GUEST SPEAKER: I'm here to talk to you today
about why mission of the World Bank's
new Office of Sustainable Development
should be to promote sustainable economic development.
First I'll explain what sustainable development means
in the context of global investment in developing
countries.
Then I will discuss why the World Bank ought
to put a premium on these particular kinds of investments
and why it ought to promote environmental protection
in its work.
To understand sustainable development,
we must first understand that the well-being
of the economic system is intrinsically
tied to the well-being of the environment.
The economy's functioning depends
on inputs from nature, which is then
exchanged among various market actors
and eventually output is waste into the environment.
The economy grows at a unsustainable rate
when the rate of resource consumption and waste
production exceeds the rate in which the environment can
regenerate and absorb waste products.
It is also important to note here
that economic growth is simply a measure of total resource
throughput.
It says nothing about happiness, health, safety, or sense
of community within a region.
Now that we've defined growth, we
can contrast it with the concept of development.
Development is the quality of improvement of resource
efficiency within a region.
To invest in projects that promote development
in poor countries is to invest in projects
that allow people to produce more with the resources they
already have.
These kinds of projects might involve investing in education,
investing in the construction of local hospitals and clinics,
or investing in research and development of crop seeds
that are less resource intensive.
While projects that promote growth simply
increase production and consumption,
projects that promote development
increase the efficiency of production and consumption
towards some end that enhances human welfare.
Economic growth is less important
than economic development because growth,
usually measured in terms of GDP,
is a flawed measure of progress.
There is nothing inherently beneficial
about economic growth.
This is because growth only implies an increase in resource
throughput.
But It doesn't take into account whether the resources are being
used in ways that efficiently maximize well-being
while minimizing resource consumption.
On the other hand, economic development
does a far better job of indicating economic progress.
Development implies that resources are being used
in increasingly efficient ways.
The more developed a country is, the more
of benefits from the resources it
has while minimizing its total consumption of these resources.
As it becomes more and more clear to people
across the world that development, not growth, should
be our top priority, then the base investment goals
would be in line with the goals of the rest of the world.
This is because investors will want the same thing
as anyone else, the maximum amount of benefit
they can get at the lowest cost.
Likewise, individuals who recognize development
as their goal want to receive the greatest benefit
from natural resources they use while minimizing these risks
consumption.
As the UN's international financial institution,
the World Bank's mission is to reduce poverty.
It should do this by promoting economic development which
insures the long-run integrity of economic systems.
If the bank instead chooses to promote economic growth,
it will be investing in projects that contribute to constructing
an unsustainable economic and social paradigm
with incredible inertia.
The longer economic growth remains the dominant measure
of progress, the more difficult it
will be to change our consumption
patterns in business practices to ones
that are more sustainable.
The World Bank may not look very far
in seeking out philosophical justification
for taking this measure.
Utilitarianism, the common philosophical foundation
for much of existing environmental policy,
tells us that we should take the forward-looking utility
maximizing action.
Choosing to make investments that promote development, not
growth, is just such an action.
This is because human well-being, in the long run,
is maximized when the very goal of the economic system
is to provide for human needs while maintaining
the integrity of the environment in the long run.
Human welfare is certainly not maximized
when the goal of the economic system
is to simply maximize consumption
without regard to the system's long-run viability.
Such economic growth reduces our collective welfare
because it leads to depletion of economic inputs,
natural resources, and it uses raw materials, as well
the accumulation in economic outputs
which are manifested by landfills and garbage patches.
Neither of these outcomes are ones that anyone would want.
If the World Bank's goal is to reduce poverty in the long run,
then let's take a long-run view of success.
As a UN initiative with a moral imperative,
the World Bank should work to ensure that it's investment
decisions are based on the utility maximizing philosophy
that promotes long-run human welfare.
Indeed investments and development related projects
pay dividends over many years, while investments
in growth related projects may only
provide for human needs for a short period of time.
It is the World Bank's responsibility
to take into account the long run
well-being of the environment because the viability
of economic systems depend on its sustained integrity.
To promote growth is to promote the idea that the economy can
continue to flourish independently
of the environment, an idea that is a fiction.
However, to promote development means
to promote human progress that is
sensitive to the environments carrying capacity
and actively works to promote environmental stewardship
while tending to human needs.
This is the goal on which all economies should be based.
To that end, the World Bank should
work to promote this idea in our newest economies
so that they take no time in choosing the best
method to promote the progress of their people.
Thank you.