Cross-post from E&E forum...
Special report: Economics blind spot is a disaster for the planet15 October 2008 by Herman Daly
HERE is a salutary tale about the World Bank. The first draft of its 1992 World Development Report, dedicated to sustainable development, contained a diagram labelled "the relation of the economy to the environment". It showed a rectangle labelled "economy", with an arrow entering it labelled "inputs" and an arrow exiting it labelled "outputs". That was it.
It was my job, as senior economist in the bank's environment department, to review the draft and offer suggestions. I said drawing such a picture was a great idea, but it really had to include the environment. As drawn, the economy was receiving inputs from nowhere and expelling outputs back to nowhere.
I suggested we draw a big circle around the economy and label it "ecosystem". Then it would be clear that the inputs represented resources taken from the ecosystem, and the outputs represented waste returned to it as pollution. This would allow us to raise fundamental questions, such as how big the economy can get before it overwhelms the total system.
When the second draft came back, a large unlabelled rectangle had been drawn around the original figure, like a picture frame. I complained that it changed nothing. In the third draft, the diagram was gone. The idea that economic growth should be constrained by the environment was too much for the World Bank in 1992, and still is today. The bank recognised that something must be wrong with that diagram - but better to omit it than deal with the inconvenient questions it raised....
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