Who Pays for Sustainability –   Present or the Future? 

When we discuss developing countries and their growth, the implication of the Big Push theory becomes critical. It says that all sectors in the economy are connected like industry, health, and education and to really grow, countries need to invest in all of them together. The idea is that instead of just focusing on things like factories or production, more importance should be given to social overhead capital, like roads, schools, and hospitals. These are the things that help other sectors grow in the long run. While governments do try to invest in this kind of capital, many economists have criticized the Big Push theory. The main reason being, that most developing countries simply do not have enough money to invest on such a large scale, which makes it really hard to actually follow what the theory suggests (Rosenstein-Rodan, 1943; Murphy et al., 1989). 

finance carries certain burdens within itself, which affect the present and the future generation disproportionately

Recently, at the UN Climate Change Conference (COP28) held in 2023, in Dubai, the focus was on sustainability and giving countries a path to move forward. But these sustainable long-term projects cost a lot. That’s where the debate starts—who pays for sustainability, us or the future? (Stern, 2007; Nordhaus, 2008). A country has many sources of finance, like international grants, international borrowing, taxes, and public debt. However, finance carries certain burdens within itself, which affect the present and future generations disproportionately. The present generation must grapple with taxes that are levied by the government, whereas borrowing and public debt are challenges that the future generation must shoulder. Now, even if they obtain financing, it comes at a cost either for us now or for the next generation later (Sachs, 2015; Krugman, 1994).

This debate can also be viewed from different perspectives, through a spatial lens and a temporal lens. Through the spatial lens, we see modern-day developed countries arguing about the present, claiming that developing countries currently pollute more. Strong-arming of the developing countries into unrealistic sustainability goals is also a part of this spatial lens. The temporal view, on the other hand, talks about the perspective of developing countries, which points out that the transition to sustainable practices is a long-term process and takes time to achieve (Roberts & Parks, 2007; IPCC, 2022). 

If it is the current generation that is causing environmental degradation, then why should the future generation pay?

Sustainable long-term projects are generally not easily change. This gives rise to an argument made by the present generation: ‘‘If we do not receive the benefits, then why do we pay for them?” The counter argument to this? If it is the current generation that is causing environmental degradation, then why should the future generation pay? Here, in this discourse  of public debt and the future generation, we see an interesting dilemma arise, that is, public debt is both a benefit and a burden to the future generation. How? The benefit arises when the government pays back the debt with interest, the interest being the earnings of the future generation. The burden lies in the fact that higher taxes will be levied by the government in order to raise the capital necessary for the debt repayment. Thus, public debt is both a benefit and a burden on future generations (Dasgupta, 2021; Stiglitz, 2019). 

But this issue of accountability must be brought to the forefront, into public discourse, right alongside sustainability. We are talking about a sustainable future, yes, but who is paying for it? It’s not just a matter of fairness—it’s also a matter of transparency. Pareto, an Italian economist from the early 20th century, gave a very interesting concept to solve this. Pareto efficiency is an economic concept where a situation is considered efficient if no one can be made better off without making someone else worse off. It talks about the distribution of goods between two parties and identifies a point or interval beyond which one party cannot do any better without harming the interests of the other. We need to arrive at a Pareto efficient point, somewhere in between, at which this financial burden is justly and transparently distributed between the present and the future (Weitzman, 2007; Heal, 2009)

Disclaimer: The views expressed here in the article belong to the author only.

Suggested Citation for this article:

Kataria, H. (2025) Who pays for sustainability –  present or the future? , Center for Research and Implementation of Sustainable Practices. Available at: https://crispglobal.org/who-pays-for-sustainability-us-or-the-future/.

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