategies played by individuals adopting particular codes of conduct. In a pluralistic setting there will necessarily be multiple strategies played.

Evolutionary game theorists are finding that social systems exhibit multiple stable equilibria, including those characterized by the tragedy of the commons (Hardin 1968), in which individualistic behavior leads to resource overexploitation, and a norm-guided society of cooperation, individual restraint, and decentralized enforcement of codes of conduct (Platteau 1994a, 1994b; Sethi and Somanathan 1996). The key to realizing the latter sort of society is a behavior that is adopted by a sufficient proportion of a society that it persists in the face of idiosyncratic violation by a minority.

Hence the importance of promoting ecological ethics of the sort captured in the popular maxim think globally, act locally. In the face of eroding boundaries between cultures that decrease the capacity of communities to induce cooperative, socially optimal individual behavior by sanctioning transgressors, it becomes all the more important to instill in people a strong self-directed ethic of stewardship. As educators, ministers and grantsmakers, those of us gathered for this roundtable bear disproportionate responsibility to cultivate belief systems that support stewardship in the face of countervailing material incentives.

In writing about ecological integrity and Christian responsibility, Nash (1991) advances a set of nine ecological virtues , which he describes as patterns of personal and social perspective and behavior that, if followed, can make ecological integrity a reality. Without enumerating or defining these nine virtues in part because I wish to encourage the reader to read the original text themselves I can think of no more important step in advancing creation stewardship than this sort of articulation and promotion of comprehensible, intuitive standards.

The good news is that this is going on in churches, schools and town halls throughout the world. There has been a truly stunning shift in perspectives regarding humanity s place in and responsibilities to creation over the past 35 years, and especially in the past decade. Anyone who spends time in elementary or secondary schools, in this country and many others, cannot help but come away impressed by the depth and sincerity of the environmental stewardship convictions held and expressed by today's children. Surely some of this innocence will tarnish as they age, but I retain great hope that we are helping our children learn early the lessons we and our parents discovered rather late: that we need to think globally and act locally.

Ethics also have instrumental value in promoting the aims of efficiency, humility and compassion through their facilitation of competitive markets and good governance. As discussed in the preceding section, the viability and efficiency of markets depend on moral norms. Although this point is too rarely recognized by those who most invoke his authority, Adam Smith advocated a market economy not because he believed in its inherent virtue, but because he believed most people were sufficiently virtuous to make market exchange feasible and that the police power of the state could satisfactorily contain the damage done by the rest (Israelsen 1996). Indeed, in his Theory of Moral Sentiments, Smith emphasized the superiority of assistance "reciprocally afforded from love, from gratitude, from friendship, and esteem" as the root of a flourishing society. Recognizing, however, that "man has almost constant occasion for the help of his brethren, and it is vain for him to expect it from their benevolence only," Smith saw an important role for self-interested behavior as well, hence his famous "invisible hand" metaphor. In Smith's view a market-based "society, though less happy and agreeable, ... may subsist .. by a mercenary exchange of good offices accordingly to an agreed valuation." The virtue of markets, in the authentic Smithian view, is that they are participatory, encouraging free and frequent human interaction that induces innovation and requires honest behavior to maintain associates' trust. Simply put, Smith saw a market economy as more compatible with the other necessary ingredients of a moral society than the feudal or mercantilist systems to which Smith was responding in eighteenth century England. Markets are grounded, however, in the informal rules or behavioral norms of a society.

The ethics prevailing in a society also underpin its governance. This is an important domain in which educators, spiritual leaders, journalists and community activists can have a profound, if lagged and sometimes subtle influence. Widely held perceptions of what is fair behavior limit potential abuses of power.

Procedural legitimacy is necessary for the sustainability of any human institution, be it government, market or civil society. Pluralism is central to procedural legitimacy. Taking this one step further, humility mandates subsidiarity as a principle in governance, whereby decisions and tasks are assigned to the smallest possible social unit capable of undertake choice and action. The development and environment communities have begun emphasizing participatory approaches to project identification, design, implementation and evaluation. When done right, participatory schemes can be highly successfully (Barrett and Csete). Too often, however, projects and programs are inappropriately labeled participatory and don t quite work out (Barrett and Arcese 1995, 1996; Gibson and Marks). Violence, towards the poor or the environment, feeds on silence; it is overcome through advocacy and dialogue. Development and environment agencies and NGOs have long traditions of presenting themselves as experts and (sometimes subtly) pushing top-down approaches. Some, mainly smaller NGOs, have made the necessary shift to community-based, participatory strategies, while others, like the World Bank, struggle to make the difficult transition.

