PRINCIPLES OF SUSTAINABLE ECONOMY Radmilo V Pei University

PRINCIPLES OF SUSTAINABLE ECONOMY Radmilo V. Pešić University of Belgrade Serbia

WELL KNOWN FACTS • • Nature has been the partner of man in every productive activity for ages. Dangerous moves towards the end of the partnership. By changing environment we are going to turn natural forces against us. We have created damage to nearly every part of the globe It may become the most horrific change in the entire human history.

WHAT IS TO BE DONE? • • • How to keep the partnership going? How not to turn nature against mankind? Sustainable Development, Decoupling, Circular/Green/Blue Economy………How to transfer all these answers into reality?

HOW IS TO BE DONE? • • New way of natural resource pricing. Extraction costs should no more serve as a natural resource price foundations. In many cases extraction costs do not depend only on resource availability, but on the costs of technology applied. Full valuation of environmental services.

REPLACEMENT COSTS • • • Replacement costs are to be used in the determination of prices. Costs of providing the closest or the most realistic substitute or alternative for natural resources (NR) and environmental services (ES). Opportunity costs of providing the closest and the most affordable substitute for NR and ES.

WHAT IF THERE IS NO ALTERNATIVE? • • • Such resources and services are to be considered PRICELESS (Ackerman, F. and Heinzerling, L. ) Importance of precaution Shift from prices without values to values without prices (life, health, nature……) Pricing on incomplete or non-existing markets is not only pointless, it is misleading and harmful. Economics without values (with prices only) is worthless. Valuation of non-replicable valuables is methodologically unjustified and logically wrong.

WHAT REMAINS TO BE DONE? • • Some valuables should remain without a price tag. All other NR and ES are to be valued by the costs of their alternatives and substitutes. Cost/Benefit Analysis may seem useful in applied economics and policy analysis. It is theoretically elegant, but in real life it may be misleading and wrong (problems with non-market valuation, discounting, time inconsistency etc. ). We have to be aware of the limits of CBA. Instead of “elegant” econometrics tools, we need more economic history (Ferguson), more natural philosophy (Ponting), and more social ethics!

REFERENCES • • • Ackerman, F. and Heinzerling, L. (2004) Priceless – On Knowing the Price of Everything and the Value of Nothing. The New Press, New York and London. Atkinsson A. (2011) The Sustainability Transformation – How to accelarate positive change in challenging times. Eatrthscan, London, Washington D. C. Edwards, A. R. (2005) The Sustainability Paradigm – portrait of a paradigm shift. New Society Publ. Gabriola Isl. , Canada Gibson, R. et. al (2007) Sustainability Assessment – Criteria and Processes. Earthscan , London, Sterling VA. Ferguson, N. (2012) The Great Degeneration Ponting, C. (2007) A New Green History of the World – The environment and the Collapse of Great Civilizations.