Sustainable energy development (SED) : issues and policy

1 SA3 i E N V I R O N M E N T tA t3 ~~D E P A R T M E N T _t ^ PA PERS PAPER NO. 016 TOWARD ENVIRONMENTALLY AND SOCIALLY SUSTAINABLE DEVELOPMENT . POLLUTION MANAGEMENT S E R I E S sustainable Energy Development (SED): Issues and Policy Mohan Munasinghe June 1995 Environmentally Sustainable Development The World Bank ESD  rX Pollution & Environmental Economics Division Sustainable Energy Development (SED): Issues and Policy Mohan Munasinghe June 1995 Papers in this series are not formal publications of the World Bank. They are circulated to encourage thought and discussion. The use and citation of this paper should take this into account. The views expressed are those of the author and should not be attributed to the World Bank.  Contents Acknowledgments iii 1. Energy, Environment and the Economy: The Nexus 1 Current Status 1 Future Economic Growth and Energy Needs 2 2. Key Role of the Electricity Sector 5 Electricity and the Developing World 6 Power Sector Problems and Investment Needs in DCs 7 Electricity, Environment and Regional Concerns 9 3. The Need For Sustainable Development 13 Economic, Environmental and Social Approaches 13 National Issues 15 Transnational Issues 18 Global Issues 18 4. A Framework for Sustainable Energy 21 Integrated Approach 21 Identifying Sustainable Energy Options: "Win-Win" Options vs. Tradeoffs 23 Improving Energy Efficiency 26 Implementing Environmentally More Benign Technologies 30 Price Reform 31 Institutional and Regulatory Reform 32 SED Options Matrix 34 5. Sustainable Energy Development: A Case Study of Sri Lanka 37 Environmental Issues 37 Methodology 38 Application to the Sri Lanka Power Sector 40 Some Illustrative Results 42 6. Conclusions 47 References 49  Sustainable Energy Development Tables 1. Average Annual Growth Rates of Energy Demand and GDP 2 2. Electricity Demand And Its Share In Total Primary Energy 5 3. Growth Trends in Electricity, Energy and Economy 6 4. Electricity Fuels Share in Total Primary Energy 7 5. CO2 Emissions From Energy Use 9 6. SED Options Matrix 35 Figures 1. Past and Future Energy Demand 3 2. The Economic, Social and Environmental Dimensions of Sustainable Development 14 3. Conceptual Framework for Sustainable Energy Development 22 4. Complementarities and Tradeoffs Among the Three Main Dimensions of Sustainable Development 25 5. Three Scenarios of Emissions from Electricity Generation in Developing Countries, 1990-2030 29 6. General Methodology for Environmental Analysis of Power Systems 39 7. Cost Versus Health Impacts 43 8. Cost Versus Biodiversity Impacts 44 ii Environment Department Papers  Acknowledgments An earlier version of this paper was presented The author is deeply grateful to Vittal at the International Conference on Energy, Anantainula, Asitha Sandanaychke and Noreen Environment and Economy, Taipei, August Beg for assistance in preparing the paper. 1994. Thanks are also due to Karen Danczyk for editorial support. iii  Energy, Environment and the Economy: The Nexus The state of the environment is a major growth and human well-being. Economic growth worldwide concern today. Pollution in prior to the 1970s was always accompanied by a particular is perceived as a serious threat in corresponding global increase of demand for the industrialized countries, where quality of energy. As a direct consequence of the oil price life had hitherto been measured mainly in increases, decoupling between economic growth terms of growth in material output. Mean- and energy demand growth was achieved in the while, environmental degradation has be- mature economies of industrialized countries come a serious impediment to economic (ICs) which were able to reduce energy wastage development and the alleviation of poverty in relatively easily and also achieve a better energy the developing world. The growing evidence management by restructuring and through energy of environmental problems is due to a combi- efficient technologies. Such decoupling was not nation of factors. Over the last three decades observed in developing countries (DCs). As DCs the environmental impact of human activities are still in the early stages of economic develop- has grown considerably due to the increase in ment and have higher growth rates, there is a economic activity, population and per capita much closer linkage between economic growth consumption. and energy consumption than in industrialized countries (Munasinghe 1991). Among the human activities that cause changes in the environment, those associated Current Status with the energy sector have great impact. Energy production, conversion, transporta- At present developing countries comprise 77 tion and utilization