Evolutionary Economic Theories of Sustainable Development

Abstract

Sustainable development has become the dominant concept in the study of interactions between the economy and the biophysical environment, as well as a generally accepted goal of environmental policy. So far, economists have predominantly applied standard or neo‐classical theory to environmental economic problems. In this article it will be argued that to fully understand a transformation of the economic system towards sustainability, standard environmental economics needs to be complemented by an evolutionary approach, that focuses the attention on irreversible, path‐dependent change and long‐run mutual selection of environmental and economic processes and systems. The article provides an overview of the main existing evolutionary contributions to environmental economics. Furthermore, a number of research directions of an evolutionary approach in environmental economics are discussed. It is suggested that such an approach should go beyond evolutionary theories of technical change, which dominate evolutionary economics so far, by including co‐evolution of economy and environment, sustainable consumption, endogenous preference change, and climate change modeling.