prices and quantities unsustainable consumption and the global economy abstract the ecological unsustainability of current consumption patterns is now well documented one aspect of this problem which has not been sufficiently addressed is the growth of excess consumption driven by falling goods prices the index of department store prices have fallen substantially since the early 1990s in large part because global capital mobility and excess global labor supply has allowed firms to depress wages and avoid paying environmental costs consumers have responded by purchasing increasing numbers of these artificially cheap goods the example of apparel is discussed in some detail and data from other goods categories are presented these trends suggest that achieving sustainable consumption in the us is not only a technical issue but will also involve fundamental changes in the global political economy to eliminate the artificially low prices of imported goods

sustainability as a fair bequest an evaluation challenge abstract in contrast to conventional approaches the conceptualisation of sustainability as fair bequest makes it possible to consider a finite time horizon valuation is necessary to determine whether the bequest package that is passed on from one generation to the next is fair acknowledging the merits as well as the limitations of economic price theory this paper differentiates between three classes of valuables the essential the useful and the unique it is argued that a fair bequest package should contain items from each of the classes because the three classes are incommensurable fairness of the bequest cannot be expressed by a single figure like a non declining total value of the package we then discuss which methods are appropriate for describing a bequest package with respect to its fairness

ecosystem service valuation for national accounting a reply to obst hein and edens 2016 while recent experimental frameworks for national ecosystem service accounting have shown substantial progress in our view some crucial methodological issues remain that deserve further consideration before setting final standards in response to the landmark work of obst et al environ resour econ 64 1 23 2016 doi 10 1007 s10640 015 9921 1 we provide arguments with regard to the suitability of particular valuation approaches generally we agree that respective valuation methods need to produce values that are consistent with national accounting standards such as representing exchange values however we disagree with their conclusions regarding specific valuation techniques firstly the circumstance that methods used for estimating shadow prices can also be used to derive consumer surplus does not justify the general exclusion of all shadow pricing methods for valuation of ecosystem services for national accounts especially for public ecosystem services secondly that preference based methods can also be used to assess welfare changes does not imply that cost based methods are generally better suited for ecosystem accounting to the contrary we see an essential need for preference information in accounting contexts thirdly that accounting standards use a written down replacement cost approach does not mean ecosystem accounting requires to employ a replacement cost approach to the contrary we argue that assessing ecosystem degradation through restoration costs would be in line with writing down depreciation but we also point to its limits

ecosystem wealth in the barents sea abstract we develop an inclusive wealth type index for natural capital in the barents sea that accounts for ecosystem services via trophic interactions we consider three key fish species in the barents sea under stochastic growth dynamics compared to evaluation at market prices the estimated wealth from the inclusive wealth approach is several times higher ecosystem wealth depends on the management scheme and we consider both business as usual bau and an optimized ecosystem based management scheme ebm while bau maintains wealth near its current level 5 increase in the long run ebm increases wealth with almost 20 in the short run and more than 25 in the long run realized shadow prices suggest that prey species stocks are undervalued when evaluated at market prices

a note on national income in a dynamic economy abstract we review the properties of the static measure of changes in economic welfare national income in a dynamic economy it is possible to establish attractive welfare properties by rather simple arguments and this can be estimated from current data its welfare properties are preferable to those of net national product and comparable to those of the state valuation function

status effects and environmental externalities abstract this paper examines a static competitive economy where the production of a consumption good generates pollution that adversely affects human welfare preferences are defined over consumption leisure pollution and economic status each person s status increases with her own consumption but decreases with the average consumption of society the achievement of a pareto efficient resource allocation requires a consumption tax to offset the incentive to overconsume in the pursuit of enhanced status in contrast with standard prescriptions the efficient pollution tax generally exceeds the sum of individuals marginal willingness to pay for pollution abatement these findings remain unaltered when preferences are modified to incorporate altruistic concern for others well being altruism however suggests a potential role for government intervention to achieve a desirable i e pareto efficient distribution of welfare between individuals

tariff endogeneity evidence from 19th century europe abstract this paper tests an endogenous tariff model for six european countries from around the mid 19th century until the eve of world war 1 ww1 the tariff rate was generally cointegrated with real gnp real wages the price level and the external trade balance results from granger causality tests suggest that real gnp and the price level may be important endogenous determinants of tariff levels

trade imbalance and the endogenous optimal tariff endogenous tariff literatures reveal empirically that trade imbalance is negatively related with import tariff this article gives a theoretical evidence and explanation to support this finding wit