have been and continue to percent of the world's population but utilize only be a primary source of local, transnational a quarter of the world's energy. A majority of this and global pollution. The environmental population have little or no access to any form of effects of energy are: groundwater and air commercial energy. A large proportion of the DCs contamination; land degradation and changes population live in rural areas and continue to rely in use; marine and coastal pollution; ecosys- heavily on traditional biomass fuels such as wood, tems destruction and loss of biodiversity; crop waste and animal dung. OECD countries, in damage to health, synethic structures and contrast, consumed over half the world's energy natural systems from SO2 and NO. and ash and nearly six times more energy per person than particulates which degrade air quality; and did developing and CEE/CIS countries. However, finally, greenhouse gas emissions which may energy demand has been growing rapidly in the have long-term implications for the global developing countries in the past fewdecades environment. (Table 1). In the last decade alone, the rate of growth of DC energy consumption has been about Despite such problems, however, energy six times that of the OECD countries and twice the services such as heating, refrigeration, cook- average world growth rate. ing, lighting, communications, motive power and electricity are essential for economic 1  Sustainable Energy Development The rapid growth in energy demand in DCs Future Economic Growth and Energy (driven primarily by economic expansion, Needs population growth, urbanization, the increasing penetration of energy-using products, and the The world economy is expected to continue to transition from traditional energy sources to grow at a healthy rate over the next few commercial sources) has surpassed the growth in decades. The World Bank estimates the GNP of energy production and power generation capaci- large industrialized countries (ICs) to grow at ties, thus creating shortages in primary fuels and an average rate of 2.7 percent annually over the electricity. To meet this rising energy demand, 1994-2003 period and that of DCs to grow at DCs require tremendous financial resources. In 4.8 ercent annuall over the same eriod with addition to the economic burden, environmental above average growth in East and South Asia degradation associated with an expanding (7.6 percent and 5.3 percent respectively). The energy sector compound the energy-related prospects for economic growth in DCs prompt- problems in DCs. ing a similar increase in energy demand are The crucial dilemma for the developing world is obvious. how to reconcile development goals and the The world's population is expected to grow by elimination of poverty, which will require 3 billion during the period 1990-2020, with increased use of energy and raw materials, with ninety percent of the increase taking place in responsible stewardship of the environment. DCs. Onlv eight countries are expected to This has to be done without overburdening their a already weak economies. Hence, the challenge and a significant portion of global energy facing DCs today is meeting the rising energy demand gronth, over the next 30 years: India, demand in a manner that will not absorb inordi- nate amounts of investment, which in turn China, Pakistan, Bangladesh, Brazil, Indonesia, would divertfunds ofrm msthen worthy develop- Mexico, and Vietnam (WDR 1992 and WEC would divert funds from other worthy develop- 1993). According to the WEC "high-growth" ment goals, such as poverty alleviation and the case, Acord to thergy "high-growth" proviion o eductionand halth are.case, world primary energy consumption is provision of education and health care. estimated to double to roughly 17.2 Mtoe Table 1 Average Annual Growth Rates of Energy Demand and GDP Erg Econonic Growth- --Year OECD D-.QC C&EEs world - OECO ECD- s Wrd 1961-70 5.0 4.1 5.2 4.8 4.7 4.7 5.2 1.7 1971-80 1.8 4.7 3.4 3.0 3.2 4.8 3.4 1.5 1981-90 0.8 4.7 2.2 2.3 2.9 5.6 1.3 3.8 Sources: WEC 1992. Khatib & Munasinghe 1992. 