DTD 5

ARTICLE IN PRESS

Ecological Economics xx (2005) xxx – xxx

www.elsevier.com/locate/ecolecon

ANALYSIS

Second-order sustainability—conditions for the development of

sustainable innovations in a dynamic environment
Christian Sartorius *
Fraunhofer Institute for Systems and Innovation Research, Breslauer Str. 48, D-76139 Karlsruhe, Germany
Received 5 September 2003; received in revised form 6 July 2005; accepted 6 July 2005

Abstract

In particular radical innovations can be important means to achieving improved sustainability. Due to the existence of path
dependency and lock-in, however, the transition from one technological trajectory to another, more sustainable one is often
impeded by significant barriers. Fortunately, these barriers are by their nature subject to substantial changes in time; so, it makes
sense to carefully distinguish between periods of stability (showing high barriers) in which the given trajectory can hardly be
left and periods of instability (characterized by low barriers) where a new trajectory can be reached more easily. The latter
distinction matters since sustainable innovations often rely on governmental regulation and the economic burden arising from
this regulation will be much lower in periods of instability. Moreover, due to the complexity and dynamics of change in their
respective environments, innovations are generally associated with fundamental uncertainty such that it becomes impossible to
predict the degree of sustainability yielded by specific innovations in the longer run. Under these circumstances, it is essential to
facilitate the change between trajectories and to allow for the possibility to select between a variety of alternative trajectories
within a process of trial and error. Sustainability as viewed from this evolutionary perspective is therefore better understood as
the general capability to adapt, that is, to readily change from less to more sustainable technological trajectories. Since the latter
kind of sustainability determines the conditions under which the former kind (i.e. sustainability related to a specific technology)
can be achieved, the two kinds are respectively called second-order and first-order sustainability.
Finally, a series of determinants (and corresponding indicators) from the techno-economic, political, and socio-cultural
sphere is identified which, after proper measurement and weighting, allow for making an assessment whether and when the
incumbent industry is sufficiently destabilized and the political system rendered sufficiently favorable to the new, more
sustainable technology such that a transition to the preferred trajectory is possible without too much effort.
D 2005 Elsevier B.V. All rights reserved.

Keywords: Sustainability; Innovation; Path dependence; Lock-in; Uncertainty; Indicators

1. Introduction

* Tel.: +49 721 6809 118. Innovations play a crucial role not only as the
E-mail address: c.sartorius@isi.fraunhofer.de. basis of the persistent economic growth prevailing
0921-8009/$ - see front matter D 2005 Elsevier B.V. All rights reserved.
doi:10.1016/j.ecolecon.2005.07.010