the evolution of hyperbolic discounting implications for truly social valuation of the future abstract we explore the standard expected utility model and alternatives to it we then examine the behavioral and neurological evidence for hyperbolic discounting we discuss evidence related to the neurological and behavioral evolution of discounting in non human animals and in humans we explore new findings about the importance of sociality in human behavior and the implications for truly social time preference finally we discuss the implications of the neurological evidence on discounting for social environmental valuation in particular the implications for very long run decisions such as those involved in climate change mitigation and biodiversity preservation

environmental policy government and the market environmental policy is made in a context of both market failure and government failure on the one hand leaving environmental protection to the free market relying on notions of corporate social responsibility and altruistic consumer and shareholder preferences will not deliver optimal results on the other hand nationalizing the delivery of environmental protection is likely to fail because nation states rarely have the depth and quality of information required to instruct all the relevant agents to make appropriate decisions thus as for many areas of policy appropriate models of environmental intervention will lie between these two extremes while it is impossible to specify general rules concerning the precise form of intervention in part because the type of intervention depends upon value judgements this paper sets out some of the considerations that are particular to environmental policy and explores several principles for policy design including information coordination and principal agent problems with a particular focus on the international context

are positional concerns stronger in some domains than in others for more than one hundred years economists have discussed the concept of positional goods that the utility conferred by many perhaps even most goods depends not only on the amount the individual consumes but also on the amount others consume e g thorstein veblen 1899 james duesenberry 1949 john k galbraith 1958 robert frank 1985 while economic interest in positional goods is increasing e g mark pingle and mike mitchell 2002 kenneth arrow et al 2004 ed hopkins and tatiana kornienko 2004 the literature remains largely theoretical rather than empirical if status concerns affect all items in the utility function equally leisure as well as goods the positional effect would operate like a lump sum tax reducing well being without changing the allocation of time or money arrow et al 2004 however if positional concerns are stronger for some things than for others then in order to understand how people can become better off in well being not simply in wealth we must investigate how interpersonal competition interacts with material gains frank 1997 evidence about what goods are more positional than others is essential for correct policy recommendations gregory besharov 2002 but little is actually known about the relative positional rankings of items in the typical consumer s utility function four hypotheses proposed in the literature are

viable ramsey economies the ramsey model of economic growth is revisited from the perspective of viability theory the ramsey model augmented with minimal consumption and sustainability criteria becomes a viability problem the framework allows for a clear picture of optimal viable optimal non viable and viable non optimal paths the drastic sacrifices in terms of present consumption required by the implementation of brundtland sustainability are visualized the rich countries bearing the major part of the burden the econometric analysis of viability sets enhances the role of technological progress in ensuring brundtland sustainability preference parameters such as the pure time preference rate are statistically non significant

institutions of higher education as multi product firms economies of scale and scope a multiple output cost function is estimated for institutions of higher education in the united states employing data for 1981 82 the authors flexible fixed cost quadratic function includes three outputs undergraduate teaching graduate teaching and research grants and one input price average faculty salaries results indicate the existence of scope economies at least up to a point for both public and private institutions of higher education ray economies of scale are more pronounced in the private sector and product specific economies of scale are observed only in the public sector for research and graduate teaching copyright 1989 by mit press

incorporating resilience in the assessment of inclusive wealth an example from south east australia this paper explores the consequences of changes in a system s resilience on the sustainability of resource allocation decisions as measured by inclusive wealth iw arrow et al in environ resour econ 26 647 685 2003 we incorporate an estimate of resilience in iw by taking account of known or suspected thresholds that can lead to irreversible or practically irreversible changes in the productivity and value of assets and hence social welfare these thresholds allow us to identify policies or projects that may be leading to an increased risk of decline in capital stocks the wealth of the region such risks are not reflected through usual measures of current system performance e g agricultural production we use the goulburn broken catchment in south eastern australia as a case study to explore the significance and practicality of including resilience in inclusive wealth estimates

can sustainable consumption be learned a model of cultural evolution abstract this paper shows how sustainable consumption patterns can spread within a population via processes of social learning even though a strong individual learning bias may favor environmentally harmful products we present a model depicting how the biased transmission of different behaviors via individual and social learning influences agents consumption behavior the underlying learning biases can be traced back to evolved cognitive dispositions challenging the vision of a permanent transition toward sustainability we argue that green consumption patterns are not self reinforcing and cannot be locked in permanently

