testing genuine savings as a forward looking indicator of future well being over the very long run genuine savings gs have been much used in recent years as an indicator of a country s sustainability according to some theorists e g arrow et al 2012 under certain conditions a country with a positive level of gs should experience non declining future utility given the assumption of unlimited substitutability among all forms of capital sometimes called weak sustainability this paper reports the first very long run tests of gs also called comprehensive investment or adjusted net savings as a forward looking indicator of future well being we assemble data for british capital back to 1765 and construct several net investment measures which are used as indicators of two alternative measures of future well being consumption per capita and real wages an allowance for a value of time due to exogenous technological progress is included in some gs measures and we demonstrate the importance of this measure and the choice of discount rate over the very long run on the whole our results do not reject the postulated relationship between gs and future well being and show gs can be a forward looking indicator of future well being for periods of up to 100 years

hartwick s rule and economic conservation laws abstract this paper examines two policy rules for intergenerational equity in a model of optimal capital accumulation and resource extraction first we introduce hartwick s rule 1977 american economic review 66 972 974 for a constant consumption path and also consider relationships between hartwick s rule and conservation laws second by using conservation laws we investigate another rule for a constant utility this paper also attempts to derive the investment rule for benthamite utility maximization

voracious transformation of a common natural resource into productive capital i analyze a power struggle where competing factions have private financial assets and deplete a common stock of natural resources with no private property rights i obtain a feedback nash equilibrium to the dynamic common pool problem and obtain political variants of the hotelling depletion rule and the hartwick saving rule resource prices and depletion occur too fast so substitution away from resources to capital occurs too fast and the saving rate is too high the power struggle boosts output but depresses sustainable consumption genuine saving is nevertheless zero in a fractionalized society world bank estimates may be too optimistic

assessing the energy saving effect of urbanization in china based on stochastic impacts by regression on population affluence and technology stirpat model abstract the rapid urbanization process has posed great challenges to china s energy system this paper uses the stochastic impacts by regression on population affluence and technology stirpat model to evaluate the energy saving effect of china s urbanization based on provincial panel data the results suggest that 1 the urbanization induces the energy consumption with a notable negative energy saving effect 2 the heterogeneity of urbanization impact on energy consumption is analyzed in different stages of urbanization showing that the energy saving effect of urbanization follows a u shaped path 3 considering the heterogeneity of the energy saving effect of urbanization at different income levels the energy saving effect increases with income level the outcome may draw a causation picture on the relationship between energy consumption and urbanization in addition an in depth causation analysis on energy inefficiency of china s urbanization is carried out and policy recommendations are put forward accordingly

accounting price of an exhaustible resource response and extensions wei environ resour econ 60 579 581 2015 presents a novel derivation of the accounting price for an exhaustible resource in a non optimal economy subject to an allocation mechanism we show that wei 2015 and hamilton and ruta environ resour econ 42 53 64 2009 are in fact employing different and mutually exclusive allocation mechanisms for the economy and this explains the differences between the respective accounting prices because accounting prices must be defined subject to the allocation mechanism for the economy the prices derived in the two papers are equally valid within their respective allocation domains further analysis shows that if there is declining marginal product of factors a hartwick investment rule for the model economy set investment just equal to depletion valued at the accounting price will lead to declining consumption for the wei 2015 accounting price and increasing consumption for the hamilton and ruta 2009 accounting price this result is extended to consider the accounting standards recommended in the un seea system of environmental economic accounting 2012 central framework united nations european commission food and agriculture organization of the united nations international monetary fund organisation for economic co operation and development world bank 2012 as well as accounting for environmental externalities from resource use

measuring sustainability in the un system of environmental economic accounting the adoption of the system of environmental economic accounting 2012 central framework as a un statistical standard is a landmark in environmental accounting the seea has the same authority and weight as the system of national accounts in the pantheon of official statistics the seea defines the unit value of depletion of an exhaustible resource to equal the average unit value of the asset the total asset value divided by the physical stock of resource by applying this definition to a non optimal dasgupta heal solow model of an extractive economy we show that depletion adjusted net saving as defined in the seea supports a generalized version of the hartwick rule this measure of saving can guide policies for sustainable development in extractive economies in particular fiscal policies concerning consumption and investment expenditures funded by resource rents the conditions required to support this finding are i that extraction declines over time at a constant rate and ii that the marginal cost of resource extraction is constant a less general result holds in the case of increasing marginal extraction costs

