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2 - Growth with natural and environmental resources
- Edited by Carlo Carraro, Università degli Studi di Venezia, Domenico Siniscalco, Università degli Studi di Torino, Italy
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- Book:
- New Directions in the Economic Theory of the Environment
- Published online:
- 11 January 2010
- Print publication:
- 04 December 1997, pp 7-42
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Summary
Introduction
Exploitation of natural resources and environmental assets is a dynamic process, given that utilisation and (spontaneous or induced) regeneration flows affect the quantity and/or the quality of the stock. Optimal exploitation of natural and environmental resources has therefore to be forwardlooking, as economic agents need to take into account the consequences of economic activity on the future availability of resources. However, devising optimal exploitation plans is in practice an enormous challenge, due to incomplete information (e.g., about models of the interrelationships among economic and ecological subsystems), genuine uncertainty (e.g., about the possibility of a future climate change or about future environmental policies or technologies) and international links (in the case of uniformly mixing pollutants like CO2, policies decided by one country in isolation from the international community may not be effective).
Devising optimal exploitation plans is an enormous challenge also in theory. Of course, there are several reasons why it is important to perform a theoretical study of the relationship between economic activity and the use of resources: it may be a source of inspiration for empirical models aimed at building quantitative tools assisting policy makers in the creation of economic and environmental policies (many large-scale econometric models based on optimising agents for studying demand for resources are nowadays based on the assumptions of intertemporal maximisation); it may enlarge the range of phenomena considered by economists, for example to take into account variables that are fundamental to issues of sustainability of growth and its compatibility with the environment, like the laws of thermodynamics and population, and may motivate economists to devote more attention to the analysis of complex systems.
6 - Sustainable growth and the Green Golden Rule
- Edited by Ian Goldin, The World Bank, L. Alan Winters, University of Birmingham
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- Book:
- The Economics of Sustainable Development
- Published online:
- 04 August 2010
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- 24 February 1995, pp 147-166
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Summary
Introduction
The concept of ‘sustainability’
The concept of ‘sustainable growth’ is an appealing but elusive one. There are two factors common to most discussions and definitions of sustainability. One is the need to follow development strategies consistent with the planet's endowments. A clear statement of this can be found in the Bariloche model (Herrera et al., 1976; see also Chichilnisky, 1977), whose authors remarked:
The underdeveloped countries cannot advance by retracing the steps followed in the past by the now developed countries: … not only because of the historic improbability of such a retracing being feasible … but … because it is not desirable. It would imply repeating those errors that have lead to the current situation of … deterioration of the environment … The solution … must be based on the creation of a society that is intrinsically compatible with its environment.
In economic terms, following development strategies consistent with the planet's endowments means recognising the importance of resource and environmental constraints and the limitations that they may impose on growth patterns.
A second common factor is an emphasis on equity, both within and between generations. The authors of the Bariloche model emphasised this through the introduction and analysis of the concept of the satisfaction of basic needs as a development priority. The Brundtland Report's (1987) reference to sustainable development includes an emphasis on needs and on intergenerational equity:
Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.