systems of national accounts, analyze and continually improve their metabolic processes, explore emerging technological paradigms, and seek sustainable development paths. This is obviously a large agenda and can only be presented in cursory form. Seeking new remedies will require leadership on the part of government, strong partnerships with industry, and an informed and engaged citizenry. These changes are explored in three short essays.


In politics, numbers beat no numbers every time.

Jodie Allen, former U.S. assistant secretary of labor

The Swedish economist Gunnar Myrdal once remarked that the question must be asked before the answer can be sought. The existing system of national accounts does not ask any ecologically relevant question, nor does it provide any answers to fundamental issues of industrial transformation and sustainable development. The application of traditional macroeconomic indicators will not guarantee environmentally benign or sustainable development because the conventional measures of national economic performance (such as gross domestic product [GDP]) fail to measure adequately human, social, and ecological welfare. In addition, they often treat different forms of wealth differently and inconsistently and neglect inputs and outputs that are not marketed, leaving large parts of the economy and biophysical infrastructure unmeasured. One can trace the development of these accounting systems and the relationship among economic growth, resources use, and environmental pollution they imply through four distinct phases (Colby, 1990). Although one must be cautious when using this analogy across scales and institutions, similar patterns can be observed at the level of the firm.3

The first phase described by some economists as "frontier economics" describes a well-known situation in which profits are maximized with little or no concern for environmental impacts or the efficiency of resource use (Figure 2A). Essentially, concerns for environment and resources remain external to the calculus allowing environmentally rapacious behavior to go unnoticed or actually registered as a net economic gain.

This phase was replaced during the 1960s and 1970s in many developed countries by a phase of environmental protection, where increased reliance on command-and-control policies and assorted end-of-pipe controls allowed certain types of pollution to be decoupled from economic growth and output (Figure 2B). This decoupling is not, however, invariate. Cross-national studies by the World Bank have shown that certain environmental problems (e.g., carbon dioxide and solid waste) actual worsen with increasing economic growth, suggesting that much more aggressive policies aimed at decarbonization (use of less carbon per

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