on the peaking of consumption with exhaustible resources and zero net investment we investigate an intertemporal model with an exhaustible resource inflowwhich exhibits a single peak in consumption on the path of development thepeak follows the date at which net investment is zero the top ofconsumption is higher and flatter and peaks later when the discount rate islower low endowments of the exhaustible resource stock and high discount rates are associated with strictly declining consumption paths

wealth and sustainability for economists in 1974 it was a live question whether the exhaustion of natural resources such as oil would necessarily lead to the decline of economic activity solow showed that constant levels of consumption could be sustained in the face of exhaustibility if there is sufficient substitutability between produced and natural factors of production hartwick then proved that underpinning this result is a saving rule set investment in produced capital equal to the value of resource depletion at each point in time a large literature has shown that a comprehensive measure of the change in real wealth net saving plays a central role in determining whether current well being can be sustained in particular current declines in real wealth signal that future well being will also decline a result that has been confirmed empirically using data for developing countries changes in wealth and sustainability are therefore joined at the hip the current composition of wealth serves to define the policy challenges that countries face in achieving sustainable development if substitution possibilities are limited between natural and other factors of production as one might expect then technical progress is a necessary complement to policies for sustainability

a mixed bentham rawls criterion for intergenerational equity theory and implications abstract this paper proposes a welfare criterion that balances the need for development and the concern for the least advantaged generations and explores its implications this criterion called the mixed bentham rawls criterion moderates the effect of discounting yet permits some degree of intertemporal trade off it is a weighted average of two terms a the sum of discounted utilities and b the utility level of the least advantaged generation we derive necessary conditions to characterize growth paths that satisfy our criterion and show that in some models with familiar dynamic specifications an optimal path exists and displays appealing characteristics

characterizing sustainability the converse of hartwick s rule this note offers a general proof of the converse of hartwick s rule namely that in an economy with stationary instantaneous preferences and a stationary technology an efficient constant utility path is characterized by the value of net investments being zero at each point in time in a one consumption economy with two stocks a stock of a natural resource and a stock of man made capital this means that if consumption remains constant at the maximum sustainable level then the accumulation of man made capital always exactly compensates in value for the depletion of the natural resource

economic partnership agreements between sub saharan africa and the eu a development perspective this paper draws on hinkle and schiff 2003 it analyses the planned economic partnership agreements epas between the eu and sub saharan africa ssa from a development perspective it does not take a position on whether ssa should enter into epas with the eu rather it starts from the notion that the process of forming epas is unlikely to be reversed and examines the conditions that will maximise ssa s benefits from the epas if this notion is correct then the analysis presented in the paper applies on the other hand pascal lamy the eu trade commissioner made a proposal at the may 2004 g 90 summit in dakar that might lead to a change in the epa process he proposed that the g 90 a group consisting of acp and non acp ldc countries should not have to make concessions at the wto doha round of multilateral trade negotiations i e he proposed a free round for the g 90 this proposal opens the door to the possibility that the same might apply to the acp countries in the eu acp negotiations and that the epa process might be reversed the paper considers the key issues raised by the planned epas their relationship to the wto s doha round and the eu s everything but arms initiative the changes needed to make the epas internally consistent the domestic reforms in ssa that would need to accompany trade liberalisation in both goods and services and the potential effects of the epas on regional integration in ssa the epas will pose a number of policy challenges for ssa countries including restructuring of indirect tax systems reduction of mfn tariffs liberalisation of service imports on an mfn basis and related regulatory reforms in the services sector and liberalisation of trade in both goods and services within the regional trading blocs in ssa the paper also finds that the epas provide an opportunity to accelerate regional and global trade integration in ssa to realise the potential development benefits of the planned epas two steps are essential first the eu must as it has stated truly treat the epas as instruments of development subordinating its commercial interests in the agreements to the development needs of ssa second the ssa countries need to implement a number of epa related trade policy reforms however the latter is far from certain given the lack of reform momentum in ssa

wealth accounting exhaustible resources and social welfare the empirical literature on natural resource accounting uses methods which implicitly or explicitly entail measuring changes in total resource asset value when an exhaustible resource is depleted in contrast the growth theoretic literature on saving social welfare and sustainable development is built upon a central finding that the change in real wealth as measured by net or genuine saving is proportional to the change in social welfare we show that the change in total wealth exceeds the change in real wealth in optimal and non optimal models of resource extracting economies this suggests that the change in social welfare is over estimated when the change in total resource asset value is used as the measure of depletion a simple empirical exercise using world bank data on adjusted net saving reinforces the results from theory

