Transaction costs and the transition to environmentally sustainable development

As global environmental problems mount, the transition to sustainable economic development seems elusive. A major reason is that the world is facing a monumental challenge in overcoming policy, market and institutional failures. The most formidable barriers are institutional rigidities and transaction costs that replicate the same patterns of resource-based development, despite the rising costs associated with increasing environmental degradation. Vested interests reinforce this institutional intransigence. Reorienting economies to foster more sustainable development will only succeed if we overcome these institutional barriers and costs.