# **_3.2  Limits to innovation – managing environmental common property resources_**

The concerns raised by early studies<sup>8</sup> forecasting population pressure on resources receded quickly as technological innovation rapidly raised agricultural productivity and kept the prices of some commodities down. More recently, widespread concern over environmental common property resources has again raised issues of sustainable development.

A relentless demand for continuing adaptation and innovation is generated by the world‘s growing consumption needs, with increases in per capita consumption levels and population growth. Technological progress has certainly increased production, but this has not been without negative ramifications. Common property resources are under pressure from activity to meet rising consumption requirements. For example, fertilizer runoff has increased with agricultural intensification, creating lowoxygen ―dead zones‖ in coastal oceans (Map 1).

While market forces and ingenuity can find ways to better manage the use of non-renewable resources that are clearly priced, it is proving more difficult to conserve resources that are unpriced or underpriced, such as oceans and the atmosphere. Even to understand the intricacies of environmental change is a challenging task for scientists ― and organizing collective action to avert negative consequences is a challenging task for political leaders even at local levels, let alone national and global levels.

These factors combine to create a daunting list of needed adaptations and innovations, which are complex to develop as well as to implement. The World Development Report 2010 summarizes some of the measures needed just for sustainable food production (World Bank 2010a). To manage land and water resources to feed 9 billion people and protect natural systems, they point to the need for politically daunting measures, such as:

- building flexible international agreements

- pricing carbon, food and energy

- redirecting agricultural subsidies

- strengthening the policy environment for natural resource management.

As the World Bank (2010a) points out, food demand is rising with growth in incomes as well as in population size. Climate change will make it harder to meet that food demand. A huge increase in productivity will be needed at the same time as huge increase in regulation to protect natural systems. However, the report takes as given the projected rate of population growth, perhaps because it was outside its already enormous scope to discuss policies that might alter its trajectory.

Yet population size _is_ amenable to policy, as we discuss below, and makes a big difference to the size of adjustments required on other fronts. Models vary, but the World Bank (2010a) estimates that to meet the growing demand for food between 2005 and 2055, agricultural productivity will need to rise by 64 percent under the assumptions of the ―business as usual‖ scenario and by a further 80 percent under the assumptions of projected stresses arising from climate change (Figure 1). Yet the model indicates that if population remained constant at the 2005 level, agricultural productivity would need to rise only 25% under the ―business as usual‖ scenario ─ i.e., more of the required productivity increase under the ―business as usual‖ scenario is necessitated by population growth, than by increases in per capita consumption.

Conventional estimates of GDP growth are misleading on the sustainability of production possibilities, because they ignore the depreciation of natural capital (Arrow et al 2004, Dasgupta 2010).

> ―Since GDP is the total value of the final goods and services an economy produces, it does not deduct the depreciation of capital that accompanies production—in particular, it does not deduct the depreciation of natural capital. In the quantitative models that appear in leading economics journals and textbooks, nature

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