Subsidiarity is an indulgence of beneficiaries, but rather an imperative from the standpoint of efficiency and compassion. By an efficient division of labor, big agencies contribute money and necessary technical expertise while local communities bring unparalleled understanding of the context of the problem, the history of attempts to surmount the obstacles and a commitment that it be done right, because they have to live with the outcome. Local participants are less prone to abstraction, when the particular is often the key to solution. Subsidiarity is compassionate because they empower subpopulations traditionally ignored or victimized by top-down processes easily distorted by self-interested behavior by bureaucrats and pressure groups with privileged access to decision-takers.

Ethics in turn depend on markets and governments. While love is the greatest virtue, it may also be the scarcest, and we must therefore economize on its use where we can. This is the point of the earlier quote by Adam Smith in his famous argument for free markets, which lessen individuals dependence on others benevolence. Moreover, competitive markets facilitate regular human contact that helps feed compassion and a commitment to pluralism.

Governments, meanwhile, help ensure satisfactory provision of public goods in information, law enforcement and education, all of which help shape and buttress the ethics prevailing in a society. The legal and regulatory systems of the state also articulate and enforce codes of conduct, thereby setting uniform public standards on matters of broad agreement. Among the most important safeguards a government can defend are the right to free speech and religious tolerance, for the defense of minority views and interests is crucial to the persistence of authentically pluralistic systems. This checks the tendency of ethical systems to mutate into ideologies that can become oppressive rather than liberating.

Governments also have an important role in cushioning against shocks, both domestically and internationally. Sethi and Somanathan s (1996) model of evolutionary social norms demonstrates that gradual change in the economy or ecology of a society has negligible effects on the behavioral norms of a community as long as the population composition remains weighted toward cooperative approaches. Significant exogenous shocks to the system, however, can cause a rapid and catastrophic breakdown in social norms and a significant increase in the threat of common resource extinction. The severe dislocations involved in transitions in the formerly socialist states of central and eastern Europe and the apparent rapid rise in crime and predatory behavior are disturbing examples of what can happen when governments become impotent in a time of swift change. Similar traumatic change has taken place in many low-income countries in Sub-Saharan Africa and Latin America that have undergone rapid economic and social change since the early 1980s (e.g., Burundi, Haiti, Liberia, Madagascar, Nicaragua, Somalia).

Where national governments have been unable to cushion their citizens from dramatic change, the international community has a practical need as well as a moral obligation to assist. As economies integrate internationally and communities become less isolated from external cultures, harmonization of international codes of conduct becomes crucial to maintaining stable, cooperative social systems of the sort studied by evolutionary game theorists. The easier it becomes to escape social sanction, the less likely is a system to evolve toward a norm-guided equilibrium in which individuals transcend purely self-interested welfare maximization to behave in a socially optimal fashion. Isolationist policies are a clear threat to the establishment and maintenance of universal norms that must underpin creation stewardship.

Many of the most pressing contemporary environmental challenges biodiversity loss, deforestation, desertification, soil erosion are most acute where markets and governments are weakest. Somehow individuals, both locals and foreigners, must thus have an incentive to steward resources without the lure of profit or the threat of government penalty. Hence the urgent need to cultivate a broad ethic of creation stewardship think globally, act locally within ourselves, our churches, our civic institutions and, above all, our children. Investment in support for the international community of leaders in education, journalism, religion and social work promises handsome, if perhaps unquantifiable, returns.

C. Governments: The traditional economic view is that the appropriate role of government is to correct market failures and to provide public goods. Both are especially plentiful in matters concerning development and the environment. Unfortunately, many states have failed to do those two things well, with serious consequences. Partly as an outgrowth of mixed performance, governments are under attack in most places. As this section tries to make clear, government has crucial roles to play in the task of creation stewardship. While improving the quality of governance is a necessary objective, we need to take care not to destroy the credibility and authority of governments in the process of reforming them.