ECOLEC-02304; No of Pages 19
 ARTICLE IN PRESS
2 C. Sartorius / Ecological Economics xx (2005) xxx–xxx
especially in developed countries since the beginning
of the industrial revolution (see Schumpeter, 1934;
Nelson and Winter, 1982, for evolutionary; Romer,
1986, for neoclassical perspectives on innovation-
driven growth); they are also an important, if not
the only, means for maintaining the sustainability of
this development, that is, for avoiding destruction of
the natural environment and exhaustion of natural
resources that may be needed by all our descendents
in order to maintain at least the current level of
wealth (see Rennings, 2000 for an overview). How-
ever, innovations towards sustainability are often
associated with substantial costs. From the point of
view of environmental economics this is due to the
fact that environmental innovations internalize exter-
nal costs for which the innovator does not receive a
compensating benefit. By contrast, Porter and Van
der Linde (1995) claim that these costs can be sub-
stantially reduced, if, rather than merely redressing
the consequences of existing technologies (e.g. by
end-of-pipe solutions), innovation is understood as
an integrated process avoiding environmental extern-
alities right from the beginning. The remaining costs
can even be turned into a benefit, if, due to its more
fundamental character, an innovation avoids both
external and internal costs.
Despite the basic attractiveness of this kind of
innovation, employing them is far from rendering
the path towards sustainability self-sustaining for
two reasons. On the one hand, all environmentally
more benign substitutes after a while tend to give rise
to unforeseen environmentally hazardous side effects
such that, in the longer run, new technological
(including organizational) substitutes have to be gen-
erated again and again. Moreover, the development
and becoming effective of new substitutes takes time,
allowing related technology branches to exhibit envir-
onmental externalities in their turn. Due to the higher
uncertainty associated with fundamental innovations,
they will show this tendency even more markedly
than incremental innovations succeeding within one
paradigm. As a consequence, sustainability will gen-
erally remain temporary and more or less incomplete.
On the other hand, fundamental technological
change requires the transition from one technology
paradigm to another and, therefore, is not only less
likely to occur and but also associated with higher
uncertainty and risk than innovation along a given
trajectory (Dosi, 1982, 1988). Accordingly, the fre-
quency of environmentally sound and economically
profitable fundamental innovations will remain low
unless they are supported by policy instruments spe-
cifically referring to the causes of paradigm formation
and the related lock-ins. Klemmer et al. (1999) to
some extent point in this direction when they
acknowledge that a mix of regulative measures is
needed to properly account for the complexity of
circumstances in which innovation arise.
In this paper, both time and uncertainty will be
accounted for more thoroughly as crucial conditions
of technological development in general and espe-
cially with regard to sustainability. In particular, it is
assumed that, along with the change in circumstances,
periods of stability of a given technological trajectory
(where establishing a new paradigm requires much
effort) alternate with periods of instability (where such
a shift is more easily achieved). It is further assumed
that it is possible to identify and even strategically use
the latter phases of instability in the search for the
lowest possible cost of achieving a higher degree of
sustainability. In order to justify this claim, Section 2
starts with a discussion of the relevance of innovation
in the context of sustainability from both the neoclas-
sical and ecological economics’ perspective. In Sec-
tion 3, an evolutionary framework is used to show
how potential progress towards greater sustainability
by means of innovations may be hampered by com-
plexity, uncertainty, path dependency and lock-in.
While identifying the strategic elements for overcom-
ing these shortcomings, Section 4 specifies the con-
ditions for the more ready identification and
implementation of sustainable innovations—a prop-
erty we call second-order sustainability because it
refers to the dynamic interrelation between innova-
tions rather than the innovations themselves. In order
to make use of this dynamic concept of sustainability,
Section 5 identifies a variety of its potential determi-
nants and indicates how they may be applied. Finally,
conclusions are drawn in Section 6.
2. Innovation and sustainability
A very wide-spread understanding of innovation is
reflected in the definition used by the OECD (1997),
which distinguishes (1) process innovations allowing
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C. Sartorius / Ecological Economics xx (2005) xxx–xxx
to produce a given quantity of output (i.e. goods or
services) with less input, (2) product innovations
characterized by the improvement of existing, or the
development of new, goods or services and (3) orga-
nizational innovations including new forms of man-
agement. While the exact meaning of even this
relatively simple definition of innovation depends on
the methodological and normative background
assumed by its respective applicator, it is even more
difficult to relate to each other the concepts of innova-
tion and sustainability. In this section, I will try to
elucidate this relationship first from the neoclassical
and then from the ecological economics’ perspective.
2.1. Environmental innovation in the neoclassical
context
While, in the above-quoted OECD definition, pro-
cess innovation is explicitly efficiency-oriented, the
meaning of improvement or novelty in the definition
of product innovations is not further specified. If, as is
often done in economic contexts (see e.g. Rennings,
2000), the notion of innovation is further qualified by
its distinction from the term invention, the explicit
reference to the marketability of an innovation implies
that also product innovation is considered in terms of
efficiency, providing more benefit (as revealed by the
customers’ willingness to pay) at the same cost or the
same benefit at the lower cost. So, in the (neoclassi-
cal) economic context, the complete monetary com-
mensurability of costs (for inputs) and prices (for
outputs) renders it fairly easy to identify innovations
in a given set of new processes or products.1 By
contrast, maintaining this commensurability is essen-
tially impossible, if the above concept of innovation is
to be extended beyond the realm of human prefer-
ences—for instance into ecological sustainability
(compare Munda, 1997).
In particular since the beginning of the industrial
revolution growing human production and consump-
tion led to ever more frequent, more persistent and
more severe adverse impacts on the natural environ-
ment, representing an overall increase in economic
sustainability (i.e. persistent growth) at the expense
1
In this context, organizational innovations are not mentioned
explicitly because, with regard to their input–output relation, they
can be treated like either process or product innovations.
3
of ecological sustainability.2 Neoclassical environ-
mental economics tried to resolve this trade-off by
determining (shadow) prices for those uses of nature
giving rise to negative external effects and imposing
them by means of Pigou taxes and allowance trading
(Pigou, 1920; Coase, 1960). Although functional in
the neoclassical setting, both approaches often proved
to be ineffective in practice for two reasons. First, due
to asymmetries in the stakeholders’ endowment with
knowledge and other resources and the public good
character of most parts of the environment, it is
impossible to determine the true willingness to pay
(i.e. the price) for the services of nature with sufficient
accuracy. And, second, even if this price could be
determined sufficiently exactly, it may be doubted
whether the two targets of satisfying the needs and
wants of humans and meeting the requirements for the
natural environment to sustain could be brought to
coherence. Reasons for this are, among other things,
the difference in time horizon between myopic
humans and long-term processes in nature and, most
of all, the basic ignorance of most individuals con-
cerning the wide variety of cause–effect relationships
in nature (I will deal with this point more extensively
in Section 3). From the neoclassical perspective, this
implies that the economy within or, respectively, with-
out its natural environment would not converge to the
same equilibrium and, therefore, possible disturbances
2
Since the Brundtland report (WCED, 1987) sustainability is
usually discussed as a state or, better, a development in which three
kinds of interests are met simultaneously: (1) the interest of the
present generation to generally improve their actual living condi-
tions (i.e. economic sustainability), (2) the search for an equalization
of the living conditions between rich and poor (i.e. social sustain-
ability), and (3) the interest in an intact natural environment that is
capable of supporting the needs of future generations (i.e. ecological
sustainability). Since social sustainability including the (re)distribu-
tion of natural resources and the benefits drawn from their use are
subject to intense political discussion and continued negotiations
especially between developed and developing countries, the norma-
tive character of this issue is readily accepted as an argument to
exclude it from the scientific discourse. Although balancing the
interests of succeeding generations is a normative issue as well,
the lacking possibility of the future generations to participate in the
corresponding political discussion is in this case taken as a justifica-
tion and as a potential for science to make fruitful contributions.
Consequently, the discussion of sustainability particularly among
economists essentially focuses on the question how to allow for the
strongest possible growth now without compromising the potential
for growth to persist in the future.
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4 C. Sartorius / Ecological Economics xx (2005) xxx–xxx
of the economy–ecology relationship cannot be cor-
rected by merely relying on the market mechanism
(Rennings, 2000).
2.2. Strong sustainability and innovation
As a consequence of the failure of market competi-
tion alone to induce the innovations necessary to bring
about ecological sustainability, a different approach
has to be used. In search for such an approach, it is
worthwhile to look more closely at the distinction
between weak and strong sustainability and at the
sustainability indicators developed in relation to the
latter concept.
From the anthropocentric point of view, sustainable
development implies the preservation of a pool of
natural resources and man-made capital that provides
each generation with the opportunity to have its activ-
ities based on equivalent sets of man-made and natural
capital. This conceptualization of sustainable devel-
opment as bnon-declining wealthQ (Pearce et al., 1989)
finds two basically different expressions. On the one
hand, economists in the tradition of Hartwick (1978)
and Solow (1974, 1986) argue that a society using an
exhaustible stock of resources could enjoy a constant
stream of consumption over time if it invested all the
rents from tapping on those resources, that is, if it held
the overall capital stock constant. Evidently, this weak
approach to sustainability is based on the implicit
