Climate change, raw materials scarcity and loss of biodiversity make the transition to a sustainable economy inevitable. To ensure a smooth transition the government must provide greater direction, and this should be based on a guiding vision that gives primacy to the pursuit of well-being – a broad concept of prosperity and welfare. This is the conclusion of the Council for the Environment and Infrastructure’s advisory report ‘Towards a Sustainable Economy: The governance of transitions’.
Sustainable economy requires a vision based on well-being
The Dutch government has set ambitious goals for sustainability for both the short and long term, such as a 49% CO2 emissions reduction by 2030 and a fully circular economy by 2050. But there is no coherent vision of what a sustainable society will look like, nor a roadmap for getting there. Such a vision should make the connection between economic, social and economic objectives. In view of the limits to growth that the earth sets on our current economic system, this vision should be based on a broad concept of well-being which goes beyond material prosperity to include aspects such as health and quality of life. Furthermore, creating this vision as advocated by the Council is not a one-off exercise, but a gradual process.
The government must strike a balance between old and new
The government wants the transition to a sustainable economy to inflict the least possible damage on society and rightly attaches importance to striking a balance between maintaining the existing economic structures and fostering structural change. However, the Council notes that, in practice, too often the source of economic renewal is sought within the existing economic system, and that this can hamper progress towards the sustainability targets as well as depress long-term national economic prospects. Right from the start of the transition, therefore, the government should pay more attention to phasing out particular economic activities wherever necessary. This will require not just a sector-by-sector approach to sustainability, but also a macroeconomic perspective on a sustainable economy as a whole. Moreover, existing legislation and institutional structures – which includes the government itself – favour established parties and interests over innovative newcomers wanting to enter the market.
The government should be more willing to regulate and adopt pricing measures
During transitions, the government is reluctant to use the effective instruments of pricing and regulation to get producers and consumers to embrace sustainability. This is particularly the case for internationally operating industries. The Council concludes that because these instruments are so effective they should be used sooner and more often in the transition process. In the Council’s view, the argument that sustainability harms international competitiveness is used selectively to avoid introducing appropriate measures, which can lead to unnecessary delays.
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