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A model of
A “Hong Kong” model of sustainable
sustainable development development
Lawrence Wai Chung Lai, Kwong Wing Chau, Daniel Chi Wing Ho
and Frank T. Lorne 251
Department of Real Estate and Construction, University of Hong Kong,
Hong Kong, People’s Republic of China Received May 2005
Accepted December 2005

Abstract
Purpose – The purpose of this paper is to discuss a Coasian interpretation of a model of sustainable
development for Hong Kong that incorporates three segments, namely economy, society, and
environment.
Design/methodology/approach – The approach is analytical, using concepts of property rights
informed by Coasian neo-institutional economics and Yu’s ideas on the Schumpeterian process in
innovation.
Findings – First, the sustainable development criteria must be non-dictatorial, decentralized, and
compatible with market economics. The emphasis is contractarian rather than legislative or
administrative. Second, the essence of segment cooperation is to create a win-win situation rather than
an “integrated” rent seeking game, which will likely result in more values being created. Third, the
requirement that it be progressive over time implies that programs and policies that are duplicative
need to be avoided, and innovations are to be encouraged. Fourth, the requirement of satisfying only
two aspects of the three segments of cooperation implies a less stringent standard of making stepwise
improvements, and thus makes entrepreneurial efforts more likely. Last, the three segments of
cooperation, if practiced simultaneously and improved over time, can achieve most, if not all, the
principles in the Rio Declaration without aiming at a specific principle in the Declaration.
Research limitations/implications – This paper should focus on a “win-win” rather than a
mutually exploitative approach to public participation in sustainable development promotion.
Practical implications – This paper should assist policymakers and politicians in understanding
how sustainable development may be conceptually modelled.
Originality/value – The paper is the first paper that defines for Hong Kong a model of sustainable
development on the basis of Coasian economics, and contrasts it with other proposed models.
Keywords Sustainable development, Hong kong
Paper type Conceptual paper

Introduction
Inspired by the design of a logo adopted by the Council for Sustainable Development
(CSD), the purpose of this paper is to articulate a trinitarian “Hong Kong” model of
sustainable development that can satisfy certain objectives of sustainable development
in the long run without infringing upon the political, economic, and social constraints
of Hong Kong as a polity in China.
Although the term “sustainable development,” as popularly understood, was first
defined in the report Our Common Future (“Brundtland Report”) by the United Property Management
Vol. 24 No. 3, 2006
Nations’ (UN) World Commission on Environment and Development (1987) pp. 251-271
(the Brundtland definition), the first authoritative official set of UN principles of q Emerald Group Publishing Limited
0263-7472
sustainable development that represents the consensus reached by a large number of DOI 10.1108/02637470610660147
PM nations originated from the Rio Declaration made during the UN Earth Summit of 1992
24,3 (The United Nations Department of Economic and Social Affairs (DESA), 1992).
Since, then, many countries and local regions have adopted various versions of
sustainable development that each believe can most accurately capture the spirit of the
Rio Declaration, which was so sufficiently broad that indigenous efforts to define
sustainable development were not only permitted, but encouraged:
252 States have, in accordance with the Charter of the United Nations and the principles of
international law, the sovereign right to exploit their own resources pursuant to their own
environmental and developmental policies, and the responsibility to ensure that activities
within their jurisdiction or control do not cause damage to the environment of other States or
of areas beyond the limits of national jurisdiction (Rio Principle 2).
For any burgeoning new concept that can claim any significance, the stepwise
development of the concept is indicative of a serious endeavour behind it. If one looks
into the origin of the term “sustainable development” and its Brundtland definition
made in 1987, the Rio Declaration is merely a statement of intention. Both before and
after the announcement of the Rio principles, there have been substantial academic
work and concept elaboration across various disciplines centring on the theme
embedded in sustainable development. An example of a frequently cited milestone is
the work of Daly and Cobb (1989).
As a matter of government administration, sustainable development in Hong Kong
has an ancestry of a drive to environmental protection during the mid-1980s, in which
the Environmental Protection Department (EPD) was born. This fast growing
department (Lai and Fong, 2000, p. 28) was grouped with the Planning and Lands
Departments into the Planning, Environment and Lands Branch, which in turn became
the Planning, Environment and Lands Bureau after Hong Kong’s return to China in
July 1997. However, since 2000, the EPD was taken out of this bureau to be grouped
with food in 2000, and then with the Transport and Works Departments in 2002.
The first major government study to foster sustainable development, “sustainable
development for the 21st Century study” (SUSDEV 21), was commissioned in August
1997 and completed in August 2000. The study was managed not by the EPD, but by
the Planning Department. Out of SUSDEV 21 came the creation that was directly
placed under the Chief Executive – a Sustainable Development Unit (SDU) in
April 2001 to oversee an advisory CSD, established in March 2003. This comprised
appointed public and private members.
We can say that sustainable development in Hong Kong did not formally begin until
the commissioning of a study on the subject, SUSDEV 21, although there had been
laws, consultancies, and reports dealing with environmental issues prior to that study
(Mottershead, 2004b, pp. 90-5). However, the term could be detected in an internal
government paper from as early as 1993. Then, few people appeared to know what
sustainable development was or what it meant. This posed opportunities, as well as
dangers, for an appropriate institutional structure to emerge. The danger is greater in
the sense that many have stuck to their “deep green” interpretation of the Brundtland
definition and refused to accept its manifestation in the Rio Declaration[1]. Others, such
as Doyle (1998), condemned the Rio Declaration and the ensuing Agenda 21 outright as
endorsement of a globalised capitalist market economy.
What is the current position of the Hong Kong Government and the wider
community? A Hong Kong Declaration was made on February 26, 2004 in the Asia and
Pacific Leadership Forum (Leadership Forum) convened by China and the UN (Asia A model of
and Pacific Leadership Forum on Sustainable Development for Cities, 2004, para. 1). sustainable
The leaders who participated in the Leadership Forum thereby announced to the
world: development
We, the representatives of national and local governments, community groups, the scientific
community, professional institutions, business, and the United Nations and other
international agencies, having met at the Asia Leadership Forum on Sustainable 253
Development for Cities, reaffirm our commitment to the goals, targets and
recommendations contained in Agenda 21, the Programme for the Further Implementation
of Agenda 21 and the Johannesburg Plan of Implementation.
The Hong Kong Declaration specifies the following policy and action areas:
. leadership and local governance;
.
economic growth and job creation;
.
planning a better environment for urban housing and land use;
.
meeting basic social services;
.
increasing mobility; and
.
tourism and cultural heritage.

