Social Costs and Sustainability — an Overview

The 1995 conference on environmental externalities in Ladenburg, Germany has been the third of its kind: after Ladenburg in 1990 and Racine (Wisconsin) in 1992. Substantial research has been conducted on the valuation of external costs during the past few years and externalities have been used by both utilities and governments to a certain degree. Additionally, the growing understanding of environmental risks with a new temporal and spatial dimension, especially of global warming, has led to a search for new economic approaches responding to such threats. A central goal of the third conference on environmental externalities was to link the concept of social costs with the broader, more ecologically oriented approaches of sustainable development. The two areas contributing most to a non-sustainable development today are stationary energy conversion processes and the transportation sector. Hence, the goals of the 1995 conference in Ladenburg in 1995 have been: Presenting and discussing recent American and European valuation studies in the fields of energy and transportation,Reporting the progress made in the use of environmental and other external costs in national accounting systems,Discussing the suitability of measuring external costs and discounting future risks with regard to global environmental threats like global warming,Discussing the need of new economic paradigms to achieve sustainable development, and the question of how to measure sustainability,Informing energy utilities and governments about ways to internalize their externalities, e.g., by establishing carbon taxes and other pollution taxes and fees which take environmental costs into account,Analyzing examples of success and failure in implementing such instruments.