What is Economic Sustainability?
Economic sustainability is the term used to identify various strategies that make it possible to use available resources to their best advantage. The idea is to promote the use of those resources in a way that is both efficient and responsible, and likely to provide long-term benefits. In the case of a business operation, it calls for using resources so that the business continues to function over a number of years, while consistently returning a profit.
In most scenarios, the measure of economic sustainability is presented in monetary terms. The worth of assets and resources in dollar figures is common, as is identifying the amount of return generated by the efficient use of those resources. The idea is to aid in identifying areas of the operation in which resources are not being utilized in the most efficient manner, and take the steps to correct the situation. At the same time, the proposed changes to the operation are considered in terms of their overall effect on the production flow, making it possible to address any potential difficulties later in the process before the changes are actually implemented. Doing so means engaging in a strategy known as cross-sectoral coordination, which involves identifying what impact changes in one area of the operation will have on subsequent phases of the production process.
True sustainability encourages the responsible use of resources. This involves not only making sure that the business is making a profit, but that the operation is not creating environmental concerns that could cause harm to the balance of the local ecology. By being mindful of the impact of the operation on the local community, the business is able to choose raw materials that are more environmentally friendly and design a waste disposal strategy that does not cause damage. In the long run, attention to these types of details has the potential to increase the community’s investment in the continued operation of the business, and improve its chances for remaining a viable operation for a longer period of time.
While the concept of economic sustainability is straightforward, there are potential obstacles that may be found in different companies. Resistance to change can often lead to a less than efficient use of available resources. A failure to track expenses and justify expenditures will also have adverse effects on the long-term stability of the company and limit the potential for sustainability. For this reason, companies sometimes work with outside consultants who can evaluate the business operation with relatively little bias and point out what needs to be done to improve the sustainability of the operation.
The goal is to establish profitability over the long term. A profitable business is much more likely to remain stable and continue to operate from one year to the next. From this perspective, this strategy can be seen as a tool to make sure the business does have a future and continues to contribute to the financial welfare of the owners, the employees, and to the community where it is located.
Sustainable development is the way to go. It keeps our environment clean. My charity is building a green hospital. At present, we're in need of a sustainable water system.
@ GlassAxe- We facilitate change by changing the way we teach. Progress has never risen from a static environment. The shift to a new economy will be ugly, and change will be met by resistance from all sides. Creating an economic system based on sustainability requires shifts in domestic and foreign policy, industry, scientific research, and energy. This will require shifts in thinking in almost every discipline to create a generation of leaders in every field who will advance an outcome based approach to their work.
@ Istria- So basically what you are advocating is essentially ecological economics and sustainable economic development. I can agree with that, but to move the current global economic system towards an ultimately sustainable economic system would require moving away from the Fordist system that is almost universally applied now. Economists would need to design theories to facilitate this shift. The United States would need to shift from a consumer-oriented economy to a service based economy.
This is a tall order my friend...how do you propose that this occur? How do we change an economy that is almost 70 years in the making?
I think that economic sustainability applies to so much more than just microeconomics. Economic sustainability applies to the state of natural and design systems. At its heart, economics is the study of making decisions under scarcity. Until this point and likely into the near future, economic decisions were based on the most efficient use of resources relative to the designed environment, even though these resources come from the natural environment. There has been this train of thought that the planets natural systems are endlessly elastic, able to recover and impervious to the pressures of one species. The assumption is that we will design our systems and natural systems will adapt, but what we have found out is that the natural systems do not adapt in the manner that we had planned.
Sustainable economic development on the other hand is decision making and problem solving based on a desired outcome rather than what is the most profitable momentary outcome. In essence it turns the natural and design sciences on its ear, by shifting the way that problems are approached. Innovation occurs out of a need to reach a desirable future outcome, rather than exploiting what is available in the fastest manner possible. I would go a little deeper into this, but this is only a comment section, so I wanted to give people something to think about.
Post your comments