Why a “Hong Kong” model?

Physical scientists build models to shoot rockets to the moon. In the social sciences,
attempts to make predictable outcomes have seldom been successful. The risks and
uncertainties of a human system are so immensely complex, as experiments with
centralized planning economies in the last century have so miserably demonstrated.
Models in the social sciences serve a different function, often as guidelines and
platforms for discussion on policymaking.
At best, models in the social sciences could merely be succinct and consistent
descriptions of some selected dimensions of a real world phenomenon. These models
may or may not be comprehensive, but they serve as an expository vehicle for a
mission statement, a means for planning, discussion, and revision; a methodology for
creating solutions for issues raised; a filing cabinet for interpreting emerging
experiences, beliefs, and values; or a summary of issues for comparative studies of
alternative systems of the world. Everyday, decision makers are bombarded by
streams of visual, auditory, and other sensory data that in themselves might not have
any inherent meaning, but models will provide decision makers a system of rationality
to make sense of what’s happening.
Undoubtedly, the term model may mean different things to different disciplines.
In architecture, an actual scale model is used to represent a physical building structure.
This model is a miniature of something conceived by the architect. However, as
illustrated below, that need not always be the case.
Most people think architects should be designing and building models of physical
structures as blueprints for construction. Those in marketing think of architectural
models as means to attract buyers. Yet, architecture is an aesthetic summary of the
scientific, social, and economic infrastructure of a physical structure that serves a
function beyond marketing. Models can also be used as a platform for planners to build
some consensus[2].
PM The architect-planner partakes in the debate over social policies in relation to
24,3 sustainable development through the idea of “green buildings,” which stress
environmental friendly designs and a life cycle management of properly designed
buildings in terms of more efficient energy use, better noise abatement, and the
conservation of elements of heritage and cultural values. However, as argued by Kohler
(1999), this idea has become replaced by the much broader idea of sustainable
254 development. This has had a great impact on the state of architectural research (Kohler
and Hassler, 2002), rendering it more multi-disciplinary and open to the views of others
in decision making.
A much older interest of architectural theorists on the human and cultural aspects of
design that goes beyond the functional needs of end-users can be traced back to what
Franklin (2001) refers to as “people-environment studies.” Lewis Mumford, author of
the City in History (Mumford, 1961), is a case in point. But the shift in ideas of a highly
influential figure in this arena of inquiry, Amos Rapoport, is even more instructive.
Rapoport (1969) originally held that socio-cultural factors shaped built forms.
Developing this theme further, he held that environmental needs should support group
culture, values, and needs (Rapoport, 1977), and that a house needs to be interpreted as
part as a specific system of settings and ideas (Rapoport, 1985, 1990). However,
Rapoport recently argued that “it is impossible to relate ‘culture’ (or ‘society’) or
housing (or any built environment), because these concepts are too broad, general and
abstract.” However, “more specific and concrete variables derived from dismantling
‘culture’” can relate to various aspects of housing (Rapoport, 2001, p. 145).
While a discussion on the human characteristics of housing may be controversial,
the idea that a building has a life cycle or state of health similar to a human being has
gained consensus among researchers in regards to the “sick building syndrome”[3]
(Chan et al., 2004; Ho et al., 2004).
Not only is there a human, cultural, or health aspect to architectural planning, physical
science enters the planning process in many important ways. An extreme example of that
is the planning of an underground community close to Las Vegas, Nevada, in which
a community needed to be planned around the possibility of radioactive leakage from a
contemplated nuclear dump. The development of communities necessarily encroaches
upon the natural capital of the earth, and thus a scientific dimension of architectural
planning is not only relevant to the civil engineering and mechanical aspects of buildings,
but arguably involves many aspects of the physical and natural sciences.
If a model of sustainable development is to be designed or described, the approach
in doing so will necessarily be interdisciplinary. But models are made for a variety of
reasons. The intent of the model must be kept in mind when thinking about the results.
As tools for developing a constructive dialogue, as suggestions for perception
formulation, and as symbolic gestures of a mission statement worthy of pursuit,
models can indeed be seen as the architecture of institutions.
What will be a good starting point for thinking about a model of sustainable
development for Hong Kong? It will be easy to use the Brundtland definition of
sustainable development. However, the concept in Brundtland’s statement is largely
inconsistent with the idea of a positive interest rate, and has hence been rejected by
many economists. Even generously interpreted, the zero interest rate condition can
arguably exist only in the longest of long shots[4].
 Short of the “first best” (a term used by the economist to refer to the ideal), it is A model of
tempting to think of sustainable development as merely consisting of a set of policies sustainable
dealing with various sectors of a system in some comprehensive manner. The type of
policy that falls under sustainable development may be that what is related to the development
environment, social welfare, health, economy, labour, housing, and real estate
development. This way of perceiving sustainable development has the danger of being
too general. Indeed, it will be difficult to think of policies that are not considered a part 255
of sustainable development.
Yet, it is not policies per se that contribute to the essence of sustainable
development. First of all, there are existing policies that are relevant for fostering
certain aspects of sustainable development already in operation. Presumably, any
prudent policy-maker would have taken external effects into consideration when
policies were originally designed. Rarely would any sector adopt a policy independent
of consideration of other sectors. Second, any attempt to impose additional criteria on
an existing policy framework has the danger of over-regulating. For a traditionally free
market-based system such as Hong Kong’s, and one that is constitutionally designed to
operate as a “One Country, Two Systems” component of China, the danger of
over-regulation by policies inspired by sustainable development cannot be
underestimated (Friedman, 1962)[5].
Indeed, as pointed out in the introduction, every country and region of the world in
principle could be free to define what it considers to be policies of sustainable
development, as long as it does not encroach upon the jurisdiction of other
sovereignties. The good side of this is that it leaves considerable flexibility in terms of
how indigenous people can choose the lifestyle and system in which they want to live
in the future. The risk is that this is, in essence, an invitation to new policies that, if
unconstrained, would lead to rent dissipation that, in the long run, may lead to a
smaller, rather than a bigger, slice of the pie (Buchanan et al., 1980)[6].
In summary, a model can serve many purposes. Domestically, it can be used for
purposes of planning, as a platform of debate, and as a blueprint for future policies.
It can also serve as an overall constraint on new policies to be adopted or developed.
Generally speaking, the specification of a model should serve the purpose of
identifying areas that create values (rents) rather than destroy values (rents).
Models can also serve an international discussion and marketing purpose, and as a
proxy description of a system in comparison with other systems – an intellectual
dimension on comparative studies. Over the years, many international conferences
have been organized to allow countries to share their experiences with one another.
Each country usually has its own paradigm of promoting sustainable development,
capturing some, if not all, principles of the Rio Declaration. A model will also be useful
for that purpose, acting as a vehicle to communicate for system comparisons, rather
than merely adopting a new name for a set of old problems.

