Friday, March 26, 2010

What is sustainable society?

Dear Colleagues

What is sustainable society? This is a key question, and a good answer is that it is a society where quality of life will be as good tomorrow and in the future are it is today. Sustainable development is when the quality of life improves over time.

This definition has some of the characteristics of the question "What is a profit?" that was asked of Sir Henry Benson, a Chartered Accountant in an English Law Court some fifty years ago. After due deliberation Sir Henry answered that "A profit is the difference between two balance sheets".

Progress in development is the difference between two balance sheets of the community ... where the balance sheets are all the good aspects of the community netted by the bad aspects. The good and the bad are the values associated with different aspects of the community.

Most mines are not sustainable. By definition they extract the minerals from the ground, and the activity of mining reduces the amount of mineral in the ground. Each depletion in the resource is a step towards the end and therefore is unsustainable.

Timberlands may be sustainable or not. Too many forest exploitation projects are based more on immediate profit rather than sustainable profit ... or sustaining value. Old growth usually generates profit that is good, but way less than the diminution in value. A continuum of new growth and harvesting that creates profit and does not diminish value is sustainable.

Fisheries are sustainable when the seasonal replenishment of the fish population is as big as the seasonal catch. The profit in one year is maximum when the catch is a maximum ... but the value loss resulting from the future collapse of the fishery needs to be taken into account.

Sustainability ... is an important idea. Because it is important it should be measured. Suitable metrics are an integral part of the Community Analytics (CA) system.

Welfare is not sustainable ... but welfare may be valuable. This concept applies to individuals, to communities and to organizations. All economic activities should be value adding ... where an economic activity is profitable but not value adding, there will be, at some point, an economic dislocation. In its essence this is what has happened in the global financial sector (which became all too apparent in the period 2007/2008).

When the dynamics of an economy are well understood it is possible to do more with less.

In the current Haiti rebuilding plan there is an approach that may be described as almost 100% welfare in an amount of $11.5 billion. Some of these funds will go to support sustainable activities ... but most will be merely the spending of money to do activity where the value metric is little understood. Sustainable is when there are surplus producing activities ... where the value creation is bigger than the cost or more precisely, the value consumption. If the Haiti rebuilding plan were to be restructured around an optimization of value adding from resource use, maybe there could be results that would be an order of magnitude better!

Peter Burgess
Community Analytics (CA)

1 comment:

  1. Great post Peter. Very clear, concise description of sustainability. Now I suppose the question is: how can we better quantify value add/ value consumption?