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Objective values

Sustainability in a strong sense stresses the importance of managing natural resources, with their primary value (PV) or the value of ecosystems as a whole taken into account. As Bellamy and Johnson (2000, p. 267) point out, the new paradigm of integrated resource management15 recognises Moore's concept of 'the whole being more than the sum of the parts' and the 'diversity in values relating to natural resources'. PV is independent of individuals' preferences, since it is a summum bonum, that is, an intrinsic objective value ascribed to nature. Therefore, it is nonmeasurable. We have seen that Keynes's macroeconomics was conceived in the knowledge that policymakers have to organize material welfare in order to promote the ethical good, which may also be intended as ideal. In order to see how a macroeconomic model works when objective non-measurable values are admitted, consider the following situation: (a) PV of natural resources is recognized; (b) present agents can perceive this organic value by intuition, and in spite of this they have to behave rightly in order to respect future generations' rights to natural resources; (c) probabilities are numerically unknown, since there is very little or no experience about the future impacts of economic activities on the natural environment. Under these conditions, model (1)-(3) cannot be applied, while models (4)-(5) and (6)-(8) seem to be appropriate.

Since PV is non-measurable, it cannot be represented through a welfare function, and so it is rational to consider environmental physical indicators as intermediate targets or fixed targets, the achievement of which favours the pursuit of PV conservation. Let us focus on pollution, the reduction of which improves environmental quality and the functioning (health) of the natural system considered as a whole. Let us also consider the following simple input-output model of Leontief (1980, pp. 86-87):

where y1 is the agricultural production, y2 industrial production, y3 pollution eliminated through the industrial process of recycling, z the total quantity of pollution after waste recycling, c1 and c2 consumption of agricultural and industrial goods respectively, L employment, and the other symbols are known coefficients. Equations (9) and (10) describe the output levels of agricultural and industrial sectors, respectively. The net total pollution is represented by equation (11), which shows that pollution is the result of the production of agricultural and industrial goods, and it is reduced through recycling. Finally, equation (12) shows that the industrial process of recycling increases employment.

Let us use this model according the logic of model (4)-(5). Let us consider as fixed intermediate targets (a) a given level of total pollution, the control of which is needed for pursuing the PV objective, and (b) a given level of employment as follows:

where z is a fixed level of net total pollution, established according to the available scientific knowledge, and L is the established level of employment, which have to be pursued by means of two instruments: c2 and y3. The solution of model (9)-(13) is very simple. It is given by those levels of c2 and y3 that satisfy z = z and L = L.

Model (6)-(8) can also be applied in this case. The solution is given by the values of instruments that minimize the difference between the actual values and the desired values of intermediate targets.

 
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