What is the “Hong Kong” model?

Intellectually speaking, the Hong Kong model of sustainable development can be
addressed both descriptively and prescriptively. Before an attempt to do so is made,
the remarks of scholars working in the area are duly recognized:
. . . Hong Kong [is] still struggling to operationalize the concept of sustainable
development – more than 20 years after the term was first coined – [and] is actually in
PM danger of locking itself into a dead end which others have already recognized and
attempted to circumvent in a positive and pragmatic manner. This, I contend, has less to do
24,3 with any fundamental inability to comprehend the concept but rather more to do with a
society that is unwilling to redefine itself in accordance with the basic tenets of
sustainability. . . (Hills, 2004, p. 14).
No doubt what Hills had pointed out is true, but the phenomenon is arguably not
256 unique to Hong Kong. Ask any citizen randomly in any major city of the world about
his/her views on sustainable development, and the reaction is unlikely to be consistent.
Sustainable development, as an ethical principle that citizens of the world should
collaboratively help formulate, is only an ideal; some might pity that it exists only in
fairy tales. Indeed, we contend that unless sustainable development principles
formulated are compatible with human nature in some fundamental ways, sustainable
development as an ethical principle is unlikely to be widely accepted.
The Brundtland objective is difficult to achieve. Indeed, as Mottershead pointed out,
the definition serves in many cases only as a catalyst[7]. For the purpose of searching
for a concept of sustainable development that will be more compatible with
neoclassical economics, some of our earlier research works have advocated a win-win
collaboration ethics as a foundation for pursuing sustainable development objectives
(Yu et al., 2000; Lai and Lorne, 2003a, b; Chau et al., 2004). Methodologically speaking,
it is a challenge to see if neoclassical economic concepts, with their underlying
assumption about human nature, could still be maintained if sustainable development
ethics and principles were adopted. This should be the research agenda of a broader
nature that this paper will not go into, however[8].
The objectives in defining a workable concept of sustainable development in the
form of a model are more modest. We ask:
(1) whether a self-definition is permitted under an international declaration of
sustainable development;
(2) whether there exists a bottom-up indigenous meaning of sustainable
development that has the potential to win a general consensus;
(3) whether there exists a top-down meaning of sustainable development that is
somewhat meaningful;
(4) whether (2) and (3) conflict with each other; and
(5) whether a resulting self-definition of sustainable development is indeed
sustainable.

In the introduction, we already provided an affirmative answer to Question (1) based

