'Sustainable development' is a term that has been around for about 30 years. Over that time it has been interpreted in a variety of ways, divided broadly between pro-growth and anti-growth approaches.

In the last year or so several developments suggest the more enlightened interpretations are gaining ground.

One was the publication of The Skeptical Environmentalist by Bjorn Lomborg, a former Greenpeace member. This book, which has had a huge impact worldwide, exposes the litany of environmental myths and painstakingly documents the evidence that environmental quality has generally been steadily improving – at least in the developed world. Lomborg is visiting New Zealand in October 2003 as a guest of the Business Roundtable and the Resource Management Law Association.

Another milestone was the World Summit on Sustainable Development in Johannesburg , which may mark a turning point in the international environmental debate. The main theme of the Summit was that "poverty is the worst polluter", and that the best environmental policy is economic growth based not on government planning but on markets and private initiative.

Recently, Joseph Healy's book Corporate Governance and Wealth Creation in New Zealand reaffirmed the prime duty of company boards and managements to pursue the goal of shareholder wealth creation rather than a nebulous triple bottom line.

No sensible person is against sustainable development. The relevant issue is not the goal but what it means and how best to pursue it.

A common definition of sustainable development is that which "meets the needs of the present without compromising the ability of future generations to meet their own needs". A moment's thought, however, suggests this definition is hopelessly problematical.

A planner in 1900 concerned about the needs of people in 2000 would have worried about supplies of whale oil for lighting, firewood for heating, copper wire for telecommunications, rock salt for refrigeration and horses for transportation. With technologies such as CDs, MS-DOS and the internet not even in existence 20 years ago, how can we possibly know what the needs of people in 2100 are likely to be?

Efforts to pursue intergenerational equity need to take account of the fact that future generations will almost certainly be far, far better off than present generations. How much should relatively poor people today be asked to sacrifice to benefit future generations whose living standards may be equivalent to those of today's mega-wealthy?

Seen in this way, sustainable development – meeting the needs of the present without compromising the future – is a reality here and now. As Cato Institute director of natural resources Jerry Taylor has written:

Look at the data. Life expectancy across the globe has shot up over the course of the last two centuries. People are better fed, better clothed, and better housed today than ever before … Air and water pollution in the most industrialized nations of the world is a mere shadow of what it was decades ago. Even Third World countries have found that, once per capita income reaches a certain point, economic growth coincides with a cleaner environment … The human footprint on the environment is indeed becoming lighter and softer."

The pessimists have been wrong because they misunderstand the way the world works. Inflation-adjusted prices of natural resources have been falling for centuries. Even petroleum is becoming more abundant, not more scarce: supplies of conventional and unconventional oil could last for a thousand years. Solar power will be available for billions of years.

The greatest resource of all is human ingenuity. When things are genuinely in short supply, prices rise, people conserve more, or switch to substitutes, or find ways of increasing supply – all of which eases the shortages.

The outcome of the Johannesburg Summit suggests that a new agenda for sustainable development may be taking shape. Rather than focusing narrowly on 'sustainability', it recognised that what developing nations need is economic development from which environmental progress will follow.

Also, there is an increasing consensus about the best means of advancing sustainable growth. A recent World Bank study found that economic policies that led to the greatest amount of ecological sustainability were adopting market-determined interest and exchange rates, reducing government budget deficits, promoting market liberalisation, fostering international openness, enhancing the role of the private sector, and strengthening government and market institutions, coupled with pricing and other reforms in key sectors such as industry, agriculture and energy.

All of these findings are relevant to economic and environmental policies in New Zealand . Both our economy and our environment have benefited from efforts to get prices right, establish clear property rights (eg in fisheries), remove subsidies, open markets to competition, and corporatise and privatise state-owned businesses.

There is ample scope for further advances. Both the economy and the environment would benefit from decisive action on roading to reduce traffic congestion in Auckland . We should get serious about genuine environmental problems rather than over-react to remote ones such as global warming. Problems such as water quality, erosion, loss of native birds, destruction of native forests by possums, and smog in Christchurch are crying out for attention. The solution to many of them lies in creating clear property rights, developing markets for trading, and introducing commercial structures and incentives.

At a company level, there is also a need for clearer thinking about environmental issues. I know of no New Zealand business leaders who are not environmentally conscious, and who would not see a good environment as part of the overall quality of life. Companies in land-based industries may well see reporting on their environmental practices and standards as making good business sense.

But it is another thing again to advocate that firms should be forced to embrace triple bottom line accounting. There are serious risks that by going down this path, companies will neglect their prime duty to create shareholder value, waste money on consultants and corporate bureaucracies, and create multiple objectives which blur the accountability of boards and management for performance.

Sustainable development and economic growth are quite consistent – indeed growth promotes sustainability. Properly understood, sustainable development is not in conflict with the government's goal of returning New Zealand to the top half of the OECD income rankings.

For more information, contact:

Roger Kerr
Executive Director
Ph: 04 499 0790
Email: rkerr@nzbr.org.nz

David Young
Communications Manager
Ph: 04 499 0790
Email: dyoung@nzbr.org.nz

Web: www.nzbr.org.nz