This thesis addresses the interconnectedness of environmental sustainability and economic sustainability. There is evidence from the Canadian experience that market economies are extremely dependent upon consumption - the most significant factor in determining the overall level of economic activity and economic growth. Therefore, from this perspective, several periods of declining consumption would create a 'vicious cycle' [Kaldor, 1967] of economic decline that would be politically unsustainable. The analysis here shows that income inequality drives changes in debt-fueled consumption, and consequently, debt influences consumption. The role of income inequality as a mediating channel of sustainability via the borrowing/lending model presents evidence that 'conventional' debt servicing behaviour in the macro-economy can support steady-state economic growth that is, in economic terms, sustainable. Solving the conflict between the environment and the economy lies in private and public investments in new technologies and, most importantly, new social institutions that facilitate economic, political, and environmental, sustainability.
Author Keywords: Consumption, Economic Growth, Household Debt, Income Inequality, Sustainability