on Rio Declaration 2. For Question (2), let us first review several positions proposed by
some NGOs and various professional coalitions in the area. Christine Loh of Civic
Exchange has long advocated a concept of Natural Capitalism[9]. In a foreword of the
collections of essays put together by Mottershead (2004a), sensitivity towards the
constraint of “One Country-Two Systems” pointed out in Section I was evident:
Natural capitalism should appeal to Hong Kong as it offers increased profit and an
environmental solution . . . Hong Kong and South China would do well to adopt its principles
to develop a new form of capitalism that takes nature into account. Hong Kong would be an
ideal candidate because it presents a good example of an urban system with an unsustainable
metabolism. By examining such issues as its material resource consumption, land formation
 and building construction, waste generation, and energy usage, we can build a picture of the A model of
city’s ravenous appetite and then see how consumption can be reduced dramatically but
efficiency increased (Mottershead, 2004a, p. xxi, italics added). sustainable
But in one of her three articles, Mottershead (2004b) made a sweeping complaint that
development
there had been an absence of international engagement, integration, partnerships,
strategic direction, and research in Hong Kong on sustainable development[10]. She
also faulted SUSDEV 21 for ignoring the Rio Declaration, but wrongly considered such 257
notions to be private property and property values, a point to be taken up below.
After all, few local academics have ever fought for the protection of private property
rights in Hong Kong, which is now supposedly guaranteed under “constitutional
capitalism” (Lai, 2002). Mottershead (2004b, p. 104) asserted, with a footnote reference
to the work of Hanna et al. (1996), that such notions as property rights and property
values “had long been discarded internationally in favour of a broader-based
perspective” in the sense that these notions were cherished by the stakeholders who
expressed their views in SUSDEV 21. It would be unfair to say from this short
statement that Mottershead, a common law professor, has a dismissive view of private
property rights for Basic Law-governed Hong Kong. As for sustainable development,
this position can hardly be compatible with Rio Principle 2, “the right to development”
or the concept of a “more efficient and equitable world economy” envisaged by Chapter
2 of Agenda 21. Mottershead was, in fact, correct to say that a broader-based
perspective is required because there is a tendency among legal practitioners to
promote environmental legislation as a means to allow judges to assign rights.
The idea of Natural Capitalism has, rightly or wrongly, characterized the early
approach used within academic circles in regard to sustainable development
movement in Hong Kong: one that it is piecemeal and issues oriented. This was amply
revealed in the collection of essays put together in Mottershead’s study.
The said issues-oriented approach can also be seen among NGOs of the region.
For example, the Conservancy Association adopted a mission statement:
. . . advocating appropriate policies, monitoring government action, promoting environmental
education, and taking a lead in community participation.
But an adopted version of sustainable development cannot be found (www.
conservancy.org.hk/aboutCA/mainE.htm).
King’s (2004) article, titled “Sustainable development and civil society” in
Mottershead’s collection of essays, noted the following NGO activities:
Both Friends of the Earth (FoE) and the Conservancy Association (CA) have provided
strategic papers and ideas on sustainable development (CA’s Local Agenda 21, and FoE’s
1996 vision for incorporating Sd government strategy, notably the Territorial Development
Strategy), but have not been successful in achieving government support or endorsement of
these strategies (Mottershead, 2001) . . . The Private Sector Committee on the Environment
(now the Business Environment Council [BEC]) was established in 1989 by several large
businesses and financial institutions in Hong Kong. These “hongs” wanted to show the public
that they were willing to “clean up their act”. . . (italics added, Mottershead, pp. 258-9).
Exactly as described, the BEC has been active in recent years in providing various
educational, as well as certification programs, to the business community and the
public on the concept of sustainable development. It presented the following vision on
its web site:
PM That Hong Kong’s businesses can become a model for sustainable development in Asia
through the integration of environmental and social responsibility into existing business
24,3 practices (emphasis added).
The Hong Kong Sustainable Development Forum (HKSDF), established nine years
after the BEC in 1998, was similarly formed to coordinate efforts, raise awareness, and
“to foster, to support and participate in consensus building . . . ” The sustainable
258 development definition provided on the web site of the HKSDF stated the following:
Goal 1.Sustainable Development Generally

To bring our mission to fruition in Hong Kong, the HKSDF has endorsed and adopted a
localized version of the Goals of the US President’s Council on Sustainable Development
(italics added, http://hksdf.org.hk/mission.htm#objectives).
Likewise, other NGOs (e.g. The Hong Kong Council of Social Services) basically
support a vision for promoting sustainable development in Hong Kong, but
provide no specific definition of it[11]. World Wildlife Fund Hong Kong (WWFHK)
advocates conservation and a reversal of environment degradation, but has not
provided a specific definition for sustainable development.
One might wish to step back and ask: what is the ultimate objective of civil
involvement? According to King (2004, p. 259):
. . . A fundamental part of sustainable development is aiming towards a single objective and
active interaction between all stakeholders and parties concerned so that all needs are taken
into account” (emphasis added).
It cannot be said that this methodology of approaching sustainable development is
necessarily a good idea. Indeed, neither the HKSAR (Sustainable Development
Unit, Hong Kong Special Administrative Region, www.susdev.gov.hk/html/index.
htm) nor many other regions of the world may wish to endorse a single objective
of sustainable development to be their goal. Indeed, citing works of Hajer (1995),
Dryzek (1997),and Hills (2004, pp. 15-21) proposed to view sustainable development
as “an environmental discourse.” Facing what is called an “administrative
rationalism” of Hong Kong, Hills believed that a pragmatic interim solution is
required. Developing the theme mooted in Hills and Welford (2002), Hills argued
that SUSDEV 21 and the CSD notion of a “balance” between economy, society, and
environment should be replaced by the idea of “ecological modernisation” (EM) as
a transition to sustainable development. Hong Kong, hence, should move away
from its long established laissez faire “development principles.” Characterised by
Hills (2004, p. 40) “as a weak form of sustainable development”[12], this approach
“may well mirror current thinking within the Hong Kong Environmental
Protection Department” (Hills, 2004, p. 39). We agree with Hills as regards to the
need to be pragmatic about any proposal in respect of sustainability.
Hills suggested five reasons as to why EM is most suitable for Hong Kong:
(1) it does not call into question the continued existence of the capitalist system;
(2) “there is money in it for business,” as Dryzek (1997) and Hajer (1995) mentioned;
(3) ecological modernization says little about social justice and Third World
development;
 (4) ecological modernization can provide a framework within which to develop A model of
partnerships between the public and private sectors (i.e. through cooperative sustainable
environmental governance); and
development
(5) EM is not concerned solely with industrial production, but with the
environmental efficiency of the economy as a whole (the author claims that it
is particularly suitable for problems related to Pearl River Delta’s integration).
259
To put Hill’s ideas in context, there is a need to note that EM is, in fact, a
transformation of the term “Environmental Modernisation” (eM), which was coined by
Michael Jacob of the Fabian Society (Jacob, 1999) and holds that a win-win approach is
feasible (Davoudi and Layard, 2001; Davoudi, 2001). eM (or EM) has, in fact, become
the prevailing model for planning institutions in Europe (Batty, 2003, p. 76):
Ecological modernisation argues that economic growth is not the enemy of sustainable
development; indeed economic growth is seen as necessary to achieve environmental
improvements and sustainability.
EM has been referred to as “green capitalism” (Connelly and Smith, 1999, p. 58) and
criticised for supporting liberal market economies and existing government structures
and failing to resolve the fundamental problem of a society driven by “wants” rather
than “needs” (Mottershead 2004c, p. 536). The means to attain win-win solutions,
according to Hajer (1996, p. 249), is “technical and procedural innovations.”
While a “Hong Kong” model of sustainable development probably cannot be
conclusively described, the theme it seeks could be most succinctly described by the
logo representing it, as adopted by the CSD. The logo is in the form of a circular ring
consisting of three segments labelled Economy, Environment, and Society (EES), with
arrows pointing in a direction that, at best, capture more of a sense of relationship
rather than a sense of causality, and, at worst, reflect a lack of direction!
The logo might have had its origins in the SYSDEV 21 Final Report of 2000, in
which sustainable development in Hong Kong entailed the following definition:
Sustainable development in Hong Kong balances social, economic and environmental needs,
both for present and future generations, simultaneously achieving a vibrant economy, social
progress and better environmental quality, locally, nationally and internationally, through
the efforts of the community and the Government (SYSDEV 21 Final Report, para. 5.3.2)[13].
But apparently, the idea for the logo originated from the planner, as its three key words
constituted the “planner’s triangle” (Batty, 2003).
Broadly interpreted, the circular ring of EES with a directional arrow could be a
three dimensional configuration with the arrow representing a progressive element of
time. That is to say, the aspiration to resolve the compatibility of EES in a region
should be viewed as a continuous and trinitarian effort, with whoever or whichever
country or region utilizing this model being required to do two things. First, a manager
of sustainable development must pay attention to how the three areas of cooperation
can be pursued simultaneously. Second, the manager must also note that cooperation is
to be repeated in different forms and in different projects over time[14].
Indeed, there may be different interpretations for the logo of Sustainable
Development of Hong Kong that the CSD may hesitate to make explicit. However,
an evasive political stand in this instance may generate false expectations in various
PM directions that consume self-dissipating resources. At least three interpretations could
24,3 be seen as plausible interpretative variations of the logo:
(1) that there should be a mechanistic balancing of the voices of the interest groups
representing the environment, society, and economy;
(2) that there is a one-way circular flow of causation from one to the next in either
direction; or
260
(3) that the three components are going in different directions independently of any
status quote starting point.

