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Theodore Panayotou's book, Green Markets: The Economics of Sustainable Development, addresses one of the most important topics in international trade and international environmental law today: how to produce successful economic development without concomitant destruction of the environment. The phrase coined for this goal is "sustainable development." While sustainable development as a political and legal concept has been debated for several years, the fundamental economic implications of the concept have largely been neglected. Panayotou's book provides an accessible economic analysis of sustainable development that is essential to the formation of appropriate environmental and trade policies.
To understand the significance of the sustainable development concept and the importance of Panayotou's discussion, the concept must be viewed in the context of the development of both international trade and international environmental law. The international trade negotiations of the late 1940's failed to achieve the goal of establishing an International Trade Organization (ITO) to regulate the actions of nations in order to maximize the benefits of world trade.

Panayotou begins his consideration of the topic with several important observations. He first notes that, while human economic and technological developments have provided the means for addressing environmental problems, there are more examples of technological failures than successes. In this he finds three implications: (1) common causes of environmental degradation exist that transcend location, culture, and development; (2) economic growth alone neither causes nor cures environmental degradation; and (3) failure to understand what are insidious environmental problems results either in neglect or in interventions that treat the symptoms rather than the underlying causes.""

Panayotou's thesis is that economic growth and environmental protection are not contrary goals and that simultaneous efforts to achieve both can be actually complementary. Panayotou begins his exploration of this idea by pointing out several persistent erroneous assumptions about the interaction between economic growth and environmental safeguards. Panayotou notes that while most governments and environmental groups focus on physical manifestations of environmental degradation, ""the physical manifestations of environmental degradation are lagging and misleading indicators of unsustainable development . . . [instead,] economic manifestations of environmental degradation are the most useful indicators for those who wish to pursue sustainable development."" The results of this error are well-intentioned but misguided, as arereflexive reactions by environmental groups that call for treatment of the symptoms of governmental mismanagement, such as deforestation, rather than focusing on the root causes of resource misuse. This in turn prevents the formulation of effective policies for remedying the problem of resource mismanagement.

Theodore Panayotou

Theodore Panayotou, John Sawhill Lecturer in Environmental Policy, is a Faculty Associate at the Center for International Development, a member of Core Faculty of Sustainable Development, and a Faculty Fellow of the Environmental Economics Program at Harvard University. He specializes in natural resource management and environmental economics as they relate to economic development. He has been teaching environmental economics and sustainable development at Harvard for the past 15 years. In 1991, Panayotou received the Society for Conservation Biologys Distinguished Achievement Award in recognition of his efforts to utilize economic analysis as a tool of environmental conservation. He has published more than 100 journal articles and books including: Not by Timber Alone: Economics and Ecology for Sustaining Tropical Forests; Green Markets, Instruments of Change, and Environment for Growth in Central America.Panayotou received his PhD from the University of British Columbia, Vancouver, and his MA from York University, Toronto.