Self-interested optimizing behavior will generally not lead to an efficient allocation of resources in the presence of externalities. Government can eliminate externalities through taxes or subsidies to equate private and social costs and benefits. Theory tells us taxes and subsidies will usually be more efficient than regulatory prohibitions, the exception coming when we cannot clearly define the costs and benefits associated with the externality. Where these are uncertain, for instance when the prospective consequences of global warming are not well understood, then there may be a sound basis for regulation according to the precautionary principle (Bishop 1978). This principle is the basis for safe minimum standards to minimize downside risk associated with potentially catastrophic events.

Since the absence of well-defined property rights gives rise to externalities, governments are also often called upon to create property rights (e.g., tradeable permits). But, as Anderson and Hill (1983, p.438) point out, the definition and enforcement process may preclude whatever gains might have been realized by the establishment of rights. In particular, when the prospective rights holders themselves define and enforce property rights, there is a greater incentive to conserve on resources used in the process than when that process is imposed exogenously by non-claimants (Anderson and Hill, 1983, p.439).

This returns us to the principle of subsidiarity. Community-based approaches to governance tend to be the most effective at advancing simultaneously the goals of efficiency and compassion. The history of land tenure in parts of Africa bears clear testimony to this claim. In Madagascar at the end of the nineteenth century, for instance, the French colonial government s alarm over deforestation caused by slash-and-burn peasant agriculture prompted state usurpation of property rights to all land in the belief that it could then allocate tracts to concessions managed in an ecologically responsible manner. The real effect of state land seizure, however, was to break down traditional lines of authority that had checked resource overexploitation for centuries, thereby accelerating deforestation on the island. Moreover, because the government failed to consult its subjects about this transfer, it was oblivious to the complex system of indigenous rights that assured all members of peasant communities a claim to minimum necessary allowance of food (e.g., the detritus of harvested fields). Land titling schemes in Kenya similarly stripped secondary rights holders of their claims to common property, intensifying their misery by, in effect, tearing up the insurance policy they held against starvation.

Economists use the label public goods to describe commodities and services that are nonrival and nonexcludable , where the first characteristic indicates that many individuals can enjoy it without diminishing another s consumption, and the second represents the impossibility of excluding some one from enjoying the good once it is produced. Public goods are thus a very special type of externality. A wide range of environmental amenities (e.g., biodiversity, clean air and water, sufficient tropical forest cover to absorb carbon emissions and provide plentiful fuelwood for locals) satisfy the definition of public goods. Indeed, the public goods nature of environmental resources is the primary reason so many economists have invested so much in nonmarket valuation methods designed to elicit individuals willingness to pay for particular public goods. As you can imagine, it is exceedingly difficult to elicit peoples true willingness to pay. There are tremendous incentives to free ride on others in the provision of public goods and underreport one s true valuation of the public good whenever respondents suspect their answers might be used, directly or indirectly, to influence the payment demanded of them, whether in the form of user fees or taxes. As a result, some public goods tend to be sharply undersupplied and evince especially high rates of return on investment.

With respect to creation stewardship, governments need to provide public goods that fulfill five important objectives. These are (i) to improve information on and understanding of the relationship between human society and the broader ecosystems of which we are a part; (ii) to facilitate low transaction costs that enable the definition, enforcement and exchange of property rights; (iii) to defend competitive markets; (iv) to ensure macroeconomic stability; (v) to cushion society against shocks, providing social safety nets and transfers as needed.

Reliable and timely information properly understood is fundamental to making efficient and compassionate choices. Research and education are the principal means by which societies produce information and understanding. Philanthropic and profit motives generate a certain amount from private sources, but the empirical evidence strongly suggests that basic research and training is distinctly undersupplied by private sources, yielding annual rates of return to public research investments of 40 percent or more (Chavas and Cox 1992). The more we study ecosystems and their linkages to socio-economic systems the more we learn about how resilient or fragile each system is to distinct types of perturbations and the better equipped we become to steward creation. Recent initiatives to integrate environmental sustainability questions fully into more traditional lines of research in engineering and the social sciences deserve considerable attention and support. Governments and philanthropic organizations must be regularly reminded of the wisdom of investing in the public good of research and education.

Governments play a critical role in reducing transaction costs to the definition, enforcement and market exchange of property rights. Physical and institutional infrastructure (e.g., transport and communications grids, uniform weights and measures, an effective body of contract law) have many of the characteristics of public goods. Private firms and donors tend to supply less than society needs to operate efficiently.

