Deflated market prices promote unsustainable resource use
Resource depletion due to market price anomalies
Unsustainable development due to failure of price signals
Today's prices reflect an unsustainable economy. Market efficiency is not the only measure of economic health, and left to itself can allocate resources at ridiculously undervalued prices. For 60 years economists have built models describing the optimal allocation of resources over time. All the models implicitly assumed that the current generation holds all the rights, and it will conserve resources if it can sell them to its children at a profit. How can we be concerned about the long term if we are using a 5 or 10, or like the World Bank, 15% discount rate ? Such massive discounting of the future is one of the causes of artificially low valuation of our current natural assets. Sustainability is matter of intergenerational equity, a matter of transferring assets to the next generation, redistributing rights to future generations, to the poor, to other species on this planet. When objectives such as preserving biodiversity are added to the economic scenario, currently undervalued resources raise in price enormously.