assumption that both natural and man-made capitals
are complete (i.e. reversible) substitutes. While this
assumption may be met in some cases, it does not
hold in general because, first, for many types of
natural assets (e.g. an endangered species, a habitat
or the ozone layer) technical substitutes do not exist
and once brought about many changes turn out to be
irreversible (Munda, 1997). Moreover, the argument
developed above clearly indicates that the mechan-
isms for specifically identifying and implementing
suitable technologies or inducing necessary innova-
tions do not exist in the neoclassical framework
underlying weak sustainability.
On the other hand, concepts of strong sustainabil-
ity, which are characteristic for ecological economics,
specify the natural capital in terms of its physical
function rather than the costs of actual damage caused
to it. The logic of this approach is based on the
assumption that, in order to continue to rely on certain
essential functions of the environment (e.g. assimila-
tion of waste or supply with resources), the ecosystem
or at least certain parts of it have to be kept intact.
Accordingly, substitutability has to be proven in each
specific case rather than simply being assumed.
Although this approach does not exclude monetiza-
tion in principle (e.g. in terms of the opportunity costs
of the avoided or restricted use of the environment),
the (how ever aggregated) monetary figure does not
suffice to eventually specify the state of sustainability.
Instead, it is necessary to follow the following three-
step procedure and to (1) identify those elements of
the natural capital that are essential for the mainte-
nance of the ecosystem’s stability or, better, its ability
to recover from distressing impacts (i.e., resilience),
(2) select those elements that are related to, and
possibly endangered by, economic activities, and (3)
derive a set of indicators each of which reflects the
actual condition of a specific aspect of the environ-
ment and puts it into relation to the sustainable state as
determined by any suitable management rule (see
Opschoor and Reijnders, 1991). Typical examples of
the latter approach are Pressure-State-Response (PSR)
indicators like the one employed by the OECD. Here,
the causes of environmental problems (bpressureQ),
the actual state of the environment (bstateQ), and
efforts to solve the problem (bresponseQ) are moni-
tored and quantified in separate modules (OECD,
1993).
The role of innovation in the latter framework
consists in modifying existing, or implementing
new, technologies in such a way that identified pres-
sures are relaxed and problematic environmental
states are improved. So far, however, this concept is
still quite limited such that it needs further qualifica-
tion and extension.
2.3. Critical loads and non-linearity
An important qualification of PSR-like schemes
refers to their implication that it is generally possible
to quantify the effect of an innovation in terms of
reduction of those processes or their side-effects that
caused the corresponding pressure in the first place. In
reality, however, many counter-measures later turn out
to be themselves not without side-effects such that the
relaxation of pressure in their target field may go
along with the increase of pressures in other fields.
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C. Sartorius / Ecological Economics xx (2005) xxx–xxx
Rennings and Wiggering (1997) explain how this lack
of innovative efficiency arises. The logic underlying
the PSR approach implies a correlation according to
which stronger (weaker) efforts to counteract an envir-
onmental problem by means of the best-available
technology generally lead to the alleviation (enhance-
ment) of the pressure and, thus, to the improvement
(deterioration) of the condition of the environment.
Unfortunately, in the natural environment, such a
blinearQ relation between causes and effects is not
the rule. In contrast, effects like the following are
frequently observed. Although in an agriculturally
dominated region the intense use of mineral fertilizers
was common practice for quite a while, contamination
of the ground-water with nitrate could be observed
only recently—with a strongly increasing rate. In this
case, the existence (and transgression) of carrying
capacities or buffer capacities gives rise to non-linear
processes which typically show sudden changes or
even jumps. Returning to a sustainable state then
not only requires the reduction of emissions below
the respective critical load or critical level. Since the
latter may itself be adversely affected by the harm, it
additionally requires the repair of the damages that
had so far been caused by the excess emissions.
With regard to the role of innovation as a consti-
tuent of response in the PSR scheme, the non-linearity
basically implies a substantial element of uncertainty.
However, uncertainty is not limited to the adverse
effects that innovation is supposed to reverse. The
innovation itself is a source of uncertainty in so far
as it can be the source of lacking sustainability unfore-
seen at the moment of its implementation. More about
the causes of uncertainty and approaches to deal with
it will be said in the following.
3. Sustainable innovations and the evolutionary
perspective
Section 2 has elaborated on the possible impact of
innovation on ecological sustainability and on the
dependence of this impact on the underlying concepts
of sustainability and the economic paradigms related
to them. It could be shown that the preconditions for
innovations effectively responding to emerging eco-
logical challenges are rather demanding. This is not
only due to the basic structural complexity of inter-
5
action between a wide variety of elements in the
economy as well as in the natural environment; it is
even more due to the specific temporal interrelated-
ness of these elements. In order to deal with these
difficulties, a closer look will be taken at concepts like
uncertainty, irreversibility, path dependency and coe-
volution which are closely related to innovation in the
sustainability context and in general and extensively
discussed in the evolutionary branch of economics.
3.1. Fundamental uncertainty and the trial-and-error
approach of evolution
It is the wide variety and high complexity of
interactions between human actors and between the
latter and their natural environment that renders
human (economic) activities as well as their environ-
mental effects highly unpredictable particularly in the
long run (see also Section 2.3). However, the uncer-
tainty accruing in this context is not just a matter of
probability distributions within a known or assumed
set of possibilities and therefore cannot be accounted
for by the concept of risk. Instead uncertainty is better
characterized as ignorance in the face of novel, fun-
damentally unpredictable, events. So the question
arises how to deal with this fundamental uncertainty.
If complete knowledge about the set of available
alternatives is lacking, actors cannot maximize the
expected utility of alternative choices and, thus,
rational decisions cannot be made. One approach to
the solution of this problem was made by Simon
(1957) who proposed that human decision-making
in situations of incomplete knowledge may better be
described as being based on bounded rationality.
However, the boundedly rational decision-maker’s
striving for an acceptable (i.e. dsatisficingT) rather
than a maximum level of utility still requires some
knowledge as to which goals are attainable in princi-
ple. Additionally, even bounded rationality assumes
fixed sets of individual preferences that basically
include all possible alternatives—an assumption that
simply turns out to be underdetermined in the face of
real novelty.
Therefore, it may be advisable to look at the solu-
tion of (long-run) problems related to fundamental
uncertainty and endogenously changing preferences
from a completely different perspective: Darwin’s
approach to evolution in nature. Like society, nature
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6 C. Sartorius / Ecological Economics xx (2005) xxx–xxx
is characterized by the complex interaction between
its constituents, the living organisms and their physi-
cal environment, and thus by the existence of funda-
mental uncertainty and non-linearity which together
can give rise to the formation of new species or the
sudden extinction of major parts of the existing bio-
sphere as well as for the persistence of existing spe-
cies over prolonged periods of time. In order to
bmanageQ such unpredictable processes, nature relies
on the principles of heritance, random variation and
natural selection—with diversity created by random
mutation and recombination within the existing
genetic pool and selection resulting from continuous
competition between species with inherited properties
for a limited set of resources.
A further step toward an increased problem solving
capability in nature and, ultimately, in man is based on
the capability of an organism to undergo specific or
individual adaptation to varying circumstances and to
transmit the acquired knowledge to other organisms—
that is to learn and communicate. While evolution on
this level is based on social norms, individual values,
and ideas rather than material genes, the basic princi-
ples nevertheless remain essentially unchanged (Sar-
torius, 2003, especially chap. 4). Initially, the
perception of a problem leads to the assessment of a
variety of alternative approaches to its solution. Those
approaches giving rise to the solution of the problem
are selected; those that fail are rejected. The solutions
with the better performance are further modified and
tested in subsequent rounds of selection.3 The wider
the variety of alternative approaches the higher is the
probability that at least one of them may perform
better than in the status quo. With respect to human
behavior, special use of evolutionary principles has
been made by many proponents of evolutionary eco-
nomics: in his search for new business opportunities,
for instance, Schumpeter’s (1934) entrepreneur
assumes significant risk but, at the same time, gives
rise to novelty; Hayek (1978) interprets market com-
3
Note that selection of the best alternative would only be possible
in a static environment with very low complexity. In reality, the
higher degree of complexity leads to the emergence of local rather
than global optima and, due to the dynamics of the system, the
successive choice of better alternatives influences the actual speci-
fication of the respectively best alternative. Therefore, selection in
the evolutionary approach adopted here refers to the better, but not
to the best (see also Rammel, 2003).
petition as a process of selection (and detection) of
innovations by means of the willingness-to-pay on the
demand side; and Nelson and Winter (1982) show
how profit may serve as the selecting force that
leads to the persistence of some innovations and to
the vanishing of most others. A particular case of
evolution leading to the solution of unprecedented
problems is the selection of cooperation rules on the
group level, a task that could never be fulfilled by
individuals on the basis of their mere rationality
(Hayek, 1988; Sartorius, 2002). In this context, envir-
onmental and social sustainability can respectively be
interpreted as cooperation (i.e. fair behavior with the
potential of win–win situations) between succeeding
generations and different parts of the same generation.
The relevance of fundamental uncertainty and the
corresponding problem-solving capability for sustain-
ability is quite evident. Human activities frequently