Governments need not only to promote competitive markets by helping reduce transaction costs, they need to defend the competitiveness of markets. This involves active anti-trust enforcement, which is largely absent in the low- and middle-income world and needs greater emphasis. Defense of competitive markets also demands state restraint from administrative pricing, unnecessarily distortionary taxation (Binswanger 1989) and barriers to domestic and international flows of goods, services and people. Restrictions on trade and immigration result primarily in the immiseration of populations in low-income economies, causing increased overexploitation of renewable resources, in part due to greater use of older and dirtier technologies. One of the important advances of the past decade is the increased realization that free trade is on balance a friend to the poor and to the environment.

The fourth public good that governments need to deliver is a stable macroeconomic environment for private decision-makers. A key lesson of the generation of macroeconomic policymaking in Africa and Latin America from the mid-1960s through the mid-1980s is that lax fiscal and monetary policies generate high and volatile inflation rates and weak financial systems, undercutting incentives to save and invest, degrading real wages and thus hurting the poor, and sparking excessive natural resource exploitation. Prudent macroeconomic management is central to sustainable development (Gandhi 1996).

Necessary macroeconomic liberalization in most of the low- and middle-income world needs, however, to be reconciled with the preexisting institutional shortcomings of low-income nations. We live in what economists call a second-best world, i.e., one tainted by the imperfections inherent to original sin. This is one reason why the first order of business in most of Sub-Saharan Africa and many other desperately poor parts of the world should be microeconomic and institutional reforms to reduce transaction costs, extend property rights coverage, foster competitive markets, and increase the supply of necessary public goods. In the absence of ancillary investments, macroeconomic and sectoral liberalization reforms can cause significant and unanticipated environmental and human injury (Barrett and Carter 1996; Mäler and Munasinghe 1996, Opschoor and Jognma 1996). Macroeconomic stability is necessary but not sufficient to improved creation stewardship.

Governments must ensure the existence of social safety nets that ensure all constituents have access to a minimum level of food, water, clothing, and shelter necessary for survival. Where communities do not protect the vulnerable, the state must. This is compassionate not only toward humans but also toward the environment. When their brothers and sisters won t support them, the poor turn to nature, often in a quite unsustainable manner, through resource exploitation and procreation. Both theory and empirical evidence suggest that social safety nets reduce the need of poor populations to resort to environmental predation (Bluffstone 1995; Barrett and Arcese 1996). Greater appreciation for international interdependency in ecological and economic systems should beget increased commitment to foreign assistance to poor communities. Unfortunately, precisely the opposite is occuring; already-low aid budgets are dwindling rapidly. While poor countries struggle to pay for food, medicines and school books to meet their populations most basic human needs, wealthy nations that can afford to underwrite necessary investments in environmental protection have been disgracefully slow to offer more than rhetorical support. Kenya, for instance, a nation with annual per capita income of less than $300 sacrifices approximately $200 million annually to conserve biodiversity through protected areas, the benefits from which accrue globally, and are enjoyed especially by relatively wealthy westerners(Norton-Griffiths and Southey 1995). The costs, meanwhile, fall disproportionately on Kenya s poorest citizens, the rural poor on the periphery of protected areas. These folk have grown increasingly dissatisfied with parks and nature reserves (Akama et al. 1995). Community-based conservation schemes aim to benefit local populations, but theseschemes have generally proved unsatisfactory to date (Wells et al. 1991, Brandon and Wells, 1992, Western et al. 1994, Barrett and Arcese 1995). Social unrest over environmental protection in low-income countries will become a far more serious threat to stewardship in the coming years if the wealthy, there and here, do not become more forsightful and generous.

Governments would also do well to resist neo-Malthusian arguments for population control. First, there is growing evidence that human population growth leads to improvements rather than deterioration in the natural resource base in some settings (Tiffen et al. 1994, Patel et al. 1995). This is because population growth and environmental destruction are both largely a consequence of poverty. It is not, therefore, helpful to treat population growth as if it were exogenously determined, or to seek to change the fertility rate amongst resource users without addressing the motivation for large families (Perrings 1996, p.22).

In order to undertake these activities successfully, governments need a bedrock of competitive markets and firm social ethics. A solid foundation of individual and social ethics helps to promote an appropriate sense of servitude and a commitment to subsidiarity, both of which improve the effectiveness of governance. And well-functioning markets reduce the temptation of policy-makers to meddle in resource allocation issues over which they possess comparative disadvantage and encourage concentration instead on the five fundamental functions of government outlined above. The failures of governments, especially but not exclusively in the developing world, have thus been both of commission and omission (Krueger 1990). The good news is that it seems we have learned this lesson and are adapting accordingly, if slowly.

