Sustainability, Texas style

What economists call “weak sustainability” is the notion that, as you deplete some stock of natural capital, you reinvest in some stock of replacement capital. An example might be taking some of the surplus from extracting oil and gas and investing in solar or wind energy so you’ve still got some supply of energy when the fossil fuels run out. But it doesn’t have to be a direct substitution. One of my friends loves to argue for taking some of the money you get from oil and gas revenue and investing it in early childhood education – building up human capital. Here’s the OECD definition for weak sustainability:

All forms of capital are more or less substitutes for one another; no regard has to be given to the composition of the stock of capital. Weak sustainability allows for the depletion or degradation of natural resources, so long as such depletion is offset by increases in the stocks of other forms of capital (for example, by investing royalties from depleting mineral reserves in factories).

Texas is not the sort of place where you think of sustainability as a guiding policy, but while they likely would flee from such a greenie-sounding label, that appears to be exactly what they’re doing to fund improved water infrastructure, Brett Walton reports:

Last year, lawmakers created a $US 2 billion water fund with surplus money from oil and gas revenues. Low-interest loans from the fund will finance both water-conservation initiatives and water-supply projects that are included in the state’s $US 53 billion water plan.