Fiscal and monetary policies
Fiscal policies include government expenditure, taxes and subsidies. Taxes, on the other hand, may be targeted to help regulate resource use, such as resource rent taxes or taxes on polluters..
Many governments, especially in industrialized countries, raise the majority of their taxes from progressive income taxes.
Trade and exchange rate polices
This group of policies includes taxes on imports and exports and controls on trade. Such policies tend to reduce the domestic producer prices for export products and to push up the domestic prices on imported items. In a global setting, a more open foreign trade framework, with fewer taxes and restrictions on imports and exports, is usually held to be good for sustainable development. The case for free trade is that it will allow production to take place in accord with the economic principle of comparative advantage. That in turn would mean that less resources and other inputs would be needed in aggregate to attain a given level of production, which should be good for everyone and for the environment. So far as exchange rate policy is concerned, some countries, concerned about the impact of negative external balances on their international purchasing power, have sought to maintain a high official exchange rate by limiting imports. Experience and economic logic both suggest that such policies are likely to be unsuccessful in the longer run. However, while they are in place, they turn the domestic terms of trade against those sectors of the economy that produce tradeable goods, including agriculture.
Labour and employment policies
Wage policies normally cover only that part of the labour force that is unionized and in the formal sector. In many less developed countries, the proportion of the labour force in such employment is small, so that wage policies have limited impact on either overall wage levels.
Investment and foreign aid
Given that the goal of sustainability policy is to transfer the equivalent of the current resource base to the next generation, investment policy is obviously crucial. In part, this is a matter of creating an environment that is 'friendly' towards private investors. Too many barriers for the entry of foreign investors will deter the international flow of capital, as will too strict rules on the repatriation of profits. Similarly, both economic instability and social unrest will deter all investors, foreign or local.
Population policies
It is clear that, at least in the long run, population growth must be slowed and perhaps reversed if sustainability is to be attained. Even in the shorter run, population growth presents challenges for many less developed countries. Substantial investments are needed in order to expand both food production and the provision of services such as education and health in line with the increasing numbers. Sustainable development is therefore made all the more difficult in such cases.
The trouble is that some of the more reliable birth control measures are not acceptable in all societies. This tends to make the whole subject of population policy a difficult one for policy makers. Yet there are other means of approaching the topic than by a head-on confrontation with sometimes strongly held ethical values.
Policies that improve the education of girls and the status of women, including the employment prospects for younger women, will usually lead to a reduction in fertility. Moreover, when the status of women rises, they are more likely to take more control of their own fertility, no longer relying on the decisions of their male partners, local health workers or religious leaders.
More generally, there is evidence that birth rates tend to fall as child mortality is reduced, urbanization spreads and living standards rise. The policy interventions to promote such outcomes are seldom contentious, and will slow population growth.
That said, it is held by many to be a desirable policy to make sure that no woman is denied access to the means to limit the frequency with which she conceives, regardless of religious or other taboos that dictate what methods are available to her to attain that end.
Population policy also extends to measures to affect the geographical distribution of people. Governments can influence the rate of migration to urban areas, chiefly by manipulating, wittingly or otherwise, rural-urban real income differentials. Policies to concentrate public investment and service provision in the cities will accelerate rural-urban migration, and vice-versa. Similarly, governments can adopt policy measures to try to influence the distribution of the rural population, for example through land settlement schemes such as the Indonesian transmigration programs.
Incomes and equity policies
A second consideration in setting taxes, however, relates to the distribution of income and wealth. Taxing the rich and stripping them of some of their assets to meet the needs of the poor of this generation, or to invest for the benefit of poor people in the future, can obviously be one way of attaining the goal of sustainable development. Unfortunately, it is seldom politically feasible on any substantial scale! However, where wealth or income comes from economic rents that result from public investments, such as increased value or productivity of land due to public infrastructure construction, it may be more acceptable to tax away at least a part of those gains.
Policies can also be adopted that specifically target the poor, such as famine relief programs, food for work schemes, or provision of free or subsidized services. Most industrialized countries have extensive social welfare programs in place to help the disadvantaged, such as the sick, the old or the unemployed. Because such programs are very expensive, in most less developed countries they are of much more limited scope, or are even totally absent.
The argument for policies designed to achieve a more equitable distribution of income is not that the poor cause more resource degradation than the rich, and so must be helped out of their poverty. Indeed, the contrary is often the case, given the much higher levels of consumption of items such as fossil fuels in rich countries. Rather the aim is to make possible a reasonable standard of living for today's poor. Then they can have the means to provide a more sustainable future for their children, for example by providing them with good nutrition, sound health care and a good education.
Kavungya answered the question on April 30, 2019 at 11:20