If nothing else, Hong Kong's business elite understands the facts of economic life. Chief Executive-designate, Tung Chee-hwa, and his executive-council-in-waiting - composed mainly of business people - therefore should fully appreciate this key economic principle: to maintain income over time requires that capital stock is not run down. Mr Tung and his advisers should bear this concept in mind when considering how Hong Kong is to develop and grow. The natural environment performs the function of capital stock for the human economy, providing essential resources (this includes the disposal of waste). Much of our economic activities are running down this stock. In the short term, these activities help to increase gross domestic product, but in the long term they reduce the capacity of the environment to provide continuing capital. The warning signs are obvious. Environmental issues have been in the news for years. The latest is worsening air quality which has led to a rise in respiratory-related illness. This problem is directly related to increased traffic on our roads. Other signs include huge numbers of dead fish washed ashore because of worsening water quality, the result of excessive reclamation works and increasing quantities of sewage. Hong Kong's white dolphin population seems to be dwindling fast, a sign that biodiversity - the number and variety of animal and plant species - is being affected by infrastructure projects. There are fears Hong Kong will produce waste faster than it can be dealt with, and that the electric utilities are not producing power efficiently because the existing regulatory mechanism encourages building more power-plant generating assets rather than efficiency. There also have been concerns raised about whether Hong Kong's population - estimated to rise from 6.3 million to 8.2 million by 2011 - will become too burdensome on our limited resources. It should be clear that our patterns of resource-use and waste generation are unsustainable. So, how do we live within our environmental means? This concept that there may be environmental limits to the conventional view of economic growth is an uncomfortable one for the business and establishment elite which understands the need to conserve capital in order to maintain income levels. They prefer to put their faith in the belief that technological advances will solve the problem. They believe that what is needed is more economic growth to pay for cleaning up the mess we leave behind. However, despite more money being spent on cleaning up our dirty ecological footprints, things are not getting better overall. It is quite clear from government projections - on air quality, for example - that things will get much worse in the space of a decade. The sooner Hong Kong puts its environmental concerns at the heart of economic policy, the sooner we will get a handle on what level of economic activity can be sustained in the long run. Hong Kong policy-makers still view the environment as of marginal public and political concern. Some even say the people do not care about the environment. Such a response is hardly responsible from those who have the power to chart the future. Surely, they are there to lead and not to blame the public for its ignorance. What would sustainable policies entail? The instruments themselves are in fact familiar: high, and strict, regulatory standards for all emissions and for energy efficiency; financial incentives and disincentives to encourage conservation and penalise waste; better land-use planning and public-infrastructure spending; development of civil liability laws; and improvement in public education, to name a few.