If you are on LinkedIn, like me, then you will have seen a post saying “Stop these political comments, this is a professional business platform”, or “What do these ‘green’ issues have to do with business or how we run the economy?”.
The answer is: Everything!
Admittedly, this is a simplification, but a true one.
At the same time, economics is not everything.
If that sounds a bit contradictory to you, then you better read on.
People think we can talk about one without talking about the other and that may be true for a small portion of economics and a small part of sustainability. But it’s not true if we look at both subjects more holistically.
The best way to start is to define what we mean, because then there is less opportunity to misunderstand each other.
The way I define sustainability here means living within one’s means – in other words, sustainable living is living in such a fashion that we can continue doing the same thing for a very long time without causing harm to the environment and future generations.
Economics is a (social) science describing how we humans handle the resources that we have (and sometimes we don’t have) to manage our overall needs and wants (a very important distinction, we’ll come to that later). What I mean when I say social science is that economics is all about us humans. The rest of the natural world doesn’t care about economics whatsoever.
We are social animals and driven by rational and irrational motives, hence economics is a reflection of both rational and irrational behaviours.
It is important to mention that because when I studied economics in the 1980s (showing my age) economics was trying to depict itself as a non-social science and tried to base its rules and perceived laws mostly on mathematics. It even invented the “homo economicus” meaning that it was assumed in economic modelling that we humans make (only) rational decisions. I thought at the time that was nonsense, but who was I to question the professors? It took a while and earned Daniel Kahneman a Nobel Prize to prove that we are not rational decision makers. No wonder economists got it wrong so often (and still do).
It is nevertheless important to note as we are still trying to come to grips with how economics (we humans) works. In other words, the situation is evolving.
It is also important to note that there is something like microeconomics, which is stuff to do with economic behaviour and performance on a household and company level. Then there is macroeconomics, which analyses the overall performance of a society, including inflation, unemployment and economic growth. Someone who has experience in running a business doesn’t necessarily have a grasp of macroeconomics and especially not the complexity of international finance and taxation (think: Trump).
Back to the original question, what does sustainability have to do with economics?
To begin with, we have recognised that economics is important but not a good measure of how well we are travelling as a society. There are more aspects to a society than economics or money. We also need social contacts, to feel safe and secure, and, increasingly, as we rediscover how dependent we are on our environment, to live within our environmental means. We need clean air and water but have taken them more or less for granted. Yes, we pay fees for access to water and expect it to be delivered to our taps clean and free of contaminants. When it comes to air, we pay nothing, yet without good quality air we get sick or even die.
You may have read recently that in some local communities our drinking water is not up to scratch. A community in the Blue Mountains found out that their water has PFAS limits way above the recommended health limits. PFAS stands for per- and poly-fluoroalkyl substances and includes several thousands of chemicals some of which are so-called POPs (persistent organic pollutants), known for their potential for bioaccumulation and toxicity. The ones found in the Blue Mountains water were POPs.
Are the relevant water authorities doing something to clean up the Blue Mountain’s drinking water? Yes, and we pay for that.
Is it sustainable to use PFAS in products? Well, no, but we didn’t realise that for some time. We have been using PFAS in products since the 1940s and it became more or less clear in the 1970s that PFAS may be toxic, but we only officially recognised this in the 1990s or so and as of 1 July 2025 PFAS (PFOA, PFOS and PFHxS) was banned in Australia. Why did it take so long? It has in part to do with economics or better, the influence of big companies on law and policy makers, especially in the USA.
How about clean air?
Below is a statement from the SafeWork NSW website:
“We are all exposed to very low levels of asbestos in the air we breathe. There are usually between 10 and 200 asbestos fibres in every 1000 litres of air. This means we breathe in up to 3000 asbestos fibres a day. Despite this very few people experience ill effects from such exposure.”
NSW has a zero tolerance policy of asbestos in anything. Asbestos is a so-called special waste or hazardous waste and anyone who followed the story of the asbestos contaminated mulch found in several parks in Sydney knows that a big fuss was made to clean up every bit of that mulch – and rightly so.
Yet asbestos in our air doesn’t seem to bother the government. In fact, the NSW Health website now speaks of asbestos as a “naturally occurring mineral”.
Clearly, this language is designed to alleviate people’s fear, although it is questionable whether the asbestos we find in our air in Sydney is from naturally occurring rock or from asbestos waste being released from (illegal or incompetent) demolition work.
I don’t want to harp on this for too long, other than to stress that this is one of the many inconsistencies in our daily lives and it does have to do with government and, importantly, economics.
To be fair, it may also be technically impossible to clean all the asbestos from our air, but in any event, the cost of doing so, would be prohibitive. Economics do play a role in sustainability.
Another connection between sustainability and economics is the waste levy, which now exists in most Australian states. The levy is what’s called an economic instrument.
The purpose of the levy is to make landfilling artificially more expensive so that alternatives to landfill (recycling) become more economically viable. Why, you ask?
You see, landfilling is a comparatively inexpensive (and profitable) operation and if there was no levy, most waste would end up in landfill.
In the internationally recognised waste hierarchy, landfilling is seen as the option of last resort, only to be used when no other option is available. The reason is that landfilling is not very sustainable. Throwing things away is not sustainable. In-built obsolescence is not sustainable. We can’t keep filling holes in the ground with things we don’t want anymore. It’s madness.
Why? Because these “things” or “waste” (most of them, anyway) can still play a role in our economy. We can recycle or reuse them or at least extract resources from them that can re-enter the economy. That in turn makes the resources we have last longer. The result: more sustainability.
I know, that still doesn’t answer the question why we need a landfill levy.
Okay, recycling means a couple of things. Take the yellow bin that most of us know. We throw materials in there that are clearly recyclable, such a glass, metals, paper, cardboard and some plastic containers. Firstly, the yellow bin content is picked up by a separate truck from the residual waste going to landfill. That’s an added cost. Then it all goes to a so-called MRF (Materials Recovery Facility) where we separate all the different materials into more clearly defined material streams. Then we have, say, a whole lot of old milk bottles. They go to a facility where the bottles are shredded and washed, up to three times, filtered, extruded into a sausage and then cut into tiny little pellets. These pellets then go to a plastic manufacturer to make new products.
Every step, every handling of the material in this chain is a separate and new cost and requires new investment into equipment, real estate, transport and so on, meaning the capital spent needs to be earned back.
The road from that yellow bin to a new product is pretty long and the whole supply and production chain is something relatively new, when compared to the already established supply chain from fossil fuels to plastic. We have been making plastics from fossil fuels for a while and in very large quantities. Making plastic from old (we call it post-consumer) plastics is relatively new. That means this way of recycling resources requires not only new investment but also the establishment of used plastic as a product. That takes time and costs money as well.
Every step of the way needs to earn money for anyone willing to do the step. Not everything ending up in the MRF is worth something. In fact, of 100 tonnes of “waste” arriving at the MRF, about 10 to 15 per cent are contaminants, which are not recyclable and have to be landfilled at the cost of the MRF operator. Of 100 tonnes of old milk bottles, only about 60 to 70 tonnes of new plastic pellets are produced, and on it goes.
Still not clearer on the levy?
The levy is an inducement to make a recycling industry worthwhile. Without it, we would still be landfilling everything.
Establishing new markets and trying new ways of production costs time and money and is inherently risky.
Welcome to the world of sustainability and economics.
As Harry Potter would say: it’s complicated.
Views are the writer’s own and are published for stimulating constructive discussion.