generate adverse environmental side-effects which,
due to the complexity of their interaction with the
environment, are often unforeseen (see Section 2.3).
In the search for (long-term) sustainability, it therefore
makes little sense to exclusively rely on the causes of,
and solutions to, specific environmental problems
since they may be subject to considerable variation
over time. This does not at all imply that the determi-
nation of critical substances and the application of
critical thresholds do not make sense. Especially in
the short run they are even indispensable. However, in
the long run, that is, in the time perspective in which
the sustainability concept is usefully applied, the pro-
cess leading to sustainability also has to account for
the conditions under which the identification of pro-
blems as well as the search for the corresponding
solutions and their translation into the appropriate
measures takes place. Rather than referring to specific
innovations whose characterization as being sustain-
able can only be temporary, sustainability should be
viewed as a property of the system and determined
with reference to the system’s general capability to
bring about a variety of potentially useful innovations
and, should the occasion arise, to allow for the ready
implementation of the most promising alternative. In
short, sustainability also, and from the evolutionary
perspective predominantly, includes the flexibility and
versatility of the entire system to allow for a quick and
effective response to whichever environmental pro-
blem arises (see Erdmann, 2000).
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C. Sartorius / Ecological Economics xx (2005) xxx–xxx
3.2. Coevolution and the extension of innovation
beyond the technological sphere
The concept of coevolution basically refers to the
fact that the development of an organism does not
simply follow the conditions set by its environment,
but that, in the process of adaptation, the organism
itself is a source of change for this environment. In
biology, coevolution usually describes the mutual
adaptation of ecologically related species such as
butterflies and plants (e.g. Ehrlich and Raven, 1964)
which, under certain circumstances, can give rise to an
arms’ race known as the Red Queen effect. In ecolo-
gical economics, coevolution refers to the socio-eco-
nomic development as a process of adaptation to a
changing environment while being itself a source of
this change (Norgaard, 1994; Gowdy, 1994). While
evolution in the socio-economic sphere was shown to
have the potential of giving rise to better adaptation to
the natural environment (Cavalli-Sforza and Feldman,
1981; Boyd and Richerson, 1985), coevolution in this
context typically accounts for the mutual interference
between socio-economic and natural developments
which, depending on their specific characteristics,
can facilitate or hinder innovation processes leading
to lesser or greater sustainability. In the case of spray-
ing pesticides in agriculture, for instance, the forma-
tion of resistance is a clear indication for a decrease in
sustainability.
With regard to sustainability-related innovations,
coevolution has several crucial implications. First,
the mutual interaction between several social spheres
increases complexity giving rise to a higher degree of
uncertainty that needs to be managed by human actors
trying to pursue a sustainable development (see Sec-
tion 3.1).
Second, coevolution involving the social or cul-
tural sphere has the potential of giving rise to a high
degree of diversity with regard to flexibility and
adaptability to temporally or spatially varying condi-
tions (Munda, 1997). This potential is however con-
trasted by the possibility of the Red Queen effect
which is likely to give rise to maladaptation and the
reduction of diversity. These two opposing effects are
the basis for the trade-off between diversity and flex-
ibility on the one hand and economic efficiency on the
other (Rammel, 2003), which will be further discussed
in Section 4.
7
Third, the coevolution (especially the Red Queen
effect) is an intriguing example of path dependence
where the developmental path can not easily be shifted
from one trajectory to another (see Section 3.3).
Forth, and most evidently, coevolution implies that
successful innovation in general, and successful sus-
tainable innovation in particular, has to acknowledge
the involvement of, and mutual interaction between,
more than the mere technical and economic spheres.
The current human way of life being coherent with the
existing institutions (including codified rules and
social value and belief systems) and giving rise to
technology-caused transgressions of the sustainability
boundary in many and profound ways and, contra-
riwise, the support of this lifestyle by just these
techno-economic conditions are an evident instance
of coevolution. Accordingly, efficiency changes under
the proviso of sustainability may be achieved more
readily through an integrated approach employing
institutional or social in addition to technical innova-
tions. With regard to the aim for increased sustain-
ability, it is therefore necessary to broaden the view
from the merely technical towards the social and
political aspects of innovations. In accord with these
thoughts, Klemmer et al. (1999, see also Rennings,
2000) broadly define the term denvironmental
innovationT as all measures of relevant actors that
lead to the development and application of new
ideas, behavior, products and processes and, thereby,
contribute to a reduction of environmental burdens or
to ecologically specified sustainability targets. This
may include process and product innovations, organi-
zational changes in the management of firms, and, on
the social and political level, changes in environmen-
tally counter-productive regulation and legislature,
consumer behavior, or lifestyle in general. This
emphasis on social innovations is all the more impor-
tant because unsustainable development itself is often
the result of btechnology outpacing changes in social
organizationQ (Norgaard, 1994, p. 16). Moreover, after
an intense and extended discussion in environmental
economics about the brightQ instruments towards an
environmentally sound, sustainable development, it
more and more turns out that there is not a single
suitable instrument. Instead, it seems to depend on the
respective circumstances (e.g. type of competition or
existence of information asymmetries), whether Pigou
taxes, markets for pollution rights, the setting of stan-
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8 C. Sartorius / Ecological Economics xx (2005) xxx–xxx
dards, or even temporary subsidization of promising
innovations is the more effective instrument
(Rennings, 2000). Jaenicke (1999) even goes one
step further by claiming that the relevance of instru-
ments for environmental policy has generally been
overemphasized. Instead, the discussion should
focus on other elements of a successful environmental
policy such as long-term goals, mixes of instruments,
policy styles, and constellations of actors.
Altogether, the above emphasis on social and
political aspects makes clear that the success of
sustainable innovations depends on more than their
mere technical (or even economic) superiority. This
is all the more evident when, following the sugges-
tion of Section 3.1, sustainability is considered as the
property of an entire system rather than a specific
innovation.
3.3. Irreversibility and path dependence
Beside fundamental uncertainty and the need for
diversity following from the preceding sections, the
complexity of multiple-interaction systems has
another at least equally important consequence for
the sustainability discussion. If the sequence of events
within a complex system was described by means of
several independent parameters, careful analysis
would reveal non-ergodicity. That is, of all basically
possible states only some are likely to occur in any
single moment. Whether or not a given state is likely
to arise accordingly depends on the past or, more
exactly, on the succession of states preceding the
actual state—a phenomenon called path dependence.
In biology, this issue is discussed among evolutionary
biologists and ecologists in the context of the phylo-
genetic development of organisms and successions in
ecosystems. Gould and Eldredge (1977), for instance,
emphasize that the complex architecture of all more
advanced organisms strongly limits the potential for
successful further mutations and, thus, better adapta-
tion. The reason for this is that most changes that may
be advantageous from an isolated perspective may not
be so in a complex context in which advantageousness
requires the meeting of many strict preconditions. As
a consequence, a variety of mutations would have to
come up simultaneously which is very unlikely to
occur. So, once a certain amount of genetic informa-
tion has accumulated within an organism and hap-
pened to be arranged in a sufficiently complex system
of mutual interaction, the entire system is stabilized
against further change (Waddington, 1969). Interest-
ingly, the parameter decisive for the stability of the
system is the average number of interaction from one
element to others and not so much the number of
genes (Kaufman, 1995).
With regard to sustainability, path dependence
plays a particularly important role in three respects.
First, as shown above, the wide variety of life forms in
nature represents a large source of solutions for pro-
blems not only in the natural environment but also in
the human sphere—for the assimilation of wastes, the
production of food, and the design of pharmaceuticals,
to mention just a few examples. Every species evi-
dently represents a piece of knowledge that could
potentially be useful for present or future generations.
Against the backdrop of path dependence, however, it
is also clear that the loss of any species leads to a loss
of such knowledge that is irreversible. For every
species is the outcome of a succession of phylogenetic
stages in which the formation of every single stage is
based on the existence of its respective predecessor—
a fact that renders it impossible to reconstruct a spe-
cies once it has been lost.
Second, even when knowledge is not directly
acquired from models in nature, but derived through
trial and error in the scientific process, this does not
imply that all knowledge is equally accessible.
Instead, technical knowledge generation is character-
ized by technological paradigms (Dosi, 1982, 1988).
Within such paradigms, knowledge acquisition occurs
gradually along the respective trajectories—by the
systematic variation of single parameters and the
selection of those variants showing the desired effect
most markedly. Incremental innovations proceeding
along such a path are to some extent predictable but
the marginal cost-to-effect ratio is subject to increase
such that maintaining the profitability (in economic
terms) of innovations becomes increasingly more dif-
ficult. With regard to sustainability, end-of-pipe solu-
tions fit into this category because they add
environmental soundness to an existing technology.
According to economic wisdom, they do this at
increasing marginal costs.
An alternative route is the search for radical
innovations leading to a transition between trajec-
tories in different paradigms. While this approach
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C. Sartorius / Ecological Economics xx (2005) xxx–xxx
has the potential of achieving much better profitabil-
ity in economic contexts, it is characterized by a high
degree of uncertainty representing a substantial
threshold for typically risk-averse people. In the sus-
