The Economics of Sustainability

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Human society currently faces a number of unprecedented challenges, ranging from global climate change and biodiversity loss to peak oil and natural resource depletion. Unfortunately, competitive market economies systematically favor the conversion of ecosystem structure into economic products over its conservation in order to provide vital ecosystem services. In order to design a sustainable economic system, we must assess the desirable ends of economic activity as well as the scarce resources required to attain them. The most critical desired ends require cooperation, not competitive markets. Fortunately, humans have evolved as cooperative, social animals, and proper economic institutions can elicit cooperative behavior in order to attain these ends. Building a sustainable economy requires a scientific approach in which institutions for allocation are determined by the ends we hope to attain and the physical characteristics of the resources at our disposal, not by ideological commitments to a market economy.