However, our proposed interpretation, as described in this paper, could arguably have
economic consequences more favourable than those of these three interpretations:
(1) Model (a), egalitarian pluralism in decision making as regards resource allocation,
as one possible way to particularise Mottershead’s idea of “interconnectedness” or
“integration of economic, social, and environmental considerations” (Mottershead
2004c, p. 537), would not only lead to a fall in overall efficiency and the ability to
generate wealth, but in the limiting case, may lead to a rapid collapse in the
environment (e.g. where the environment itself becomes a battleground).
(2) Model (b), a fatalist trap of lock in a cyclical succession of different emphasis in
terms of decisions made or outcome one at a time, which can be compared to the
Aristotelian cycle of “monarchy, democracy and tyranny” can only spiral down
(rather than spiral up) in terms of the total level of satisfaction for all three
components;
(3) Model (c), a divorce of endeavours, is worse than (b) due to conflicts of
objectives without any rule to resolve them. In other words, Model (c) is
equivalent to no models at all, as any thing, say, idea, or entity, will be perceived
as consistent with the model as long as it mentions the magic words implied by
E þ E þ S.

Indeed, sustainable development can be a journey, with the arrow denoting a circular
spiral of projects created over time. The logo, therefore, must be seen as a two
dimensional representation of something taking place over three dimensions. The three
elements of cooperation not only need to be practiced at the same time, but have to be
done better each time[15].
Although supportive of a developmental and human-centred approach and
endorsing of the CSD idea of securing economic, social and environmental dimensions,
the Hong Kong Declaration has many ambiguities and potential conflicts that need to
be resolved. The declaration urged for the implementation of actions “in a spirit of
partnership” through “a participatory approach” (para. 6). The idea of partnership
suggests the existence of win-win solutions. However, the idea of a participatory
approach, “participatory processes,” (para.17) and “community involvement” (para. 20)
may not always entail “a spirit of partnership.” The declaration also correctly pointed
out that fighting corruption is a major link in governance (para. 8).
However, the idea of providing “favourable fiscal and financial incentives” (para.17)
tends to produce an environment for arbitrary allocation of resources, and hence,
opportunities for rent-seeking activities or “obstacles and constraints to progress”
(para. 13). The most important issue is the lack of a clear model for organising various
goals and objectives that pertain to the environment, economy, and society. As far as A model of
economic growth and job creation are concerned, the idea is “the adoption of advanced sustainable
and appropriate technology” (para.15), but there is no reference to the possibility of a
spontaneous emergence of innovations. development
In order for the engine of sustainable development to get rolling, it may be
important to emphasize a certain uniqueness and creativity of the system that is
inherited from market economics. Such creativity is essential for tackling 261
location-specific sustainable development problems. As pointed out in the previous
section, sustainable development should not just be a set of old problems with new
clothes. In order for the concept to be useful and significant, policies and programs
coming out from sustainable development should increase total values in overlapping
generations, benefiting both present and future generations.
There are reasons to believe this interpretation of the “Hong Kong” model of
sustainable development can increase values (rents) rather than dissipate values (rents):
.
The sustainable development criteria are non-dictatorial, decentralized, and
compatible with market economics. The emphasis is contractarian rather than
legislative or administrative.
. The essence of segment cooperation is to create a win-win situation rather than
an “integrated” rent seeking game, which will likely result in more values being
created.
.
The requirement that it be progressive over time implies that programs and
policies that are duplicative need to be avoided and innovations are to be
encouraged.
.
The requirement of satisfying only two aspects of the three segments of
cooperation implies a less stringent standard of making stepwise improvements,
and thus makes entrepreneurial efforts more likely.
.
The three segments of cooperation, if practiced simultaneously and improved
over time, can achieve most, if not all, the principles in the Rio Declaration
without aiming at a specific principle in the Declaration.