2 Environment Department Papers  Energy, Environment and the Economy: The Nexus (megatons of oil equivalent) in the next 30 years, almost double to 60 percent during the same with almost 90 percent of the growth coming period.The International Energy Agency (IEA) from the DCs (see Figure 1). Under this sce- has forecast that through the year 2010, world nario, the share of total energy consumption energy use will grow at an annual rate of 2.1 accounted for by the OECD will have fallen percent, with East Asian countries energy use from over 5.Q percent in 1990 to under 30 growing at more than 4 percent (World Energy percent by 2020, while the share of DCs will Outlook, OECD, 1994). Figure 1 Past and Future Energy Demand (Mtoe) 18 16 14 12- 0 0 10 0 OECD 8 CEEICIS 6-D 4- 2 I960 1970 1980 1990 *2020 Source: World Energy Council 1992, 3   2Key Role of the Electricity Sector Electricity is clean, versatile, easily accessible Electricity has not only transformed the quality of and simple to distribute. It is also essential to life and work, but also created one of the largest maintain a reasonable quality of life, and for industries, with worldwide revenues estimated at sustainable development. Due to this phe- more than $800 billion in 1992 (Flavin and nomenon, electricity is gaining a larger share Lenssen 1993). Thus, in addition to its widely of energy in final use and the demand for it is recognized role as a catalyst to economic activity increasing worldwide at almost twice the rate in other sectors, the electricity sector itself makes a of demand for primary energy. Currently, the direct and significant contribution to the economy. worldwide electricity demand is increasing at a rate of over 3.6 percent annually, which Despite a general recognition of the indispensable is slightly higher than the world's economic nature of electricity, one third of the world's growth rate, twice the population growth population is still deprived of access to electricity, rate and more than 1.5 times that of global mostly in developing countries. The ICs are the commercial energy consumption. Presently most electricity intensive, containing 16 percent of fuels for electricity production are claiming the world population and consuming almost 60 36 percent of total energy demand and in the percent of the globe's electricity. On average, next thirty to forty years, more than half the developing countries use only 500 KWh of elec- world's primary commercial energy sources tricity per capita per year compared with more would be utilized in electricity production. than 5000 KWh in Europe and more than 10,000 KWh in the USA (World Bank 1992). Table 2 Electricity Demand And Its Share In Total Primary Energy 1990 (actual) 2000 2020 OECD 6800 41 8600 - 2.40 10900 49.0 1.2 DCs 2630 30 5050 - 6.75 12000 47.3 4.5 C&EEs 2270 34 2850 - 2.30 3700 50.0 1.2 World 11700 36 16500 - 3.20 26600 48.3 2.4 Source: Khatib and Munasinghe 1992. 5  Sustainable Energy Development Electricity and the Developing World sumption increasing over thirteen fold since 1960. During this period electricity consump- Of the various forms of energy, electricity is tion has grown at a rate which is over 1.5 times particularly important in the context of the the rate of energy consumption and economic developing world. The provision of electricity growth (Table 3). greatlv enhances the quality of life in DCs particularlv for the poor. It improves health A direct relationship between electricity and standards, and assists in education and in economic growth cannot be deduced as easily motivating people. Rural electrification (RE) as in the case of total energy. This is mainly also helps to retard migration from rural areas because electricity growth depends not only on to cities and enhances opportunities for income economic growth, but also on the substitution generation and employment in rural areas. To of electricity for other commercial and non- the extent that it displaces less efficient and commercial energy. Such a substitution de- more environmentally damaging fuels, electric- pends on the cost and productivity of electric- ity is essential for sustainable development. ity use compared to other commercial fuels, Hence, given the vital role electricity plays in and also on the changes in quality and style of the development process, the future prospects life. In the more developed OECD countries, for economic growth are closely linked to the such substitution decreases as more energy provision of adequate and reliable electricity uses are shifted into electricity use, moving the supplies. Electricity demand in DCs grew very share of electricity in final energy to saturation. rapidly over the past three decades with con- Table 3 Growth Trends in Electricity, Energy and Economy Electricity growth Electricity/GDP Year OECD DC Woeld OECD -C E. W6rld 1961-70 5 4.1 4.8 1.6 2 4.7 1971-80 1.8 4.7 3 1.3 2 3.5 1981-90 0.8 4.7 2.3 0.9 2.2 2.7 1991-2020 0.7 4.2 2.2 0.7 0.9 0.7 Energy/GDP Electricity/Energy . Year n : OECD_ DC Worl-. OI) - . -ii.ld 1961-70 1.1 09 2.8 1.5 2.3 1.7 1971-80 0.6 1 0.5 2.4 2 1.8 1981-90 0.3 1.3 0.6 3.1 1.8 1.5 1991-2020 0.3 0.8 1.7 2.3 1.2 1.2 Source: Munasinghe 1991. WEC 1992. 