tainability context, Porter and van der Linde (1995)
emphasize that integrated environmental innovations
(where harm is avoided from the beginning rather
than redressed after its generation) can be so efficient
that the environmentally beneficial effect induced by
suitable regulatory measures is achieved at no addi-
tional cost.
The third aspect of path dependence to be
addressed here refers to the induced resistance-to-
change and, thereby, to some extent relates to the
second. It plays an important role in the discussion
about technology development and is of central
importance for the objective of this paper: the search
of determinants for a sustainable technology develop-
ment. Innovations and the introduction of new tech-
nologies often are the key instruments to the
(temporary) avoidance or redressing of adverse envir-
onmental effects. However, even if negative external
effects were completely internalized and the new
technology turned out to be technologically and envir-
onmentally superior to the existing one, successful
commercialization and diffusion into the market can-
not be taken for granted. A frequently quoted example
for this kind of failure of a superior technology to
prevail refers to the design of typewriter and computer
keyboards (David, 1985). Although the totality of
users could benefit from the use of a better design
that allows for a significantly higher writing speed, the
traditional QWERTY keyboard is maintained because
just for the first users of any new alternative, a devia-
tion from the dominant design would cause costs that
are much higher than the expected benefits (Arthur,
1988). While network externalities are the relevant
factor in the latter case, a variety of other effects
will be identified in Section 5 that lead to the lock-
in of a conventional technology and, accordingly, to
the lock-out of its superior challenger.
4. Second-order sustainability
While traditional approaches to achieving (strong)
sustainability typically start with the identification of
the technical or social causes of a current lack of
9
sustainability and then point to possible alternatives,
the implications of fundamental uncertainty, coevolu-
tion and path dependency go far beyond such an
assessment of specific innovations. In order to accord-
ingly develop a more comprehensive conception of
sustainability, it is necessary to return once again to
the shortcomings of the traditional approach of attain-
ing sustainability.
4.1. Knowledge gain through trial-and-error
First, in most societies, and all the more in all
advanced economies, the common wealth is yielded
by the complex interaction of numerous individuals in
the context of a variety of technologies and social and
political institutions. Due to the uncertainty prevalent
in such complex systems (see Section 3.1), it is
impossible to predict all the specific effects of any
human intervention. This argument explains the some-
times low success in fitting a new technology or
institution into a given setting in general. And it
particularly explains the frequent failure of technical
or institutional innovations in terms of sustainability.
As a consequence, the search for increased sustain-
ability, while in principle being the result of human
action, will usually not be the well-specified outcome
of a man-made plan. Hayek (1973) referred to this
phenomenon as the bfailure of constructivist
rationalismQ and identified man’s constitutive lack of
knowledge as its main cause. Instead of looking for
the one and only perfect substitute, Hayek suggests, it
therefore appears much more promising to engage
into a trial-and-error process based on a variety of
potential substitutes.
4.2. Diversity as precondition for trial-and-error
The second argument in disfavor of the specific
replacement of a non-sustainable technology (or insti-
tution) also refers to the uncertainty aspect, but it
focuses on the effect of dynamic change rather than
the mere lack of knowledge. Since, in a complex
system, the change in one component always gives
rise to a change of the restrictive conditions for all
others (compare the discussion of coevolution in
Section 3.2), it is little surprising that sustainability
as achieved by the employment of whichever technol-
ogy or institution (e.g. property rights or social pre-
 ARTICLE IN PRESS
10 C. Sartorius / Ecological Economics xx (2005) xxx–xxx
ferences) can only be a temporary state of a system.
Even those interventions that successfully redress
instances of lacking sustainability at first will them-
selves change the entire system in such a way that
new losses of sustainability are likely incurred in the
future—either due to their interaction with other com-
ponents or directly by themselves. In order to main-
tain sustainability over longer periods of time, it is
therefore not sufficient to simply solve a given pro-
blem; rather the problem-solving capacity must keep
pace with the rise of new problems. So, the Darwinian
process of trial-and-error has to cope with time—a
scarce resource especially in dynamic systems; and in
order to do so, two preconditions need to be met
which at first appear to be given quite naturally, but
in fact do not come for free. Variation, the first pre-
condition, implies the existence of a wide variety of
potential alternatives on which selection can act. For
socioeconomic systems in general, Matutinovic
(2001) shows that diversity is a systematic and resi-
lient property the lack of which could provoke
instability and eventually lead to the collapse of the
system. Since in present-day economies the selective
effect of market competition is rather strong, self-
sustained maintenance of a high degree of diversity
cannot be taken for granted. Especially with regard to
the uncertainty associated with long-term sustainabil-
ity problems, it may therefore even be necessary to
actively keep competition in a more early stage—
against the self-enforcing advantages of productiv-
ity-increasing specialization (see Kemp, 1997).
Accordingly, it is evident that this diversity is costly
since, (1) for the supply of promising technologies
society needs to promote learning, that is, to invest
into human capital. More specifically, incentives for
an engagement into R&D have to be provided for the
respective firms. (2) Prior to eventually reaching mar-
ket diffusion and successful commercialization, parti-
cularly the more radical inventions may additionally
need governmental support (e.g. through subsidization
or the creation of niche markets). (3) Finally, the
partial suspension of market forces needed to maintain
a certain degree of diversity and keep competition in
an early stage not only leads to the less efficient
adaptation of technologies to the existing uses; (4) it
also prevents part of the cost-saving potentials of
economies of scale and scope or learning effects
from being realized. The trade-off we face here is
one between (short-term) economic and (long-term)
sustainability-related efficiency.
4.3. Lock-in resolution as precondition for
trial-and-error
In contrast to the preceding arguments, the third
argument against the possibility of an easy substitu-
tion of more sustainable technologies–and respec-
tively the second precondition for the successful
employment of trial-and-error processes–relates to
the systemic integration of established technologies
and institutions rather than their potential substitutes.
For even in the presence of a variety of alternative
solutions, selection and further development of the
most suitable technology by means of the market
forces will remain ineffective so long as the estab-
lished technology is subject to strong stabilization and
withstands its displacement by even strongly superior
alternatives.4 In Section 3.3, this resistance to change
of the established technology known as lock-in was
shown to be caused by a wide variety of effects of
which a more complete account will be given in
Section 5. Sustainability is particularly affected by
such a lock-in because the more radical–and thereby
often more effective–innovations (Rennings, 2000;
Ashford, 2002) face more opposition than the less
effective incremental ones because they belong to a
new paradigm. To the extent that lock-in effects are to
be undermined, economic actors again have to bear
the cost of refraining from the realization of the
corresponding economies of scale, learning and net-
work effects, etc. (see Section 4.2). Although, this
time, the trade-off between short-term and long-term
efficiency is basically a purely economic one, it has
important consequences for sustainability.
4
The careful reader will have recognized that, on the one hand,
the proposed approach relies on the selective capacity of (market)
competition to identify and gradually improve more sustainable
technologies while, on the other hand, competition has to be par-
tially suspended in order to create the diversity on which selection
can act. This apparent contradiction is resolved by temporal, spatial
or functional disjunction of the two functions. While temporal
disjunction can be achieved by the mere alternation of phases of
variation and selection, spatial and functional disjunction, respec-
tively, imply implementation and testing of new technologies on a
locally or application-specific markets. The latter two approaches
also constitute the basis for strategic niche management (Kemp et
al., 1998).
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C. Sartorius / Ecological Economics xx (2005) xxx–xxx
4.4. Second-order sustainability as adaptive flexibility
While the specific problem-solving capacity of cer-
tain innovations gives rise to sustainability in specific
circumstances and for limited periods of time, it is the
total number of such solutions or, more concisely, the
context-dependent trial-and-error process giving rise to
their implementation that brings about sustainability in
more general terms—in the long run and in dynamic
contexts. The latter idea conforms well with the view of
Kemp (1997), Van den Bergh and Gowdy (2000),
Rammel and Van den Bergh (2003) and Rammel
(2003) that sustainability is the result of a strategic
process (rather than a certain state) trying to deal
with uncertainty and unpredictable emerging properties
by means of badaptive flexibilityQ. This emphasis of the
process character does, of course, not render specific
sustainable innovations dispensable in the search for
sustainability in general, but due to their conditional
effectiveness they represent sufficient (rather than
necessary) conditions of sustainability whereas the
conditions for the effective working of the basic trial-
and-error process are necessary (but not sufficient)
ones. Since, from the functional perspective, bgeneralQ
sustainability determines the conditions under which
bspecificQ sustainability can be achieved, the two kinds
of sustainability describe the function of a system on
two different levels with general sustainability repre-
senting the more basic level. Since sustainability, and
more so its lack, is immediately perceived as specific
instance of resource or environmental problems
whereas the working of its general problem-solving
capacity (albeit more fundamental) is less immediately
evident, I refer to the two aspects as first-order and
second-order sustainability, respectively.
In the preceding parts of this section, a variety of
measures was mentioned that would increase diversity,
improve selection and, thus, support second-order sus-
tainability, but most of these measures would come
with significant (opportunity) costs only. Conversely,
the lack of second-order sustainability caused by the
unwillingness to pay this price leads itself to the incap-
