Hanover -- Last week's bitter temperatures not withstanding, the world -- both environmentally and economically -- has appeared to be heading toward a meltdown.

There is the the rapid decline of the U.S. housing market, the collapse of financial giants like Bear Stearns, Lehman Brothers and AIG, the subsequent, multibillion-dollar federal bailout of the financial services industry, and even the breakdown of national economies, as in Iceland.

And there is the physical melting of the polar ice caps amid rising temperatures, leading to warnings of global peril if climate change is not addressed immediately.

The two problems are related, according to many who attended a conference at Dartmouth's Tuck School of Business last week. In fact, the health of capitalism and the environment are intertwined, and must be managed together if either is going to survive.

“Capitalism is sustainable in every sense of the term,” said Anant Sundaram, a professor of business administration at Tuck, during the opening chat last week. “With extremely important caveats.”

The conference, which ran Thursday and Friday, posed the question of whether capitalism is sustainable, as an economic system and force on the environment. In panel discussions, professors, consultants, investment analysts and other corporate leaders considered the question and did their best to offer a way forward.

Even if the economic circumstances surrounding the question are not pleasant, most of the panelists agreed with Sundaram that capitalism could function without destroying the natural world. But it might not be sustainable in its current form. If it is going to survive as a system of production and exchange, it would have to change, become much more forward thinking and acknowledge new restrictions to keep from gobbling itself whole.

The question is more than a conversation topic for a Tuck-sponsored salon. It is being considered by plenty of people in the Upper Valley every day.

“One thing that comes immediately to mind when you talk about the topic is our whole floodplain on 12A is covered with buildings,” said Judy Macnab, chairwoman of the Lebanon Conservation Commission, in reference to the Upper Valley's most notorious commercial strip.

That development along the Connecticut River is what happens when capitalist impulses are given unchecked access to the natural environment, and a testament to the need for strong zoning laws, she said.

Commercial interests are at stake, too. Poor design and heavy traffic have made West Lebanon's Route 12A an unpleasant place to visit, she said, driving shoppers away whenever possible.

A better approach would be the path two other developers have taken in Lebanon. One is David Clem of Lyme Timber Co., she said, who has solicited feedback from residents in redeveloping the former Bailey Brothers building on Route 10.

Another is a project planned near the crest of Route 120. The landowner, L-A Suncook LLC, owns 289 acres off the eastern side of Route 120, behind the former Wilson Tire building. Suncook, a Philadelphia-based private equity firm, intends to set aside 223 acres for preservation and develop the rest for offices and a hotel.

“Both of those are much appreciated for their willingness to work with us, instead of push things down our throats,” Macnab said of the two projects.

The incentive to do something that the community wants has some real economic value, according to P.K. Knights, local operating partner of L-A Suncook. The company might realize a higher profit if it were to pack all 289 acres with single-family homes, but there is also value in avoiding a long fight with the city by doing something the community wants.

“It might be better to create something the community accepts and move forward in the near future,” Knights said.

More than proper land use, however, there are the buildings themselves. Sustainable development, as it relates to so-called “green building,” was the subject of one Friday morning panel at Tuck. Environmentally sustainable construction is yet another area where profit motives and environmental concerns are becoming increasingly aligned, even during a recession, according to the panelists.

“Growth (in the industry) is unbelievable,” said Jim Boyle, founder and CEO of Sustainability Roundtable Inc., a sustainable real estate consultant.

The value of green building construction was estimated at $12.3 billion in 2008, according to the U.S. Green Building Council, and projected to be $60 billion in 2010.

Dartmouth College has supported a number of sustainable projects and has three buildings on campus certified under the U.S. Green Building Council's LEED program, a benchmark for green buildings. There are different certification levels that consider a building's energy efficiency, use of native materials and other initiatives to reduce its environmental impact.

LEED certification has become attractive to companies that want to advertise sensitivity to the environment. But beyond the marketing opportunities, it doesn't always make sense to get certified, said Paul Olsen, of Dartmouth's Real Estate office, who was one of the panelists. Getting certified is expensive, costing as much as $100,000 for a project.

“In order to be a green building, it doesn't have to get certified,” Olsen said. “That money could be better spent.”

The financial advantages of going green are something Wayne Bonhag considers every day as a principal of Bonhag Associates. His Lebanon-based engineering firm is working on several LEED projects for Southern New Hampshire University, which is watching its bottom line carefully amid the recession.

“We are very much aware that we don't want to spend any more money on the capital side of things that won't be coming back to us in the short term,” Bonhag said.

Sometimes it doesn't make sense, he said. One industrial client in New Hampshire wanted to line its roof with solar panels. But when Bonhag crunched the numbers, solar just didn't seem to make sense. It was too expensive. However, he was able to find another renewable energy option.

“In this particular case, I was able to negotiate a wind purchase,” Bonhag said. “It's still green, and yet we were able to do this so they can buy power.”

Not every problem is so neatly resolved. Especially in the financial sector. Socially responsible investing has grown in popularity in the past few years, but has been tested in this recession.

The Wilderhill New Energy Global Innovation Index -- a benchmark for green investing -- is down 56 percent since June 30. By comparison, the S&P 500 was down 31 percent over the same six months.

Carey Callaghan manages the Energy Alternatives Fund, a mutual fund through American Trust Co. in Lebanon. As its name suggests, the fund invests in companies that, in one way or another, address the twin concerns of climate change and energy supply shortages.

Since it was launched last June, the fund has declined 44 percent, Callaghan said.

The financial crisis has hurt short-term prospects for some of his companies, as addressing climate change takes a back seat to other pressing concerns. The collapse in energy prices has also affected perceptions about the need to develop alternative fuel.

Still, he believes the need for solar technology and alternative fuel sources will not go away. And new regulations that result from this crisis -- for fuel standards, emissions and energy consumption -- could play to his advantage.

If the crisis has resulted in anything, he said, it is a healthy skepticism of unbridled capitalism and calls for tighter regulation.

“The blind faith of many adherents to capitalism has been put to the test because it's clear capitalism has flaws,” he said. “You need to impose some limits on capitalism.”

The panelists at Tuck largely agreed. One speaker -- Greg Hintz of the consulting company McKinsey & Co. -- began his introduction with a couple straw polls.

First, he asked the audience of about 60 whether capitalism -- simply as a system of exchanging goods -- was sustainable. Most raised their hands in agreement.

Then, he wondered whether capitalism, in its pure form -- an open-market free-for-all, with no regulation -- was sustainable in terms of social and environmental needs, able to regenerate the resources upon which it fed.

The other panelists wouldn't let him get that far.

“No regulation?” Sundaram asked.

Pure capitalism, Hintz repeated.

The discussion broke down into a series of qualifying questions. No regulation at all? No contracts? Nothing?

The question never made it to a vote, and Hintz moved on with his talk. But the provocative suggestion of “pure capitalism” never went away.

Later, regulation came up again, and Hintz suggested that if capitalism relied so much on rules and law, then the answer to the conference's question was “no.” Capitalism wasn't sustainable.

“I completely disagree,” Sundaram said.

It is a system that needs regulation to function, even to establish a clearinghouse where trade can happen, the other panelists suggested. It requires policing to keep its practitioners' safe from their own worst impulses. The economic system upon which our modern world relies would be unworkable otherwise.

“I won't accept a definition of capitalism that doesn't have a regulatory component,” said Michael Dworkin, a professor at Vermont Law School. “It becomes meaningless.”