6 Environment Department Papers  Key Role of the Electricity Sector Table 3 shows an interesting contrast between assuming no drastic changes in the past trends electricity demand and economic growth in with respect to demand management and OECD countries and DCs. Owing to the conservation, the World Bank estimates that the decoupling of economic growth from energy demand for electricity in DCs will grow at an demand in the 1970s, the ratio of electricity average annual rate of 6.7 percent in the 1990s growth to economic growth in OECD countries (Table 2). This compares with actual growth steadily declined. Developing countries which rates of 10 percent and 8 percent in the 1970s still have a long way to go in satisfying their and 1 980s respectively. Such rates of growth basic electricity needs showed a very high indicate the need for large additions in capacity. electricity/economy growth relationship in the The Asia Regions requirements dominate with past three decades. While it is evident that there almost two-thirds of the total, and coal and is a trend in OECD countries to decouple hydro are the primary sources- both which economic growth from dependence on in- have specific environmental problems associ- creased electricity consumption, in developing ated with their use (Munasinghe 1992). countries the electricity/economy ratio will remain relatively high. Developing countries Power Sector Problems and Investment will require more electricity in the future and Needs in DCs this growth in demand is influenced by the electricity share in their economies and energy Currently industrial and residential electricity demand, as well as by their economic growth. demand in DCs have exceeded their power Table 4 outlines this relationship. From the generating capacities, resulting in frequent table it is clear that the growing share of power shortages and blackouts. Power short- electricity fuels in total energy is increasing, but ages in any country affect it in two ways: they at a declining rate. This growth will continue handicap productive activities and delay social until electricity reaches a point beyond which it development. On the output side, electricity cannot fully replace other fuels (Khatib and shortages disrupt production. For India the cost Munasinghe 1992). of power shortages to the industrial sector has been estimated at 1.5 percent of GDP and in Given the benefits of electricity and its impor- Pakistanat 1.8 percent of aD Mnasin tance to the developing world, the demand for electricity can only grow. In the medium-term, 1992). Power shortages also discourage inves- Table 4 Electricity Fuels Share in Total Primary Energy (%) 1970 32 27 18 29 1980 38 32 25 34 1990 41 34 31 36 Source: Khatib and Munasinghe 1992. 7  Sustainable Energy Development tors by affecting production and requiring more trillion (in current terms) to finance future investment for on-site electricity production or capital investments. In comparison with the standby supplies. This not only requires more total projected annual requirement for DCs of investment by entrepreneurs in DCs where $100 billion for the early 1990s, the present capital is already limited, but it also distracts annual rate of electricity related investment in investors from their main productive activity. It developing nations is only around $50 billion. would (for small investors) increase the cost of Even this present rate is proving difficult to operation, since electricity from small private maintain. Developing country debt, which generation is more expensive than public averaged 23 percent of GNP in 1981, increased national supplies (Munasinghe 1990b). dramatically to 42 percent in 1987 and, although it has since declined to 37 percent due to Structural, institutional and financial problems improved economic performance and trade further exacerbate the already inadequate conditions, is still significant (World Bank, electricity supply in DCs. Poor operating 1992). Capital-intensive power sector invest- performances, poor maintenance of plants, ments have played a major role in this observed technical and non-technical transmission and increase. Investments required to meet growth distribution system losses and high fuel con- of demand for energy in DCs will rise to an sumption have resulted in high energy wastage average of $200 billion per annum in the late and economic losses. Poor maintenance prac- 1990s, or 4 percent of GDP. Added to this, tices account for some of the low availability of private investors are reluctant to re-enter those power generating capacity, which averages less DCs that continue to experience difficulties in than 60 percent for thermal plants in DCs, servicing their foreign debt (Saunders and compared with more than 80 percent in devel- Gandhi 1994). oped countries (World Bank 1994). In DCs, power plants consume 15-30 percent