natural capital in integrated assessment models of climate change in integrated assessment models iams economic activity leads to global warming which causes future economic costs however typical iams do not explicitly represent the role of natural capital in this paper the dice model by nordhaus 2008 is expanded with a natural capital variable that is affected both by climate change and by depletive effects of economic activity due to a synergy between the two effects the optimal policy of the expanded model features more and earlier abatement of co2 emissions than dice interestingly the policy implications are different from what follows if one tries to capture the depletive effects on natural capital by simply reducing factor productivity growth in dice acknowledging considerable uncertainty simulations show that climate and savings rate policies from the expanded model are more robust in the long term than policies that do not consider non climatic depletion effects on natural capital

your money or your life green growth policies and welfare in 2050 this paper proposes a simple index of economic progress that weighs in the monetary cost induced by climate change mitigation policies as well as the health benefits arising from the reduction in local air pollution the shadow price of pollution is calculated indirectly through its impact on life expectancy taking into account the health benefits of mitigation policies significantly reduces their monetary cost in china and india as well as in countries with large fossil based energy producing sectors australia canada and the united states

assessing sustainability a comprehensive wealth accounting prospect an application to mozambique we estimate the wealth of mozambique in 2000 and 2005 in order to assess the sustainability of its development path our methodology builds on arrow et al 2010 we show that mozambican wealth increases through human and physical capital accumulation while the pressure on natural capital remains low the growth of total factor productivity enhances the outcome of the different capital assets but population growth has a strong downward effect on wealth per capita results suggest that mozambican development was sustainable between 2000 and 2005 but these remain ambiguous and are highly sensitive to data and assumptions used

unraveling the veil of fuzziness a thick description of sustainability economics this article provides a thick description geertz 1973 of sustainability economics baumgartner and quaas 2010a b have proposed as an alternative to ecological economics the new field of sustainability economics which has triggered various replies the purpose here is to order and to review these contributions building upon a literature review of sustainability economics the paper argues that the concept currently has more of a fuzzy and declamatory character the rhetoric mccloskey 1998 of sustainability economics contains general issues of sustainability economics externalities and the capability approach the article argues that it is currently not clear how the solutions for science and policy proposed by sustainability economics differ from those of ecological economics efforts should be directed towards further development of the theory and the operationalization of sustainability principles the systemic view of co evolutionary development social learning and sustainability economics normative underpinning merits more consideration in the debate about sustainability economics

testing tariff endogeneity in japan a comparison of pre and post war periods abstract this paper tests an endogenous tariff model for japan 1890 1970 using a vector autoregression var i find that tariff changes are endogenous in the post war period rather than being designed to promote economic activity this suggests that tariffs respond to macroeconomic disturbances

clarifying protected and utilitarian values of critical capital abstract sustainable development may be defined as a non declining value of capital stocks social natural built and human over time the ability for substitution between and within each stock over time has been widely debated resulting in the identification and then preservation of critical capital stocks we propose that critical can be defined from two ethical perspectives teleological or consequentialist goal or ends based and deontological moral duty and rule based the consequential ethic ensures critical capitals are utilitarian in value and they generate goods and services for the maintenance of human wellbeing whilst deontologically critical capital depends on culturally and psychologically protected values which may vary locally or at least as for e g biodiversity be open to conflicting opinions this separation in the basis for defining critical capital stocks leads to awareness that some tradeoffs between critical capital stocks may be irreconcilable or likely to lead to outrage a framework is developed to guide practitioners as to how to identify critical capital stocks using both protected and utilitarian values examples show that protected values are likely to be specific to community ethnic religious cultural etc and require different methods for resolving substitutability of capital stocks to achieve sustainable development

environmental policy and the economic downturn this paper considers how environmental policies should respond to macroeconomic downturns it first explores the implications of the global economic downturn of 2008 09 for environmental policies focusing in particular on the example of action against climate change the arguments for and against activist fiscal policies in general are then reviewed and the case made that a demand induced downturn provides a very good opportunity to undertake a necessary step change in the public spending component of environmental policies and to start working through a backlog of public investment to improve the environment fiscal policy should be used to improve the allocation of resources across time and space recent fiscal stimuli are considered in the light of this discussion it is also argued that there is little cause to delay the introduction of price signals to internalise environmental externalities but the levels at which such signals should be set requires careful analysis changes over the business cycle may be warranted depending on the nature of the environmental externality and the cause s of the business cycle in question