ability to adapt to changing circumstances and, thus, to
a loss of welfare that arises from the high cost of
redressing or functionally replacing a damaged envir-
onment. In this trade-off between the costs and benefits
of second-order sustainability, the optimum degree of
diversity is not easily determined ex ante. However,
11
also this optimum can be approached in a trial-and-
error manner—by the gradual change and subsequent
assessment of the conditions for second-order sustain-
ability particularly in those industries and economic
sectors where the most severe violations of first-order
sustainability are encountered.
5. Determinants of second-order sustainability
In Section 3.3, it was suggested that certain struc-
tural properties of a given technology can severely
restrict the probability with which new innovations
may become effective. The way in which these states
of rigidity are sometimes discussed (David, 1985) or
modeled (Arthur, 1988) in the literature could imply
that such states of stability are omnipresent and, once
they turn up, tend to persist for prolonged periods of
time. Not surprisingly, many economists (e.g. Lie-
bowitz and Margolis, 1994) are convinced that latter
position crossly overstates the relevance of network
externalities, as this would allow them to become the
cause of almost ubiquitous market failure. In the latter
debate, an intermediate position is taken by Witt
(1997) who, while principally acknowledging the
relevance of network effects, limits their general
importance for the function of the market to certain
restricted periods of time. So periods of stability tend
to alternate with periods of instability where new
networks can be formed. Such a period in which the
direction of technological progress is flexible is
referred to as a bwindow of opportunityQ (Witt,
1997). Disregarding these windows could severely
hamper, if not completely inhibit, the introduction of
any useful innovation. And even when, in the pursuit
of sustainability, a new (sustainable) technology was
successfully pushed by governmental regulation with
no regard at the specific circumstances, the difference
between stable and unstable phases would be worth a
lot of money. It will therefore be the main objective of
this section to identify those factors that allow poli-
tical and other decision makers to make a well-
founded judgement as to whether the preference for
a potentially sustainable innovation is based on eco-
nomic, social and political feasibility.
The first set of factors will be economic ones. It
will become evident in the following that the variety
of relevant effects is wider and their respective time
 ARTICLE IN PRESS
12 C. Sartorius / Ecological Economics xx (2005) xxx–xxx
pattern more diverse than may have been implied by
the repeated reference to network externalities in pre-
vious parts of this paper. Additionally, it is a special
characteristic of many sustainable technologies that,
beyond the competitive disadvantage frequently aris-
ing from their failure to internalize reduced external
costs, the government typically plays a crucial role in
overcoming existing barriers to competitiveness in the
relevant markets. In doing so the government inevi-
tably faces opposition from those whose interests are
negatively affected: the incumbent industry and other
groups paying the price for the measures taken. Typi-
cally, a government or policy makers in general are
not inclined to neglect such an opposition unless the
promoting forces from other parts of the society are
sufficiently strong. More so, major techno-economic
changes require a general openness or even a readi-
ness to change (i.e. a phase of instability) on the part
of the political system. For these reasons, the techno-
economic factors will have to be supplemented by
both, political and social factors. The selection of
these criteria occurred on the basis of a priori theore-
tical plausibility considerations and ex post after the
screening of relevant case studies (Sartorius and Zun-
del, 2005). Due to the large number of relevant fac-
tors, it is not possible to present them here at length;
for a more detailed discussion, the reader is therefore
referred to Sartorius and Zundel (2005, ch.2).
5.1. Determinants of (in)stability in the
techno-economic system
5.1.1. Economies of scale
Economies of scale account for the greater effi-
ciency of larger manufacturing devices. They are typi-
cally measured on the firm level in terms of average
unit cost as a function of output rate. As these average
costs decrease with increasing scale, they give rise to
strong competitive disadvantage for new technologies
which, at the beginning of their life cycle, cannot
immediately engage into large-scale production.
5.1.2. Economies of scope
Economies of scope account for synergies between
different production lines from the common use of
certain resources, intermediate products, or production
facilities. While economies of scope lead to important
cost decreases for the established industry, the mutual
dependencies between existing processes renders it
more difficult for a radically new technology to
become competitive.
5.1.3. Learning by doing
Unlike the cases of economies of scale and econo-
mies of scope, the cost decreasing effect of growing
experience in designing, constructing (dlearning by
doingT), and using production facilities (dlearning by
usingT) is usually expressed as the percentage of cost/
price reduction per doubling of the cumulative pro-
duction output in the respective branch. While learn-
ing effects give rise to a large potential for further cost
reductions for any new technology, they confront it
with a high cost disadvantage in the beginning.
5.1.4. Network externalities
Network externalities refer to the fact that the
utility derived from the use of a given technology is
positively correlated with the number of its users.
Alternatively, a technology can be subject to network
externalities if it relies on another technology that
forms a network in its turn. The weaker the depen-
dence on the established network or the better the
compatibility, the smaller is the entry barrier for the
new technology.
5.1.5. Sunk cost
Investment into a new technology can cause sig-
nificant sunk costs if it renders useless an old technol-
ogy prior to its complete depreciation. While sunk
costs represent opportunity costs of any new technol-
ogy, they do not come to bear in competitive markets.
Instead, they are relevant whenever market access is
restricted by other causes. The rate of capitalization in
the relevant industry and data about the investment
cycle can be used to assess sunk costs; but this
analysis needs to be supplemented by the competitive
structure of the industry in question (see below).
5.1.6. Market structure
Although natural or regulated oligopolies or mono-
polies do not exclude competition in principle, such
market structures will provide the corresponding firms
with strong incentives to maintain the existing market
barriers, engage in strong activities to preserve these
monopoly rents and neglect innovative activities.
While the innovation-related forces of market competi-
 ARTICLE IN PRESS
C. Sartorius / Ecological Economics xx (2005) xxx–xxx
tion may be characterized as biased in favor of the
established technology by (above-mentioned) increas-
ing returns to adoption, any non-competitive market
structure will stabilize the technological status quo
even more because it does not give rise to innovation
in the first place.
5.1.7. Potential versus risk
In order to replenish their earned innovation rent
and, thus, maintain their current profit margins within
a competitive market environment, entrepreneurs
occasionally have to complement their technological
portfolios with more radical innovations. Since the
latter are associated with higher risk, an (expected)
strong potential (including its regulatory conditions)
will be decisive for the success or failure of this
technology being adopted.
5.1.8. Demand
To be considered an economic substitute for an
existing technology, a new technology at first has to
fulfill certain functions of the former. In order to
attract the attention and raise the specific demand of
consumers and investors that would prefer the more
familiar, established technology over its otherwise
quite dissimilar counterpart, a new technology has to
fulfill certain extra-functions to overcome this inertia.
5.1.9. Niche markets
If the entry barrier for a new technology is high, it
may need a long period of subsidization until general
competitiveness is achieved. At the same time, partial
competitiveness may be achieved much sooner under
certain, geographically or culturally specified, favor-
able conditions—often called a niche market. Since
the existence and extent of niche markets can be
decisive for reaching competitiveness of a new tech-
nology in general, the strategic use or the artificial
(regulatory) creation of such niche markets can be an
important approach to the successful implementation
of a new technology as suggested by the strategic-
niche-management approach of Kemp et al. (1998).
5.2. Determinants of in-/stability in the political system
The basic characteristics of the political system
generally play an important role in allowing a new,
more sustainable technology to prevail. As a precon-
13
dition for this to happen, the political system either
must be in favor of the new technology from the
beginning or it needs to be destabilized itself in the
first place. While in the former case, structural char-
acteristics of the political system play the most impor-
tant role, both structural and procedural aspects are
important in the latter. The following enumeration will
begin with the structural factors.
5.2.1. Institutional embeddedness
Many technologies, particularly those related to
environmental protection, are subject to substantial
political regulation determining which external effects
a technology is allowed to exert and which (and how)
others must be avoided. In this context, the close
mutual relationship between the established technol-
ogy and its regulatory environment tends to adversely
influence the competitive position of any (radically)
new competitor. An example for the self-stabilizing
effect that needs to be overcome by a new technology
is the reference many regulations make to the state of
the art (related to the established technology) for
solving an environmental problem.
5.2.2. Interest groups
While it is a matter of political culture how influ-
ential corporate bodies or individual actors can be in
principle, it depends on the specific circumstances
which effects they actually give rise to. Basically,
the power of an interest group is known to be crucially
dependent on the size of the group, the homogeneity
of its interests, its organization, and the resources it
controls (Olson, 1965). Other important factors are the
economic relevance of the industry or its history and
cultural integration. Particularly in mature industries
with strong market power, lobbying may pay even for
single firms as investing in a useful regulatory envir-
onment is more profitable than investments in tech-
nological innovations (Berg, 1995)—with the
corresponding stabilizing effect for the established
technology.
5.2.3. Asymmetry of knowledge
For the solution of environmental problems, gov-
ernments and political administrations need external
advice. As long as the problem has not attracted too
much public attention, the necessary information is
most convenient obtained from the industry that
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14 C. Sartorius / Ecological Economics xx (2005) xxx–xxx