Entrepreneurship has certainly been an emphasis evident in some of the literature

attached to the concept of sustainable development in Hong Kong. In the preface to a
BEC publication titled Introducing the Hong Kong Business Guide to Sustainable
Development, Sustainable Development Council Chair and then-Chief Secretary of
Administration of the HKSAR, Donald Tsang, wrote:
Many entrepreneurs may feel uncertain about how to incorporate the important concept of
sustainability into their business operations in order to benefit their stakeholders, their
business partners and their employees. . . (Business Environmental Council, 2004).
There is no question that much work remains to be done on implementing sustainable
development as a general culture that also addresses business and social interests.
A statement of intent is just the beginning. A model will help define the task. Ideally,
Hong Kong would like to claim that all three aspects of cooperation (i.e. economic,
environmental, and social) have been fulfilled equally well, and have made Hong Kong
the best in the world in this sense. Yet, it will be more modest, and perhaps more
realistic, to believe that certain aspects are being fulfilled better than others, and could
PM hence be used as a showcase to the rest of the world, while other aspects can be
24,3 improved. Indeed, the model is so sufficiently general that even if all aspects are
currently somewhat deficient, the model can still be used to evaluate that deficiency,
and to re-express the will to improve the structure to a higher level in the next round of
the circular journey of sustainable development.
In practice, the segment of cooperation that is more prominent for a region will
262 likely depend on the growth phase of the region. While there is currently no existing
methodology to evaluate such a functional relationship, all countries and regions of the
world are trying various ad hoc experiments to make them “better” places in which to
live. Yet, there will be a difference in the means various countries use to enact this
cooperation. It can be done by involuntary nationalization, explicit regulation, or
explicit law. They can also be furnished by voluntary contracting via a process of
consultation and negotiation, with governments serving nothing more than as
information platforms. The Hong Kong Sustainable Development model, broadly
interpreted, has adopted the position that government should act as “an enabler for the
markets.” If so, market means of cooperative features are expected to evolve more than
the regulatory types as futures unfold.
To be sure, this process will not come about easier than shooting rockets to the
moon. Experiments, which include both policies and programs conducted at various
regional levels, can nevertheless be fitted into a general model, and with a will to
continuously develop in the form of a spiral circular journey as asserted, global
experience can be localized. There is a saying among practitioners in the area of
sustainable development: “Think Globally, but act Locally.” This type of thinking is
consistent with the spiral circular methodology where cumulative global experience
can indeed be localized. Thus, the Hong Kong model of sustainable development, while
developed for the primary purpose of serving local citizens, may also have the potential
to be developed into an international model. With respect to the Pearl River Delta
integration objective recognized among policymakers and academics alike, as pointed
out earlier, such a model of development might achieve a more pragmatic result.
Indeed, the Hong Kong model of sustainable development can be perceived as
prescriptive rather than descriptive. Any region of the world with a market-based
system could embrace a similar basic principle. Entrepreneurial policies and programs
may be viewed as arising from a private-public cooperation that can be considered an
“add-on” rather than a “displacement” for either a private or public function. It is on
this basis that the size of the pie can be expected to grow, not shrink. However, this
type of private-public cooperation requires ingenuities originating from the citizens
and firms interested in the building of their community. To the extent that this
direction of development is to be encouraged, human ingenuities require stimulus and,
to some extent, coaching and education in order to put abstract wills into concrete
programs. Thus, the model is consistent with various educational and certification
programs that are already ongoing in the region. It is also consistent with the general
constitutional principle of “One Country Two Systems,” under which Hong Kong is
supposed to operate.

The “Hong Kong” model as a Coasian model of sustainable development

The “Hong Kong” model of sustainable development is Coasian and may want to seek
reference in terms of prior academic work done in this area. Elements of uniqueness
and creativity are very much an important ingredient in any framework of sustainable A model of
development (Yu et al., 2000). Without these elements, it can be questioned whether sustainable
there is indeed a role for the government to act in this arena, as private incentives in a
market environment would have provided for such sustainable programs already. development
Concepts of such development have been ongoing (Lai and Lorne, 2003a, b, 2006a, b).
A version of this concept is articulated as follows:
.
Negative externalities can be curtailed and even transformed into positive ones if 263
the parties involved are willing to experiment in a transformation of regular
practices and mindsets.
.
The existence of entitlement or rights to natural resources is as important a
precondition for such an experimentation (Lai, 1993; Lai and Yu, 1995; Lai and
Lorne, 2003a, b, 2006a, b; Lai et al., 2005; Yu et al., 2000), as it is for the
structuring of a win-win contract (a set of reciprocal promises that are mutually
beneficial) for the parties involved.
.
The role of the state is to establish and protect resource entitlements and
facilitate voluntary negotiations among parties.
Central to the above idea is the Coasian notion that any externality can be captured as a
resource (Coase, 1960). Moreover, it must be pointed out that there is always a
stochastic element involved in any externality as an opportunity to be explored both
technically and socially by engaging in Schumpeterian experiments (Yu et al., 2000) of
various sorts. Such experiments can only take place where the parties involved have an
implicit awareness of cooperation and developing a “win-win” solution, rather than the
need to play a game of prisoner dilemma.
The model is surprisingly simple, and we can anticipate criticism from various
angles. Mathematical theorists of all persuasions would scoff at the use of the term
“model” in describing the concept. We argue that mathematical modelling will not be
possible, at least not as a conscious choice, except that it would evolve stochastically as
a positive spillover.
It is tempting to fit our concept in such a historical framework as that of the
“macro-history” of historian Huang (1990, p. 265, 2004, p. 145). Huang’s idea is that
history is the product of past efforts, and the present is the result of selfish and idealist
behaviour. It proceeds rationally in a teleological manner upward and outward, with
progress most efficiently driven by systems that are “mathematically manageable.”
We hold that we do not need to fit the current proposed model into a historical
framework. Indeed, the very essence of sustainable development puts a very different
meaning to the concept of time by going beyond the concept of mechanical time, and
thus, history may not repeat itself!
Neoclassical economists may also question whether the concept itself is merely a
semantic variation of the Coasian original proposition of bargaining. Yet, it can be
shown by examples and case studies that the bargaining parameters envisioned in the
Coasian framework of sustainable development are significantly different from that of
the original Coasian framework of bargaining (Lai and Lorne, 2006a, b). Mathematically,
while the original Coasian framework of bargaining focuses on seeking the optimal
equilibria of fixed dimensions, the Coasian framework of sustainable development
focuses on seeking adding dimensions to a previously existing framework of
interactions. That, we repeat, is the essence of a Schumpeterian experiment.
PM The Coasian framework of sustainable development really requires lawmakers to
24,3 go beyond a mindset of finding solutions to problems by increasing the quantity of
rules, and thus “assigning rights and liabilities” as such. Besides, a legal framework
that has tradable property rights could be an important option, but that is not
necessarily the right solution in any scenario. Therefore, we agree entirely with
Mottershead that sustainable development may require going beyond the issue of
264 property rights per se.