more fuel The future expansion of the power sector in DCs per unit of electricity than that of ICs (WRI also has serious environmental impacts to meet 1994). Transmission and Distribution system the growing demand. WDR estimates indicate losses represent a loss to DCs of about $30 that, under the worst scenario, emissions of billion a year through increased supply costs pollutants from electric power will rise tenfold (Saunders and Gandhi 1994). Inadequate tariffs bv 2030. In addition to the basic investments due to governmental policies and poor revenue mentioned above, the World Bank, in the 1992 collection due to inadequate metering, as well WDR, estimates incremental investment for as poor accounting and billing, have led to large energy-related environmental management financial losses and difficulties in raising programs in DCs in 2000 as follows: investment capital. While institutional building (training of power utility staff, modernization) *$2 billion for controlling particulate matter has continued to progress, conflicts between emissions from coal-fired power stations. government's role as owner and its role as operator of utilities, have affected sector perfor- *$5 billion for reducing acid rain deposition mance. Opaque command and control manage- from new coal-fired stations. ment of the sector, poorly defined objectives, government interference in daily affairs, and a *$10 billion for switching to unleaded fuels, lack of financial autonomy have affected and for implementing controls on the main productive efficiency and institution perfor- pollutants from vehicles. mance (World Bank 1992). *$10-15 billion for reducing emissions, effluents To accommodate the projected growth in and wastes from industry. electricity demand, assuming no major gains in energy efficiency, DCs will require about US $1 8 Environment Department Papers  Key Role of the Electricity Sector *$3-4 billion per year by the end of the century Electricity, Environment and Regional would enable a major program of research, development, and demonstration projects for Concerns renewable energy to be undertaken. Although electricity is relatively benign in use, Controlling emissions of particulates will raise the generation of electricity is one of the world's investment costs by about 1 percent, or 0.04 major environmentally damaging activities. percent of GDP. In areas where controls on While the energy sector contributes 49 percent sulfur dioxide and nitrogen oxides are neces- of greenhouse gases, electricity generation alone sary, a further 5-15 percent of capital costs (or produces more than 25 percent of energy- 0.5 percent of the regions' GDPs) would be related carbon dioxide emissions. During the incurred if low-sulfur coal or natural gas were past 20 years, half of all increases in energy- not available. With these investments, DCs will related carbon dioxide emissions were from be able, in 2030, to produce ten times as much electricity (Energy Analysis Program 1991). electric power as today, with lower emissions of Most of the growth in world carbon dioxide eletrticulater asntodacid rain-causithnr e onts. o emissions from 1971 to 1990 is due to the CEE particulates and acid rain-causing pollutants. and developing countries (Table 5). Taking account of the impact of energy effi- ciency and environmental considerations, the Despite alternative energy sources such as WEC (1993) estimates a broad order of magni- wind, solar, and biomass, the largest segment of tude figure for the cumulative investment new electricity in the world is projected to come requirements (at 1992 prices) of the world's from coal firing in the next several decades, and requirenergyeindus(atry992 overi the ntwent o this will bring related environmental problems energy industry over the next twenty-five to along with it (U.S. Industrial Outlook 1994). thirty years at around $30 trillion. By compari- son world GDP in 1989 was approximately $20 The expected growth of electricity generation in trillion. The WEC estimates that the DCs could DCs escted prously genera be investing in excess of $2 trillion (at 1992 DCs described previously is confronted by a prices) annually by the year 2020; over 50 variety of technological, economic, and environ- percent of world annual energy investments, mental problems. Although the electric power About $1.2 trillion annually will be needed to sectors in industrialized nations are concerned raise energy efficiency and environmental with environmental problems related mainly to standards in the former USSR to the average generation, in many DCs environmental issues level of the OECD. are not considered such a high priority. The Table 5 CO2 Emissions From Energy Use 1971 4380 2427 - - - 1980 5500 2750 1570 1180 37% 1985 5800 2640 1700 1460 - 1990 6550 2900 1700 1950 39% Source: Various IPCC Reports. 