Sustainable development--an institutional enclave (with special reference to the Bakun dam--induced development strategy in Malaysia).

Author:Keong, Choy Yee

Analysis of sustainable development has always been the Achilles' heel of the science of economics. Despite a plethora of attempts to articulate its theoretical concepts more closely and rigorously, the notion of sustainable development remains an elusive term that has been subject to a wide range of interpretations. The fundamental problem here is that the rigors of its theoretical constructs appear to have made little headway on environmentally disruptive problems arising from a number of unsustainable projects in the developing world. (1) Indeed, the magnitude of environmental disruptions has reached such an unprecedented scale that it poses the question of the analytical tools needed to deal with the present development impasse. This implicitly raises a far-reaching indication that managing sustainable development is not merely a matter of integrating environmental factors into economic policies, which has been believed to underpin the decision-making process, but it is also a matter of understanding the interaction between institutional forces and economic behavior.

The basic thrust here is twofold. First, it is contended that more effort is needed to understand the existing and potential constraints governing the achievement of sustainable development. This necessarily requires us to determine how the environment should be defined and conceptualized in policy-planning processes. Second, in order to come to grips with the problem of environmental disruption, it is necessary to examine the causal mechanisms that give rise to a range of unsustainable environmental transformation. Here, it is relevant to identify the institutional processes that legitimate the increasingly exploitative mode of capital accumulation. This institutionalized framework of analysis is therefore aimed at unfolding important clues for generating a sustainable mode of social regulation which can help to redirect an economy away from its potentially damaging and materially unsustainable form of development process. The mode of social regulation refers to an institutional ensemble encompassing elements ranging from concrete institutional structures such as legislation to intangible determinants such as values and norms of behavior (Jessop 1990, 174; see also Tickell and Pack 1995 and Drummond and Marsden 1999). These elements define rights, constraints, opportunities, and powers that influence the ways in which the real causal mechanisms are expected to operate. Social modes of regulation are essential for ensuring that the conditions for the accumulation process are put in place (Drummond and Marsden 1999, 51-53). Regulation as used here does not subscribe to the ordinary English term as a legal apparatus. Quite akin to the notion from system theory, it relates to the process that reciprocally adjusts to a given set of conditions to yield some orderly dynamics (Coriat and Dosi 1998, 9; see also Aglietta 1979).

Causal mechanism as used within the present context refers to a process or sequence of events or a set of conditions through which outcomes or empirical regularities are brought into being. The analytical explanation of the causation process is known as causal analysis, Causal analysis provides a useful framework to explain how underlying causal mechanisms can produce certain unsustainable practices. It also provides potentially useful insights on how the modes of social regulation can be employed to contain or mitigate those environmentally and morally unsustainable practices. This in turn allows us to formulate a sustainable resource management system that can harmonize economic growth with socio-environmental sustainability (see figure 1; see also below for further illustration). The scheme of the present investigation is demonstrated by a case study in Malaysia in connection with the promotion of a dam-induced development strategy which necessitates the destruction of a massive natural environment.

Sustainable Development in Retrospect

The notion of sustainable development is defined by the World Commission on Environment and Development (the Brundtland Report) as "development that meets the needs of the present without compromising the ability of the future generations to meet their own needs" (1987, 43). The report calls for the development of growth models that embrace the ecological concepts of sustainability. It also asserts the need to observe the ethical principle of intergenerational justice in terms of efficient allocation of natural resources so that the welfare of future generations will not be worse off than the present generation.

The central force of sustainable development picked up with remarkable frequency as an appendage of modern economic thought under the hand of Robert Solow when he embarked on a-vigorous attempt to espouse how economic growth may be promoted in such a way as to fulfill the needs of the present generation without compromising the ability of future generations to meet their own needs. Commanding the Rawlsian max-min principle (Rawls 197 1) (2) as a critical point of departure, Solow considered the conditions in which aggregate capital may be maintained constant over generations despite a declining stock of exhaustible resources. More specifically, Solow posited that constant capital may be maintained over an infinite time horizon if the Hotelling scarcity rent derived from the depletion of resources is reinvested in producible capital in order to compensate for the loss of exhaustible resources. The intellectual advancement of this line of approach to sustainable development is widely known as the Solow-Hartwick rule (Solow 1974a, b, 1986; Hartwick 1977, 1978a, b). (3) Based on this Solow-Hartwick rule, earlier generations could safely run down the pool of natural capital as long as the aggregate value of man-made capital and natural capital is kept constant over time (Solow 1974a, 41; see also Solow 1992 and 1993). So long as this principle of constant capital is fulfilled, it does not matter even if the natural environment is being irreversibly destroyed. This is because it is assumed that when natural capital is destroyed it can be replaced or substituted for with man-made capital. As Solow pointed out, "A sustainable path for the economy is ... not necessarily one that conserves every single thing or any single thing. It is one that replaces whatever it takes from its inherited natural and produced endowment" (1992, 25). It is also further conceded that "what history tells us is an important fact ... that goods and services can be substituted for one another" (1993, 181) and "we are in the everyday world of substitution and trade-offs" (1992, 25). Apart from this it is also assumed that the positive impact of technical efficiencies is more than enough to offset the negative impact of environmental degradation.

The Solow-Hartwick rule transcends further under the novel contributions of David Pearce, Kerry Turner, Anil Markandya, and Edward Barbier, who added a new distinctive trait into its rule of constant capital by imposing the need to preserve intact certain components of the natural capital as a condition for sustainability (Pearce 1987; Pearce et al. 1989; Pearce and Turner 1990). The main thrust underlying their extraordinarily suggestive works is that since some of the functions performed by the environment, such as those which serve as complex life support systems or as sinks for waste or as regulators for micro-climatic conditions, are not replicable by reproducible capital, so that natural resources must be exploited within their sustainable levels in order to maintain the resilience of the resource system over time (Barbier and Markandya 1990).

The resilience approach to sustainable development has been rigorously analyzed by C. S. Holling. Holling has argued that natural resources must be exploited in such a way that does not disturb the resilience of a system as a whole, in other words, it is Holling sustainable (1973, 1978, 1986). The resilience of an ecological system is related to its ability to absorb or adapt to shock and stresses and to reconfigure itself without significant decline in its crucial function as a life support system when disturbed. It is thus conceded that protecting natural capital resilience, in particular resources that provide essential ecological or life-support functions (i.e., critical natural capital), is crucially important in any strategy of sustainable development (Perrings 1997).

Holling's sustainability recognizes that irreversible destruction of some species in a resource system is permissible only if the system when disturbed tends to return to its ecological equilibrium. In other words, some degree of irreversible ecological destruction is not necessarily akin to unsustainable development if the environment when altered is able to return to its former ecological resilience. A series of contributions by Colin Clark (1976), Vernon Smith (1977), Anthony Fisher, John Krutilla, and Charles Cicchetti (1974), Richard Hartman (1976), Colin Clark, Frank Clarke, and Gordon Munro (1979), and Partha Dasgupta (1982) have explored an optimal control policy for natural resources such as fishery, forestry, and a wide range of biological stocks which have implications similar to the Holling operating principles of sustainability. Briefly noted, the control approach to sustainable resource management requires natural resources to be exploited in such a way as to avoid an irreversible course of resource extinction.

The theoretical underpinnings of sustainable development proceed with maximum rigor under the stimulating lore of Kenneth Boulding (1966), Robert Ayres and Allen Kneese (1969), Nichola Georgescu-Roegen (1971), Herman Daly (1977), and Charles Perrings (1987), where they argued that economic progress should be assessed within the physical foundation of economic activities. The key points underlying their arguments are that an...

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