The application of the Hong Kong model

We hold that there can be a large variation of situations in which a win-win model can
be applied to Hong Kong’s situation, not so much as a descriptive statement of what
has happened, but rather as a prescriptive statement or speculation on what could have
happened among Hong Kong’s development episodes. Aside from the few examples
that were described in previous studies, ongoing research in the Faculty of
Architecture at the University of Hong Kong entailed a development of infrastructure
more conducive to the operation of the market principle.
Take, for example, the redevelopment of old neighbourhoods that the HKSAR
Government is currently contemplating. The case-by-case nature of this problem is
easily recognizable, and there is perhaps no uniform answer for the general question of
choosing between the redevelopment of neighbourhoods in the old urban core vs new
development in the new territories. Yet, there have been works done in the Faculty of
Architecture at HKU, and perhaps some works conducted by NGOs, that we think may
contribute to decisions being made on this question. All, in one form or another, have
contributed to a win-win policy, as described by the model discussed in this paper.
A Centre of Excellence for Sustainable Development with seed money was
established at the University of Hong Kong in the late 1990s, with the Department of
Real Estate and Construction of the Faculty of Architecture playing a pioneering role.
Recently, “sustainable cities” has become one of the multi-disciplinary strategic
research themes prioritised by the university. Member departments and centres, which
include the Centre of Urban Planning and Environmental Management in the Faculty
of Architecture, have been promoting sustainable development in the use of marine
and land resources since the early 1990s. The Department of Real Estate and
Construction, for instance, helped edit a special issue of the journal Aquaculture
Economics and Management in 2002 (Hodgkiss and Lai, 2003) in collaboration with
ecologists. It also made a contribution to the Encyclopaedia of Life Support Systems of
UNESCO (2004), developed a masters degree course “sustainable development and
property rights,” and established a building classification scheme (BHHI)[16], which
was prompted by a safety and health crisis in 2003 due to the outbreak of SARS.
The BHHI classifies buildings into different grades (A, B, C, and U) based on an
individual building’s level of achievement in safeguarding its health and
environmental hygiene. The reliance on observable data ensures a high level of
objectivity. Admittedly, the inspection of a building (estimated at HK$20,000 per
building) can be costly, but the department has also designed a win-win-win solution
that benefits third parties (by reducing health risks), and neither the government nor
property owners need to pay for the assessment directly.
To be sure, such an evaluation exercise has been conducted in a decentralized
manner, although sometimes it has involved the input of multiple professional bodies.
For example, the BEC attempted a Hong Kong Building Environmental Assessment A model of
Method (HK-BEAM) in 1997. HKU, as well as other tertiary institutions, also attempted sustainable
a similar assessment of evaluating local public goods that may handle environmental
and architectural enhancements in various ways. development

Conclusion
Land use planning in Hong Kong under constitutional capitalism is a matter of 265
“planning by contract” predicated on a leasehold land system (Lai 1996, 1997a, b, c,
1998a, b, 2002, 2004, 2005) in which private development rights are allocated by sale.
As both land leases and capitalism are protected by the Basic Law, any model of
sustainable development for Hong Kong has to embrace these features. A “Hong Kong”
model of sustainable development can (and should) be articulated for the purpose of
raising citizen awareness and an overall appreciation of the concept of sustainable
development, and also to reduce transaction costs in policy development and
consultation in light of these constitutional constraints. For a Pearl River Delta
integration initiative, it is believed that the model so articulated has a better chance of
gaining consensus for across-the-border decision-making processes.
The model proposed by the authors is not so much a description of or prescription
for what sustainable development would or should look like. Rather, what we propose
is more about governance and institutional structure that would be conducive to
sustainable development. This is an attempted approach to a highly contested subject,
about which there are so many different viewpoints and conflicting values. What is
more, it is a developing subject that will benefit from continued rethinking and
innovations. By defining the model in terms of institutional structure rather than the
end result, the proposed model should help resolve some present conflicts, as well as
cater to future innovations. In this way, the model itself is “sustainable” even in the
midst of conflicting viewpoints, values, and interests as well as changing parameters.
In this way, the model may hopefully improve the quality of the current debate on
sustainable development and help suggest a solution that is, in a way, “out of the box.”
The Schumpeterian dimension of the model puts emphasis on innovation and new
ideas, rather than on confrontational politics, to resolve conflicts, with the market code
of “win-win” as the guiding principle. While the authors have not assigned a “subject”
to the verb “win,” in the proposed model, any subject has to be one who has some
property rights or entitlements, and thus could become a party to contract or
negotiation. This is not a claim to truth, but an invitation to debate, which, if well
substantiated with good arguments and data, would certainly raise the standards of
intellectual discourse on (and hence means to) sustainable development.

