On the economics of sustainability

The purpose of this paper is to work toward reconciliation of the neoclassical consumer choice axiom that “more is better” and the ecological concern that “more is not sustainable.” The key is to divide the desired “more” into its rival and nonrival components, for it is the consumption of rival goods (such as plastic) that strains the ecosystem. In contrast, the consumption of nonrival goods (such as bird-watching) leaves little to no footprint. While sustainability can be enhanced through changing preferences, a menu of taxes, subsidies and/or vouchers can also motivate greater nonrival consumption-and therefore sustainability-without reducing consumer welfare.