Humankind & Resource Distribution—XIX: Ecological limits, sustainable prosperity and intergenerational justice

A machine that saves human labour may enlarge the possibilities of freedom, but what happens when the additional production it makes possible exhausts the resources upon which future production depends? The preceding part examined the distribution of productivity gains among those living today. The question must now be extended across generations. What constitutes a fair distribution of resources between those who can exercise economic and political power today and those who have yet to be born?

The distinction between physical scarcity and socially manufactured deprivation, established at the beginning of this series, is particularly important here. Hunger in the presence of sufficient food is a problem of access and distribution. The exhaustion of an aquifer through withdrawals exceeding its replenishment is a physical problem, although the institutions governing access may determine how rapidly exhaustion occurs and who suffers its consequences. Neither problem can be understood adequately by ignoring the other.

Economic activity transforms nature through labour, knowledge and technology. It does not create matter or energy from nothing. A forest, fertile soil, a river and a stable climate contribute to production even when their services carry no market price. The absence of a price does not establish the absence of value. Indeed, some of the most indispensable conditions of human existence become economically visible only after their deterioration imposes costs upon society.

Consider a community that cuts down a forest and sells the timber. The sale contributes to measured economic output. If the loss of vegetation subsequently increases flooding, soil erosion and the cost of obtaining clean water, expenditure on repairing the damage may also contribute to output. Neither transaction, considered in isolation, reveals whether the community has become wealthier. The relevant question is what productive assets and ecological functions remain after the transactions have taken place.

The World Bank’s Changing Wealth of Nations 2024 offers a useful framework for distinguishing annual production from the assets that sustain it. Its estimates incorporate human, produced and natural capital alongside net foreign assets. More than a quarter of the countries examined experienced rising real GDP per capita alongside declining real wealth per capita during 1995–2020.[1] Such divergence should prompt inquiry into whether present income is being secured at the expense of future productive possibilities.

Monetary valuation, however, has limitations. An increase in the value of machinery cannot necessarily compensate for the disappearance of a species, the irreversible contamination of drinking water or the destabilisation of climatic systems.

The possibility of substituting one asset for another varies with the resource and the degree of degradation. Sustainability requires physical indicators as well as financial accounts. A society may possess greater monetary wealth while losing ecological functions for which no affordable substitute exists.

The scale of the challenge is substantial. The United Nations Environment Programme’s Global Resources Outlook 2024 reports that global material extraction has tripled over five decades. Without significant changes in prevailing trends, extraction could increase by another 60 per cent between 2020 and 2060.[2] This is a conditional projection, not an inevitable outcome. It illustrates why improvements in resource efficiency must be assessed against the total volume of resources consumed.

A vehicle that uses less fuel per kilometre reduces the resource cost of a journey. If cheaper journeys encourage substantially more travel, the overall reduction in fuel consumption may be smaller than expected. Such rebound effects do not invalidate technological progress. They demonstrate that efficiency and aggregate environmental outcomes are distinct matters requiring separate measurement.

Nor does ecological responsibility imply that every society must reduce material consumption by the same proportion. A household without safe drinking water, adequate shelter or electricity may require greater access to material resources to achieve a dignified existence. A wealthy household may reduce its environmental footprint without sacrificing essential capabilities. An equitable transition must distinguish the resources required to overcome deprivation from consumption whose social benefits are modest relative to its ecological costs.

Climate change exposes this distributional problem internationally. The Intergovernmental Panel on Climate Change documents unequal contributions to greenhouse gas emissions and unequal vulnerability to their consequences.[3] Historical responsibility, present emissions, financial capacity and developmental needs provide different criteria for allocating the costs of mitigation and adaptation. No single criterion resolves every dispute, but ignoring these differences can impose disproportionate burdens upon populations least equipped to bear them.

Pakistan illustrates the economic consequences of ecological vulnerability. The World Bank’s 2022 climate and development assessment projected that the combined effects of climate-related hazards, environmental degradation and air pollution could reduce GDP by at least 18–20 per cent by 2050.[4] This is a model-based estimate of potential losses, not a prediction of an unavoidable contraction. It nevertheless underscores the importance of treating resilient infrastructure, water management and pollution control as investments in productive capacity rather than peripheral expenditure.

The distribution of water offers a concrete test. A farmer with reliable access to irrigation and capital for efficient equipment is differently situated from a tenant dependent upon uncertain supplies. Pricing water without addressing unequal access may penalise vulnerable users; supplying it without regard to depletion may encourage waste. Transparent allocation, monitoring of groundwater, appropriate incentives and protection of essential needs must therefore be considered together. The institutional challenge is to reconcile conservation with equitable access.

The same reasoning applies to energy. Removing environmentally harmful subsidies can improve incentives and release public resources, but sudden increases in energy costs may undermine the livelihoods of poorer households and small enterprises. A transition towards cleaner energy requires attention to affordability, reliable supply, retraining and the distribution of investment costs. Environmental policy that ignores these consequences may encounter resistance even when its scientific rationale is sound.

Intergenerational justice introduces a further difficulty. Future citizens cannot negotiate with present owners of natural resources or vote against decisions that diminish their inheritance. Their interests must be represented through institutions operating today: enforceable environmental standards, transparent resource accounts, long-term investment appraisal and independent scrutiny.

The choice of discount rates in public investment decisions also matters, since it influences the weight assigned to benefits and losses occurring decades hence. Uncertainty about future conditions does not eliminate the obligation to examine foreseeable risks.

A resource-rich region should not be judged prosperous merely because extraction generates revenue. The relevant tests include whether local communities receive durable benefits, whether ecological damage is prevented or repaired, and whether revenues from exhaustible assets are converted into education, infrastructure and other lasting capabilities. Where damage cannot be reversed, financial compensation alone may be inadequate.

The hypothesis emerging from this inquiry is open to empirical examination. Economies that protect critical natural assets while widening access to essential resources may achieve more durable improvements in human welfare than economies pursuing output growth without regard to ecological depletion. Testing this proposition requires comparisons over time of real wealth per capita, physical resource stocks, health outcomes, poverty, emissions and exposure to environmental hazards. It also requires accounting for environmental burdens transferred abroad through trade.

The purpose of an equitable economic order is not to distribute an ever-expanding quantity of commodities irrespective of their consequences. It is to enable human beings to live with dignity within the conditions that sustain life. The inheritance of future generations must include not only accumulated knowledge and productive equipment but also a habitable world in which those achievements can be used.

The next part will examine the international distribution of resources, technological capabilities and economic opportunities, and the institutional conditions for cooperation among nations.

Endnotes

1. World Bank, The Changing Wealth of Nations 2024: Revisiting the Measurement of Comprehensive Wealth, Washington, DC, 2024.
2. UNEP and International Resource Panel, Global Resources Outlook 2024: Bend the Trend—Pathways to a Liveable Planet as Resource Use Spikes, 2024.
3. IPCC, Climate Change 2023: Synthesis Report, Summary for Policymakers, Geneva, 2023.
4. World Bank, Pakistan Country Climate and Development Report, 2022; accompanying release, 10 November 2022.

[To be continued]

Dr. Ikramul Haq, Advocate Supreme Court, Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE), holds an LLD in tax laws. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He also served Civil Services of Pakistan from 1984 to 1996