9  Sustainable Energy Development problems of the electricity sectors in the devel- their growing economies and the improvements oping world differ among regions and countries in people's living standards. China and India, (Winje 1991). which have almost 37 percent of the world's population (mostly rural and poor), are cur- Africa rently following a path of economic reform and will continue to depend on coal for electricity Many African nations import oil, and indig- generation over the next two decades. There- enous commercial energy resources play a small fore, these nations will continue to be the largest role in domestic electric power generation. This regional sources of transnational and global practice has worsened the debt situation in environmental problems in the future. With an these countries. In much of Africa, existing increasing awareness of regional and global electricity systems are isolated, and consist of environmental impacts of coal combustion, both small generation units that have low efficiency China and India are increasingly searching for and reliability. Therefore, the demand for ways to minimize environmental impacts of electricity usually exceeds supply. Confronted power generation while focusing on problems with these basic problems, many African such as inadequate supplies of electricity for governments are concentrating mainly on economic growth and to improve living stan- improving and expanding existing systems, and dards of poor rural populations. Another believe that environmental issues in the power major problem facing countries in this region is sector are relatively unimportant. Therefore, in the loss of power in transmission and distribu- this region, there is an urgent need for the tion. When compared to the typical rates of 6-8 development of national and regional electricity percent in the industrialized countries, these are master plans, with assistance from industrial- enormous: China, 16 percent (UNICEF 1993); ized nations (Winje 1991). In many parts of India, 22 percent; Pakistan, 28 percent; Africa there is substantial hydroelectric poten- Bangladesh, 31 percent; South Korea, 12 tial, but its exploitation has been subject to percent; Sri Lanka, 18 percent; and Thailand many environmental and social problems and the Philippines, 22 percent each. In contrast, (Akosombo Dam in Ghana, Aswan Dam in the United States and Japan had corresponding Egypt). values of 8 percent and 7 percent respectively (Munasinghe 1991). Asia Apart from the above problems, nations in the The consumption of commercial energy in region suffer from inefficiencies resulting from developing countries in the Asian region grew inadequate pricing and excessive governmental rapidly in the last two decades. Between 1980 interference. and 1992 energy consumption grew at an annual rate of 5.6 percent in east Asia and the Latin America and the Caribbean (LAC) Pacific and 6.8 percent in south Asia. While the dependence of oil has decreased in many Electricity generation in the LAC region is countries, the use of coal, an abundant resource distributed evenly between hydroelectric and in the region, has increased especially in China thermo-electric plants. The development of the and India. China is currently the world's largest power sector in many nations has been over- coal producer with an output of 1082 Mt shadowed by the general debt problem in Latin followed by India. The consumption of coal is America. In spite of this, the environmental expected to increase rapidly in the next two impact of electricity supply has been given decades. Although the percentages of electricity increasing attention in the last 10 years. Many generated from coal are 92 percent for China countries have begun to consider the environ- and 70 percent for India, current electricity mental impacts of mining fossil fuels and generation is inadequate to meet the needs of constructing large hydropower and thermal I10 Environment Department Papers  Key Role of the Electricity Sector power plants. In some cases reforestation ratios. Many of the above factors have also projects are now required by law. Concerted resulted in the emission of high levels of sulfur international action in Latin America will dioxide, nitrogen oxides, and total particulate ensure the development of an efficient electric- matter. Cooperation with industrialized nations ity system in a sound environment (Winje 1991). is needed to enable measures such as restructur- ing the fuel mix in the power sector, and Eastern Europe (EE) and Former Soviet implementing stack gas cleaning equipment, to