genuine savings and sustainability genuine savings gs has emerged as the leading economic indicator of sustainable economic development at the country level it derives from the literatures on weak sustainability wealth accounting and national income accounting we discuss the theoretical underpinnings of gs focusing on the relationship between changes in a nation s extended capital stock and the future path of consumption the indicator has entered widespread use propelled by the world bank s publications despite its varying performance as a predictor for future consumption notwithstanding the extensive body of literature reviewed promising future research avenues are identified

accounting for india s forest wealth in this paper we account for forest wealth in india changes in the timber and carbon wealth embodied in these forests are related to important green national accounting aggregates such as genuine saving and the change in wealth per capita important accounting issues include the timing of carbon releases that occur when forests are disturbed as well as the valuation of these releases our empirical findings suggest that while india s forest wealth is substantial net changes in this wealth are arguably not so large at least in relation to gnp however when viewed in the context of the wealth diluting effects of population growth this implies a far larger additional savings effort is required to cover the net loss in forest values than otherwise appears to be the case finally we examine ways in which the accounting approach that we adopt can be reconciled with approaches which stress conserving forest wealth

net national product as an indicator of sustainability net national product nnp can potentially serve several objectives among others to measure value added and to be an indicator of welfare in the aftermath of the world commission on environment and development however it also seems important to investigate whether the concept of nnp can serve as an indicator of sustainability my point of departure following hicks 1946 ch 14 is therefore to require that nnp should measure what can be consumed in the present period without reducing future consumption possibilities and in line with this to argue that the nnp should equal the maximum per capita consumption level that can be sustained if sufficiently many facilitating assumptions are made then a concept of nnp that serves as an exact indicator of sustainability can easily be constructed for instance for a closed economy with a constant population a stationary technology and with only one capital good it follows that the present does not reduce future consumption possibilities if and only if it does not decrease the stock of the single capital good hence under the assumption that the one capital good k is identical to the one consumption good x nnp defined as y x k measures the maximal sustainable consumption at time t because then x y is equivalent to k the purpose of this note is to establish that with multiple capital goods it is not in general possible to construct an exact indicator of sustainability on the

sustainable development the hartwick rule and optimal growth defining sustainable development as non declining utility the consistency of this concept with the hartwick rule and optimal growth is explored when resources are exhaustible a simple proof that a generalized hartwick rule is necessary and sufficient for constant consumption is derived the existence of a maximal constant consumption path is shown to depend critically on the elasticity of substitution if this is less than 1 consumption declines if it is greater than 1 then consumption is not maximal if it is equal to 1 the cobb douglas case then existence is proved consumption can increase along an optimal path if the pure rate of time preference is 0 if it is non zero then consumption declines

capital theory and the measurement of sustainable development an indicator of weak sustainability the measurement of sustainable development is not without considerable difficulties yet this should not detract from the positive advances that can be made in this direction in this paper we present one form that a weak sustainability indicator can take derived from a simple but intuitive savings rule it incorporates the idea that the level of overall capital stock should be non decreasing although subject to qualification at this stage some interesting results emerge from the application of the rule to 18 countries

human capital tangible wealth and the intangible capital residual since income is the return on wealth the total wealth of any given country should be on the order of 20 times its gdp instead the average observed ratio from the balance sheet accounts of the system of national accounts sna is a factor of 2 6 to 6 6 depending on whether natural resource stocks are included in the balance sheet the clear implication is that the sna wealth accounts are incomplete with the most obvious omission being human capital estimating the value of human capital using the lifetime income approach for a sample of thirteen mostly high income countries yields a mean share of human capital in total wealth of 62 four times the value of produced capital and 15 times the value of natural capital but for selected high income countries in the sample there is still an average of 25 of total wealth which is unaccounted it is neither produced nor natural nor human capital this residual intangible wealth is arguably the stock equivalent of total factor productivity the value of assets such as institutional quality and social capital which augment the capacity of produced natural and human capital to support a stream of consumption into the future