Notes
1. See Mawhinney (2002) for some definitions of this “deep green tradition.” See Beckerman
(1992, 1995, 2003) for a complete opposition approach, which denies that sustainable
development is meaningless. We hold that neither position is tenable, but space does not
permit a dedicated theoretical discussion here. Suffice it to say, as to be demonstrated in this
paper, sustainable development can be incorporated into a Coasian economic “model”
informed by Schumpeterian reasoning. This model can deal with both the need for
conservation and economic and social development. See Yu et al. (2000) and Lai and Lorne
(2003a, b, 2006a, b) for an economic characterisation of the idea of sustainable development.
PM 2. In Vancouver, Canada, for example, sustainable development charretes are run by
architectural guru Patrick Condon. The city of Vancouver and the greater region of
24,3 Vancouver retained such architectural consultants as the Sheltair Group to perform similar
tasks.
3. For definition, see Environmental Protection Agency (1991).
4. Those who studied and understood Irving Fisher’s Theory of Interest (Fisher, 1930) will
266 reject the concept of sustainable development in the Brundtland sense altogether. However,
Hirshleifer (1970) reviewed various schools of thought on interest rates and described the
zero interest rate condition as a special case that occurs in the longest of long shots.
5. Sensitivities on this inherited constraint of the system can be found in various governmental,
as well as non-governmental, discussions of the problems. The later endeavours, which
include discussions within academic circles, NGOs, casual conversations with citizens on the
subject, etc. will be further elaborated on in the next section.
6. Hong Kong traditionally operates pragmatically, and is not usually accustomed to such an
abstract conceptual characterization of the problem. However, on some hotly debated
specific policy issue, manifestations of this nature of the problem can be abundantly found.
See Lai and Yeung (2004) and the related papers and positions articulated regarding the
issue of preserving Victoria Harbour.
7. “The BCR (Bruntland) definition of sustainable development has, depending on the literature
reviewed, been the catalyst for somewhere between 200 and 500 other definitions around the
world” (Mottershead, 2004a, brackets added).
8. To some environmental activists who believe that the world is a zero-sum game, and that the
research objective stated here should be laughed at, we only have to pose to them a simple
architectural question: is it possible for a building to be constructed from the top floor?
The question would have been equally laughed at as being anti-gravitational – that is, until
a model has been built to show compatibility with the force of gravity.
9. According to a version prescribed by Ms. Loh, “Natural Capitalism” consists of the following
three principles: (1) eliminating the concept of waste by re-designing the economy, whereby
waste is reduced or eliminated at the production stage; (2) shifting the structure of the
economy from focusing on the processing of materials and the manufacture of things to the
creation of services, thereby discouraging the production of waste where no one is
responsible for it; and (3) reversing the destruction of the Earth with programmes for
restoration and investing in the Earth’s natural capital. The term may also be traced to a
book by Hawkins et al. (1999).
10. Mottershead was apparently ignorant of the existence of doctoral theses on sustainability
written on Hong Kong by Hong Kong students (Shulman and Shulman, 2001) or the
publications of her peers.
11. Christine Fang, Chief Executive of the HKCSS, is also a member of the Council of Sustainable
Development of the HK Government. She spoke at the Seminar in 2001 on “The Role of
NGOs: Releasing Goodwill and Building Partnership for Action” – a position that is
consistent with the model described in this paper.
12. As opposed to “strong sustainability” (Daly, 1991; Rees, 1990, 1999), “weak sustainability”
(Pearce et al., 1989; Pearce and Barbier, 2000) accepts the substitutability of resources.
13. This definition was heavily criticized by Mottershead (2004b, p. 103), who argued that
Hong Kong should have adopted a definition achieved by the Brundtland Report. Note,
however, the wording in the Digest of Meeting on April 1, 2003: the remark by the committee
was made under “Item 1 – Opening Remarks by the Chairman,” in which the wording of the
paragraph was: “Having considered the need for a ‘tailor-made’ definition of ‘sustainable
development’ for Hong Kong, members agreed to adopt initially the definition in the report of
 the World Commission on Development and Environment. A more pressing issue was how A model of
to promote and implement sustainable development in Hong Kong” (italics added).
14. Aside from the formal statement of SUSDEV 21, there are many examples in which this
sustainable
interpretation has been manifested. The BEC, in its printed guideline for businesses in development
Hong Kong wanting to practice sustainable development, has emphasized the balance of the
three segments. Likewise, in various sustainable development related web sites, the implicit
approval of developing a win-win strategy between segments has been amply mentioned.
For example, see A Symposium on “Creating a Win-win Situation for the Environment & the
267
Economy,” July 27, 2004, Sponsored by Ethics in Contemporary China in Transition
Research Project, Governance in Asia Research Centre, The City University of Hong Kong.
15. Predictably, this interpretation of the meaning of sustainable development in Hong Kong
will be considered “inadequate” by environmental activists in the area. Indeed, activists
seemed to have a ravenous appetite (a la C. Loh) in that ALL existing sustainable
development features in Hong Kong are rated as “INADEQUATE” (p. 137)!
16. Compared to the LEED green building certification process in the US, which is a government
funded project (managed by the US Green Building Council) that deals with the green design
of private high rise buildings on a voluntary user-pay basis, BHHI is a university funded
programme that evaluates the health and hygiene of existing apartment buildings at no
direct cost to the community.

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Further reading
Ackoff, R.L. (1979), “The future of operation research is past”, Journal of the Operational
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Barron, B. (2004), “An economics perspective on sustainability”, in Mottershead, T. (Ed.), A model of
Sustainable Development in Hong Kong, Hong Kong University Press, Hong Kong,
pp. 175-98. sustainable
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Mottershead, T. (2004), “International sustainable governance”, in Mottershead, T. (Ed.),
Sustainable Development in Hong Kong, Chapter 4, Hong Kong University Press,
Hong Kong, pp. 43-88.

Corresponding author
Lawrence Wai Chung Lai can be contacted at: wclai@hku.hk

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