Union (FSU) occur (Winje 1991). Technology could be one solution to lower energy intensity levels. EE and FSU countries consume a larger amount Historically, such technical advances have led of primary energy and electricity than industri- to large reductions in the amounts of energy alized countries in terms of energy intensity. required for any given economic activity - for Their electricity intensity is two to three times, example, the electricity required to produce a and the energy intensity is three to four times, ton of aluminium has declined steadily since the higher than that of developed nations. This is last century. mainly the result of the existence of vast energy resources in the region, which were made In Central Asia, another area of high hydroelec- available at highly subsidized prices. The tric potential, electricity planning is made inefficiency of energy generation, the poor difficult by conflicts with irrigation and by the quality of commonly used energy carriers such problems faced by the newly independent states as coal and lignite, and the large portion of in continuing development towards an inte- primary industries, contribute to these high grated system. 11   3 The Need For Sustainable Development The increasing level of environmental pollu- scarce resources. Problems of interpretation arise tion in both industrialized and developing in identifying the kinds of capital to be main- countries as well as resource depletion, have tained (for example, manufactured, natural, and led to a recognition of the need for ICs and human capital) and their substitutability, as well DCs to find a less material intensive develop- as in valuing these assets, particularly ecological ment path. In the past, industrial countries resources. The issues of uncertainty, irreversibility that faced a tradeoff between economic and catastrophic collapse pose additional difficul- growth and environmental preservation ties (Pearce and Turner 1990). invariably gave higher priority to the former. These richer countries have only recently The environmental view of sustainable develop- awakened to the environmental consequences ment focuses on the stability of biological and of economic progress. This model of economic physical systems. Of particularly importance is and social development has been adopted by the viability of subsystems that are critical to the many third world regions. However, an global stability of the overall ecosystem (Perrings increasing awareness by both ICs and DCs of 1991). Protection of biological diversity is a key the consequences of following such a path aspect. Furthermore, "natural" systems may be have led them to explore the concept of interpreted to include all aspects of the biosphere, sustainable development. This is an approach including human-created environments like cities. that will permit continuing improvements in The emphasis is on preserving the resilience and the present quality of life at a lower intensity dynamic ability of such systems to adapt to of resource use, thereby leaving behind for change, rather than conservation of some "ideal" future generations an undiminished or even static state. enhanced stock of natural resources and other assets. The social concept of sustainability seeks to maintain the stability of social and cultural Economic, Environmental and Social systems, including the reduction of destructive Approaches conflicts (UNEP et al. 1991). Both intra-genera- tional equity (especially elimination of poverty), Sustinabedvsthree key and inter-generational equity (involving the rights Suementstainableodev entironmental hasof future generations) are important aspects of eocalees-economic, 2)The enonmet and this approach. Preservation of cultural diversity social (see Figure 2). The economic approach acostegb,anbterkwldeocrig to sustainability is based on the Hicks-Lindahl esstainblee raies embedded inoless conceming concept of the maximum flow of income that cultures, . . cuturesshould be pursued. Modern society could be generated while at least maintaining wulduneed to enurage smcand the stock of assets (or capital) which yields would need to encourage pluralssm and these benefits (Solow 1986, Maler 1990). There strengthen empowerment and grass roots partici- is~~~~~~~~ an uneligcnet.fotmltn pation into a more effective decisionmaking iscanounde ryiconce optimatity and framework for socially sustainable development. economic efficiency applied to the use of 13  Sustainable Energy Development Figure 2 The Economic, Social and Environmental Dimensions of Sustainable Development ECONOMIC 0 E* fficiency * Growth * Stabitity * Poverty Biodiversity/Resilience* i * Consultation/Empowerment Natural Resources 4