constant savings rates and quasi arithmetic population growth under exhaustible resource constraints in the dasgupta heal solow stiglitz dhss model of capital accumulation and resource depletion we show the following equivalence if an efficient path has constant gross and net of population growth savings rates then population growth must be quasi arithmetic and the path is a maximin or a classical utilitarian optimum conversely if a path is optimal according to maximin or classical utilitarianism with constant elasticity of marginal utility under quasi arithmetic population growth then the gross and net of population growth savings rates converge asymptotically to constants

comprehensive wealth and future consumption accounting for population growth economic theory predicts that the current change in national wealth broadly defined to include natural and human capital as well as produced capital genuine savings determines whether the present value of future changes in consumption is positive or negative theoretical research has focused on the effects of population growth on this relation but no rigorous empirical investigation has been conducted panel data for 64 developing countries during 1970 82 are used to test the effects of three adjustments for population growth including one that controls for omitted wealth although the adjustments have substantial impacts on estimates of genuine savings they lead to only limited improvements in the relation between those estimates and subsequent consumption changes even without adjustments for population growth adjustments for natural resource depletion improve the relation significantly policymakers and economists can interpret published estimates of genuine savings as signals of future consumption paths if and only if the estimates include adjustments for natural resource depletion but better estimates of capital stocks are needed before it can be confidently said that adjustments for population growth significantly improve the accuracy of those signals

the rise fall and sustainability of capital resource economies in debates about green accounting it is sometimes argued that a positive value of aggregate investments indicates that an economy is developing sustainably asheim 1994 and pezzey 1994 have shown that this is wrong using a version of the well known dasgupta heal economy with one capital and one non renewable resource stock as a counterexample asheim s proof referred to the unproved assumptions that in such an economy a higher rate of time preference induces higher initial consumption and vice versa and that optimal consumption is initially rising and then falling here we show that these assumptions do hold true under certain circumstances thereby also proving some of dasgupta and heal s other conjectures about sustainability

evaluating projects and assessing sustainable development in imperfect economies we are interested in three related questions 1 how should accounting prices be estimated 2 how should we evaluate policy change in an imperfect economy 3 how can we check whether intergenerational well being will be sustained along a projected economic programme we do not presume that the economy is convex nor do we assume that the government optimizes on behalf of its citizens we show that the same set of accounting prices should be used both for policy evaluation and for assessing whether or not intergenerational welfare along a given economic path will be sustained we also show that a comprehensive measure of wealth computed in terms of the accounting prices can be used as an index for problems 2 and 3 above the remainder of the paper is concerned with rules for estimating the accounting prices of several specific environmental natural resources transacted in a few well known economic institutions

empirical testing of genuine savings as an indicator of weak sustainability a three country analysis of long run trends genuine savings has emerged as a widely used indicator of sustainable development this approach to conceptualising what sustainability is about has strong links to work published by anil markandya and colleagues over 20 years ago in this paper we use long term data stretching back to 1870 to undertake empirical tests of the relationship between genuine savings gs and future well being for three countries britain the usa and germany our tests are based on an underlying theoretical relationship between gs and changes in the present value of future consumption based on both single country and panel results we find evidence supporting the existence of a cointegrating long run equilibrium relationship between gs and future well being and fail to reject the basic theoretical result on the relationship between these two macroeconomic variables this provides some support for the gs measure of weak sustainability

corruption and the political economy of resource based development a comparison of asia and sub saharan africa we model how the supply and demand for bribes affects resource use by an economy and the reinvestment of resource rents in other assets this requires adjusting the world bank s measure adjusted net savings for any rent dissipation due to corruption the impacts of corruption on long run changes and periodic growth in the adjusted net savings rate are estimated across african and asian economies from 1970 to 2003 corruption rather than resource dependency per se affects negatively the ability of african countries to reinvest resource rents in the short term but for asian countries corruption is less important than point resources corruption influences long run growth in adjusted net savings rates in all countries and is also the pathway through which this growth is affected by patterns of resource use trade and abundance

genuine saving and positional externalities much evidence suggests that people are concerned with their relative consumption yet positional externalities have so far been ignored in savings based indicators of sustainable development this

investing exhaustible resource rents and the path of consumption we set out dollar valued net national product for an economy with a wasting essential stock oil deposit we take up maintaining capital intact and locally unchan ging consumption the percentage change in net investment or genuine savings relative to the market rate of interest denotes whether current consumption is rising