AN AXIOMATIC APPROACH TO SUSTAINABLE DEVELOPMENT

The paper proposes two axioms that capture the idea of sustainable dev elopment and derives the welfare criterion that they imply. The axioms require that neither the present nor the future should play a dictato rial role. Theorem 1 shows there exist sustainable preferences, which satisfy these axioms. They exhibit sensitivity to the present and to t he long-run future, and specify trade-offs between them. It examines o ther welfare criteria which are generally utilized: discounted utility , lim inf. long run averages, overtaking and catching-up criteria, Ram sey's criterion, Rawlsian rules, and the criterion of satisfaction of basic needs, and finds that none satisfies the axioms for sustainabili ty. Theorem 2 gives a characterization of all continuous independent s ustainable preferences. Theorem 3 shows that in general sustainable gr owth paths cannot be approximated by paths which approximate discounte d optima. Proposition 1 shows that paths which maximize the present va lue under a standard price system may fail to reach optimal sustainabl e welfare levels, and Example 4 that the two criteria can give rise to different value systems.