(Elkington 1997; Esty et al. 2005; Mori 2011). It is crucial that we refrain from
compromising the three dimensions because of strong sustainability—physical,
social, human, and natural capital are non-substitutable (Pearce and Barbier 2000;
Ekins et al. 2003; Dietz and Neumayer 2007).
Two underlying problems in the sustainability of cities are externality and the
so-called tragedy of the commons. Externality refers to the choices and behaviors of
an economic agent that directly (technically) affect the satisfaction (benefit and
usefulness) of another economic agent without going through economic transactions
in the market. Unless property rights concerning externality are clearly provided for
and there is an environment where market transactions can take place, optimal
economic transactions will not occur.
This factor was clearly described in the theorem of Coase (1960). The essence of
the problem of externality lies in the inability to resort to economic transactions in
the market and, consequently, it becomes impossible to force offenders such as
polluters to take appropriate action that recognizes and takes into consideration the
costs imposed on people other than the polluters themselves. It can be said that
environmental issues are issues of externality (van den Bergh 2010). From this
problem of externality arises the problem of the “tragedy of the commons.” In the
use of common land where the relationship of property rights is unclear and there is
open access, seemingly appropriate decision-making by single individuals leads to
tragic results for the common land (Hardin 1968, 1998). An example that illustrates
this is the scenario where individual villagers make a decision to introduce an
additional head of cattle into the common pasture. Prior to deciding on their
investment, they respectively compare the potential income that they may be able
to earn with this additional head of cattle and the variable costs incurred accompanying their investment. If the former exceeds the latter, they will opt to invest in the
additional head of cattle. When each villager decides to invest in one more head of
cattle in the same way, the impact on the pasture will inevitably increase with the
introduction of each head of cattle while the anticipated income of the villagers who
have already put their cattle out to graze will decline, resulting in overgrazing,
depletion of the pasture, and no profit maximization.
It is believed that a similar situation as this tragedy of the commons is occurring in
cities. In that case, the first question we must consider is how much impact a single
city has on the global environment. There are, in fact, no cases of individual cities
having a serious impact on the global environment. Even in megacity areas,
populations are around the level of 30 million people, which is less than 0.5% of
the entire world population of approximately seven billion people. This leads to the
question as to whether attempts to assess and control individual cities are meaningful
in the context of the sustainability of the global environment and humankind. While
it is possible to locally optimize economic and social activities in each city, in most
cases cities can hardly be expected to engage in activities that consider environmental externality with little impact. In fact, assessment of the impact of individual cities
on the global environment indicates that the impact on a single city is almost
negligible. On the other hand however the aggregate impact on the environment
on a global scale of these cities, which as noted above represent most of the world’s
population of approximately seven billion people, cannot be ignored. This condition
164
K. Mori
compromising the three dimensions because of strong sustainability—physical,
social, human, and natural capital are non-substitutable (Pearce and Barbier 2000;
Ekins et al. 2003; Dietz and Neumayer 2007).
Two underlying problems in the sustainability of cities are externality and the
so-called tragedy of the commons. Externality refers to the choices and behaviors of
an economic agent that directly (technically) affect the satisfaction (benefit and
usefulness) of another economic agent without going through economic transactions
in the market. Unless property rights concerning externality are clearly provided for
and there is an environment where market transactions can take place, optimal
economic transactions will not occur.
This factor was clearly described in the theorem of Coase (1960). The essence of
the problem of externality lies in the inability to resort to economic transactions in
the market and, consequently, it becomes impossible to force offenders such as
polluters to take appropriate action that recognizes and takes into consideration the
costs imposed on people other than the polluters themselves. It can be said that
environmental issues are issues of externality (van den Bergh 2010). From this
problem of externality arises the problem of the “tragedy of the commons.” In the
use of common land where the relationship of property rights is unclear and there is
open access, seemingly appropriate decision-making by single individuals leads to
tragic results for the common land (Hardin 1968, 1998). An example that illustrates
this is the scenario where individual villagers make a decision to introduce an
additional head of cattle into the common pasture. Prior to deciding on their
investment, they respectively compare the potential income that they may be able
to earn with this additional head of cattle and the variable costs incurred accompanying their investment. If the former exceeds the latter, they will opt to invest in the
additional head of cattle. When each villager decides to invest in one more head of
cattle in the same way, the impact on the pasture will inevitably increase with the
introduction of each head of cattle while the anticipated income of the villagers who
have already put their cattle out to graze will decline, resulting in overgrazing,
depletion of the pasture, and no profit maximization.
It is believed that a similar situation as this tragedy of the commons is occurring in
cities. In that case, the first question we must consider is how much impact a single
city has on the global environment. There are, in fact, no cases of individual cities
having a serious impact on the global environment. Even in megacity areas,
populations are around the level of 30 million people, which is less than 0.5% of
the entire world population of approximately seven billion people. This leads to the
question as to whether attempts to assess and control individual cities are meaningful
in the context of the sustainability of the global environment and humankind. While
it is possible to locally optimize economic and social activities in each city, in most
cases cities can hardly be expected to engage in activities that consider environmental externality with little impact. In fact, assessment of the impact of individual cities
on the global environment indicates that the impact on a single city is almost
negligible. On the other hand however the aggregate impact on the environment
on a global scale of these cities, which as noted above represent most of the world’s
population of approximately seven billion people, cannot be ignored. This condition
164
K. Mori