Table 1
Factors determining the stability or instability in each of the three subsystems and the indicators used for their operationalization
Effect Indicators Operationalization
Economies of scale cost (or price) development as a function of actual output
Sunk costs average capitalization of industry statistical data
identification of investment cycles recurrent phase-shifted cycling of prices and investment
political regulation cost of retro-fitting after regulation,
delayed investment due to expectation of uncertain measures
Economies of scope pattern of interactions between number and relevance of interactions between the old (new)
production lines technology and the entire production network
Techno-economic subsystem

Learning by doing cost (or price) development as a function of cumulative output

Network externalities direct competition with (an)other
network(s)
need for compatibility with comple-
menting infrastructure or periphery:
• existence of public standards
• availability of an adapter
Market structure degree of competition as a function of
market concentration
Potential / risk riskiness ↔ availability of capital
problem solving capacity ↔
realization of an innovation rent
Extra-demand readiness to pay for extra-functions
existence of natural niche markets
creation of artificial niche markets by
means of regulation
Institutional subsidies
embeddedness protection
norms and standards
Interest groups resources under control (power)
structure; degree of homogeneity
influence; earlier success
Asymmetry of influence of industry in hearings
knowledge number of industry-independent
research institutions/projects
Parliamentary stability of majorities
Political subsystem
market share(s) of the competitor(s),
availability of gateway technologies
which requirements are met?
cost of the adapter, legal admission possible, payable royalties
market share of the biggest firm(s), Herfindahl index, legal
regulations
marginal interest rate, capital share of venture capitalists
technical properties (benchmarks), associated costs
market research
higher prices, non-applicability of the established technology
(eco-)taxes, tradable certificates, cost of retro-fitting the old
technology
financial support, tax breaks
duties, other barriers to trade
specificity of specification
number and economic importance of represented firms/sector
market shares, concentration index
(qualitative)
(qualitative)
number, financial support, number and size of commissioned
projects
size of majority, stability of constituting coalition (number and

majorities relation of parties)

Election cycle distance to the next election ditto.
Singular constraints political scandals deception by possible interest holders
catastrophes accidents, unexpected discoveries
Decision-making probability of legislative initiatives number and relevance of potential initiators, number of cases
procedures legislative vs. administrative number of laws referring to ordinances, actual number of
regulation ordinances
reassessment and resubmission cycles deadlines, frequency, possible consequences
corporate structure number, size, and frequency of political involvement of
corporate organizations
participation frequency and extent of incorporation of political “outsiders”
(e.g. NGOs) into the decision process
supranational structures share of regulation that is not subject to national legislation
Scientific confirm- relevant publications in scientific number of relevant articles (keyword search) in journals etc.;
ation of threat to literature, contributions to conferences identification of seminal articles and quotation circles
Socio-cultural

sustainability independence of research sources and quantity of research sponsoring