III. Concluding Remarks

The most obvious theme of this paper is that authentic sustainable development, in the form of stewardship for creation and the humans therein, rests on a three-legged stool. If we wish to advance an interrelated economic-ecological system ordered by the axioms of efficiency, compassion and humility, then we must facilitate the appropriate, simultaneous development of competitive markets, ecological ethics and responsible governments. Each supports the other using complementary informational channels and incentive mechanisms to influence human behavior. We cannot advance one without the others; creation stewardship is a complex, multidisciplinary task.

With respect to green policy concerns related to renewable resource use in the low- and middle-income world, several issues deserve emphasis. The past decade s sharp movement toward free and competitive markets needs reinforcement, especially through the provision of complementary institutional and physical infrastructure to reduce transaction costs and promote domestic and international competition. But we should not pin all our hopes on markets; their role is important but necessarily limited. We must simultaneously cultivate an ethic of individual and collective responsibility, for creation and its constituent species, not least of which for our fellow humans. The ecological virtues, as Nash (1991) calls, them, deserve promotion throughout civil society, not least of which in churches and schools. As more people think globally and act locally contemporary society can obviate the potential problems of imperfect markets and governments. Governments need to continue to extricate themselves from meddling in domestic and international trade, and focus more on the essential tasks of providing public goods to improve information and understanding, to facilitate market exchange by lowering transaction costs, to defend competitive markets, to ensure macroeconomic stability, to provide social safety nets against exogenous shocks and transfers across nations and generations. Participatory approaches to governance, based on the principle of subsidiarity, are key to governance that advances the aims of efficiency, compassion and humility.

In summary, through markets, ethics and governments we must render environmental stewardship compatible with survival for poor households else we face catastrophic loss of the human and non-human elements of creation in large tracts of the low-income tropics. The past couple of decades have brought important advances in our understanding and operation of each of those three basic institutions. While the challenges are great, there is reason for hope.

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[1] It is worth pointing out that since it is rare to find any change that would not make someone worse off, the Pareto criterion in its strict sense is relatively useless. This has caused economists to adopt the Hicks-Kaldor concept of "potential" Pareto improvements, wherein the gainers could in principle fully compensate the losers from a particular reform, regardless of whether such transfers are feasible or likely. This reduces the Pareto principle to utilitarianism.

[2] This relationship's high status within the discipline is clearly reflected by its articulation in the First and Second Theorems of Welfare Economics.

[3] It should be pointed out that eco-imperialism is sometimes the outcome but rarely the intent of most conservation groups. As Kreuter and Simmons (1995, p.161) put it in discussing the ivory trade ban, "[t]hey are simply reacting to a situation in which they capture psychic benefits from 'saving' elephants and are never aware of the cost of their actions. What is more, they have little incentive to find out about the consequences of their actions or ethical implications." This harmful ignorance is reminiscent of early economic development advocacy.

[4] Barrett (1996, forthcoming) advocates fairness theory as a way to include both distributional and procedural justice considerations in theorizing about sustainable development.

[5] Turner and Pearce (1992) offer a related construct they call the "sustainability paradigm".

[6] See Arnsperger (1994) for a good survey of the literature on fairness theory.

[7] Those sympathetic to the Brundtland Commission definition of sustainable development will notice that fairness theory provides a foundation mandating equality of opportunity sets across generations.

[8] The active market in sublet housing in most college towns offers clear evidence of this.

[9] The principle of free entry pertains to property rights, as well. Restrictions on foreign ownership of resources (e.g., land or corporations) inhibit transactions that enhance social efficiency, including the acquisition and gazetting of lands by conservation NGOs.

[10] I am concerned, however, my and others research on the relationship between the poor and environmental degradation not induce inappropriate villainization of the poor.

[11] Ostrom (1990) and Bromley (1992) offer excellent summaries of this rapidly emerging literature. Dasgupta (1993) offers an excellent discussion of the importance and power of internalized norms and Putnam (1993) offers fascinating insights on the value of persistent civic-mindedness in democratic society.

[12] Blümel et al. (1986) offer an especially good survey of the economics of public goods.

[13] Radio and television broadcasting in the U.S. is an obvious example. Meyer (1996) offers a nice discussion of this in the context of a developing country.