For the management of renewable resources, there are two principles for sustainable development: harvest rates should equal regeneration rates, and waste emission rates should equal the natural assimilative capacities of the ecosystems into which the wastes are emitted. Regenerative and assimilative capacities must be treated as natural capital, and failure to maintain these capacities must be treated as capital consumption. The concept of the economics of sustainable development is discussed within this context. As growth in the physical dimensions of the human economy pushes beyond the optimal scale relative to the biosphere, it in fact makes us poorer.

Herman E. Daly is currently Professor at the University of Maryland School of Public Affairs. From 1988 to 1994 he was Senior Economist in the Environment Department of the World Bank. Prior to 1988, he was Alumni Professor of Economics at Louisiana State University, where he taught economics for twenty years.