subsystem

Public concern about relevant articles in newspapers, reports number of articles/reports over time
lack of sustainability in broadcast,
Public acceptance of formation of major protest campaigns number and size of campaigns
possible solutions
Source: own compilation.
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C. Sartorius / Ecological Economics xx (2005) xxx–xxx
caused the problem. According to the life cycle theory
of bureaucracies, initially independent (regulatory)
authorities will thus successively merge their interests
with those of the established industry (Martimort,
1999). This bregulatory capture of bureaucraciesQ
often leads to quick and at most half-hearted solutions
related to the dominant technology. By contrast, more
radical changes can only be expected, if the necessary
knowledge comes from more independent sources—
notably state-financed scientific research.
5.2.4. Parliamentary majorities
Especially more radical changes are often not
unanimously supported since the associated improve-
ments go at the expense of the established regime.
Even if its basic attitude would tend to render a
government supportive of the corresponding change,
its actual realization will ultimately depend on the
strength and stability of the majority on which it can
rely. From this perspective, a large, stable majority
basically opens the potential for more radical changes
than does a minute or unstable one.
5.2.5. Election cycle
One of the most prominent stylized facts in poli-
tical science states that more radical political changes
usually occur at the beginning of an election period
while incremental changes, if not political standstill,
follow at the end (Troja, 1998). With regard to envir-
onmental innovations this implies a potential for a
political window of opportunity in the post-election
period. Unfortunately, empirical tests so far failed to
confirm this effect of the election cycle (Horbach,
1992). A special popularity of environmental regula-
tion, an eminent problem pressure or, like in Germany,
the temporal alternation between state and federal
elections could be reasons for this.
5.2.6. Singular constraints
The costs and, thus, the scope of each regulatory
measure is subject to a budget constraint. While the
power of the interest groups behind technologies gen-
erally influences the allocation of governmental
resources, it depends on the social appreciation of
environmental protection or the reputation of the
involved parties whether the incumbent industry can
defend its subsidies or has to share it with its more
sustainable competitors. In this respect, singular (i.e.
15
exogenous) events like political scandals and envir-
onmental or other disaster can bring about sudden
changes.
5.2.7. Decision-making procedures
Since it is not possible here to extensively analyze
the entire political decision-making process, just a few
criteria will be presented that may allow for a basic
characterization of the procedural aspects of a political
system with regard to the stabilization or destabiliza-
tion of a specific technology.
(1) It is an important aspect of political culture
whether the initiatives for regulatory acts typi-
cally come from single actors (e.g. president,
members of parliament) or major bodies (gov-
ernment, parties, or the parliament). In general,
the former tends to give rise to more radical
(i.e. destabilizing) changes than those of the
latter.
(2) The relation between legislative bodies and
executive administration determines whether
a regulation is enacted by means of a law that
has to pass a lengthy parliamentary approval
procedure or whether this can be done by refer-
ring to an ordinance that is quickly adopted by
the administration alone.
(3) Obligatory reassessment and resubmission
cycles ensure that any existing regulation does
not lead to the stabilization of the respectively
benefiting technology.
(4) Participation of larger parts of the society (e.g.
NGOs, public research institutes) in the search
for more sustainable solutions will not only
facilitate the search for knowledge but also
increase and widen the support for (often more
radical) solutions.
(5) Finally, it is important how a country is incor-
porated into supranational structures (e.g. EU,
WTO). While this limits a country’s possibility
to implement innovations in an idiosyncratic
manner, it broadens the scope and efficacy of
many sustainable innovations.
5.3. Factors of change in the socio-cultural system
Public attention to a (perceived) problem and
subsequent worry about its potential consequences
 ARTICLE IN PRESS
16 C. Sartorius / Ecological Economics xx (2005) xxx–xxx
play a key role in provoking political reactions direc-
ted to solving the problem or, at least, alleviating its
consequences. This is all the more true in the context
of environmental protection since due to their long-
term relevance and public-good nature, environmental
problems and their solutions are rarely issues that
allow a politician to derive major benefits for himself.
While awareness and concern by a considerable part
of the population is neither sufficient nor necessary
for political action to be initiated, their lack will
usually lead to a failure or, at least, major delay in
acting accordingly.
Mass media play an important role not only as
transmitters for the corresponding information but
also for the assignment of meaning and valuation
to the underlying problem. The relation between the
media and their readers, listeners, or watchers is
characterized by mutual interaction giving rise to
positive and negative reinforcement The scientific
verification of an environmental problem, which
often stays at the beginning of such an dissue atten-
tion cycleT (Downs, 1972), is identified through
scanning the scientific literature for relevant key-
words and trying to identify seminal publications
through the tracing back of references. On the
other hand, public concern about these problems
can be measured to some extent by counting relevant
articles in newspapers and reports in other mass
media. Additionally, it may be necessary to account
for the more qualitative aspects of concern and
valuation, as the authors of relevant articles often
differ in their basic attitude towards a given environ-
mental problem. It is also important to realize that
the attention of mass media to any given problem
usually tends to decline more rapidly than the atten-
tion of the public in general.
Table 1 summarizes the comprehensive list of
determinants of periods of instability elaborated
above including the corresponding indicators and
their potential operationalization.
5.4. Windows of opportunity as periods of higher
second-order sustainability
In order to identify periods of greater or lesser
second-order sustainability by means of these indi-
cators, it needs to be pointed out first that sustain-
ability correlates strongly with the instability
(= flexibility) of the established technological regime
and the political and social conditions supporting it.
So, second-order sustainability will be strongest
when the window of opportunity is most widely
open and it will be weak when the window is closed.
In order to identify a window of opportunity, an
aggregation of its determinants is necessary. Since
the direct comparison of all these indicators on the
basis of a common denominator (e.g. monetary
value) is not possible, however, any comparison
can in the end only be of qualitative nature. There-
fore, the following scheme of aggregation is used to
arrive at least at a relative measure of second-order
sustainability.
In the techno-economic sphere, all factors essen-
tially work in parallel. High sunk costs add to the
stability of the incumbent technology as well as does
extended learning. Niche markets for the new tech-
nology on the other hand destabilize the incumbent
technology. None of these factors relies on another
one to become effective. So, even if one effect became
zero, the other factors would remain unaffected. Their
mode of aggregation is additive.
By contrast, in the socio-cultural system, (scienti-
fic) verification of an environmental problem is a
necessary (but not sufficient) prerequisite for the for-
mation of public concern. Conversely, public concern
alone sometimes is little effective until the exact
causes for an environmental problem are scientifically
verified and unless an acceptable solution exists. So,
all factors work in sequence with the combined effect
yielded by multiplying the constituents.
In the political system, both effects are found.
While structural and procedural factors in general
appear to complement each other in a multiplicative
way, the specific structural (or procedural) factors tend
to work in parallel.
With regard to the relationship between the entire
systems, the political system not surprisingly is of
central importance because in the end, it brings
about the regulation necessary to achieve greater sus-
tainability. However, the political system hardly
works on its own; it needs impulses from the other
systems: destabilizing impulses (for the existing
regime) come from the society disapproving the lack
of sustainability and from the new, more sustainable
technological or institutional alternatives; opposite
stabilizing impulses come from the incumbent indus-
 ARTICLE IN PRESS
C. Sartorius / Ecological Economics xx (2005) xxx–xxx
try that caused the environmental problem and the
loss of sustainability in the first place. Fig. 1
summarizes how the composite indicator of sustain-
able technology development is constructed from its
constituents.
6. Conclusion
In particular radical innovations can be important
means to the achievement of improved sustainability.
Due to the existence of path dependencies, however,
the transition from one technological trajectory to
another, more sustainable one is often impeded by
significant barriers. Fortunately, these barriers are by
their nature subject to substantial changes; so, it
makes sense to carefully distinguish between periods
of stability (with high barriers) in which the given
trajectory can hardly be left and periods of instabil-
ity (characterized by low barriers) where a new
trajectory can be reached more easily. With respect
to sustainability, the latter distinction is particularly
important for two reasons. First, more sustainable
innovations often rely on governmental regulation.
In periods of instability, the economic burden arising
from this regulation will be much lower than in
periods of stability; so, a given budget will yield a
much better sustainability effect in the former case
Fig. 1. Reconstruction of a measure of second-order sustainability
from its constituent factors in the techno-economic, political, and
socio-cultural sphere.
17
than in the latter. Second, due to the complexity and
changes in their respective environments, innova-
tions are generally associated with fundamental
uncertainty such that it becomes impossible to pre-
dict the degree of sustainability resulting from spe-
cific innovations in the long run. Under these
circumstances, it is essential to ensure flexibility
including the possibility to select between a variety
of different trajectories in a process of trial and error.
Sustainability as viewed from this evolutionary
perspective may therefore better be understood as
the general capability to readily change between
different technological trajectories. Since the latter
kind of sustainability determines the conditions
under which the former kind can be achieved,
we call the two kinds first-order and second-order
sustainability.
In order to undergo successful diffusion, most
sustainable innovations rely on regulatory measures
especially in the beginning of their (economic) life-
cycles. When looking for the factors determining
periods of (in-)stability, the political system enacting
this regulation therefore is of central interest. How-
ever, while basically allowing for the convergence
of both technological progress and sustainability, the
political system itself can neither give rise to the
search for sustainability nor bring about the appro-
priate innovations in the first place. This is where
the socio-cultural and, of course, the techno-eco-
nomic sphere itself enter the focus of attention as
emitters of positive impulses. Additionally, negative
impulses like those coming from the incumbent
industry need to be taken into account. After all, a
series of factors (and corresponding indicators)
could be identified which, after proper weighting
and prioritization, allow to make an estimation
whether, and possibly when, the incumbent industry
is sufficiently destabilized and the political system
rendered sufficiently favorable to the new, more
sustainable technology such that a transition to the
preferred trajectory is possible without the lowest
effort possible.
Acknowledgement
Funding of this research by the German Federal
Ministry for Education and Research (grant
 ARTICLE IN PRESS
18 C. Sartorius / Ecological Economics xx (2005) xxx–xxx
07RIW5C) is gratefully acknowledged. I thank Guido
Bünstorf, Jan Nill, Stefan Zundel and an anonymous
referee for valuable comments on earlier versions of
this paper.
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