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

tariffs and growth in the late 19th century the paper estimates the correlation between tariffs and economic growth in the late 19th century in the context of three types of growth equation unconditional convergence equations conditional convergence equations and factor accumulation models it does so for a panel of ten countries between 1875 and 1914 tariffs were positively correlated with growth in these countries during this period economic theory is ambiguous as regards the relationship between trade policy and growth the growth literature of the past decade has produced an impressive array of models in which protection can either increase or reduce long run growth rates grossman and helpman 1991 rivera batiz and romer 1991 stokey 1991 young 1991 such theoretical ambiguity invites empirical research while new growth theory is ambiguous on the subject the new empirical growth literature has produced a consensus that free trade is positively associated with growth based on evidence from the late 20th century but see rodrlguez and rodrik 1999 for a sceptical review of the literature the clear

delegation ratification and u s trade policy why divided government causes lower tariffs recent research on executive legislative relations concludes that divided government causes higher tariffs and inhibits international cooperation i find that divided government leads to lower u s

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

the welfare economic theory of green national accounts this paper takes a critical look at the literature on green national accounts the problem studied is to find a linear index of economic variables that responds to perturbations in the same direction as social well being the thesis of a large literature that net national product which is a flow is that index in closed economies is shown in some interpretations to be simply false and in others to suffer from deep estimation problems it is argued that capital depreciation using shadow prices should certainly be included in national accounts but that the right welfare index is a comprehensive measure of wealth defined as the shadow value of an economy s stock of all capital assets it is shown that comprehensive wealth is usable as a criterion for policy evaluation as well as for determining sustainable economic development

environmental choices and hyperbolic discounting an experimental analysis environmental goods such as carbon abatement or green space development often generate benefit streams that may not occur until far into the future how individual consumers value such amenities therefore depends critically on the discount rate the usual assumption is that agents discount future values using constant exponential rate but there is some evidence from the lab suggesting that discount functions are more likely quasi hyperbolic we compare estimates of subjects rate of intertemporal time preference for financial rewards and environmental goods using multiple price list and a new matrix multiple price list approaches our objective is to determine if discount functions for environmental and monetary goods differ and to estimate the structure of discounting in both contexts we find that financial discount functions are not hyperbolic but those for environmental goods are discount rates for environmental goods are generally lower than for financial rewards but are still above zero consumers therefore value long lived environmental goods differently than financial goods

optimal versus sustainable degrowth policies abstract this paper introduces a natural resource and pollution in a ramsey growth model which relies on the postulates of ecological economics it studies the impact of voluntary degrowth policies on production and welfare the instrument of these policies is a tax on the natural resource these public policies are implemented after the downturn of the households welfare following from the increased pollution two kinds of policies are considered and rely either on an optimality criterion or on an intergenerational equity criterion with respect to the laissez faire case they decrease both production and pollution but increase welfare classes of sustainable degrowth paths characterized by time constant or time increasing tax rates are determined

structural decompositions of energy consumption between 1995 and 2009 evidence from wiod abstract energy is key to achieving sustainable development this paper explicitly distinguishes between the supply side of energy consumption and demand side of energy consumption and investigates the factors that affect the energy consumption across economies using data from the world input output database wiod this paper decomposes the relative changes of energy consumption into intensity effect production structure structural change in final demand total final demand effect and household consumption then it further decomposes production structure into inter industry structural effect and trade effect in intermediate inputs overall energy consumption growth is mainly driven by total final demand 55 04 increase at the world level but can be significantly reduced by intensity effect due to technological change 21 02 decrease at the world level there is heterogeneity of structure related effects across economies and within the same economy in both aspects of energy consumption in addition the trade effect and household effect are relatively small this paper provides an empirical framework for analyzing energy consumption in a globalizing world and suggests tailored and integrated energy policies

corruption institutions and economic development many scholarly articles on corruption give the impression that the world is populated by two types of people the sanders and the greasers the sanders believe that corruption is an obstacle to de velopment while the greasers believe that corruption can in some cases foster development this paper takes a critical look at these positions it concludes that the evidence supporting the greasing the wheels hypothesis is very weak and shows that there is no cor relation between a new measure of managers actual experience with corruption and gdp growth instead the paper uncovers a strong negative correlation between growth in genuine wealth per capita a direct measure of sustainable development and corruption while corruption may have little average eect on the growth rate of gdp per capita it is a likely source of unsustainable development

questioning demand a study of regretted purchases in great britain abstract this paper presents findings from a nationally representative household survey on the tendency to regret purchases across 20 product groups the survey reveals that the vast majority of adults in great britain 82 have regretted a purchase in the past post purchase regret is shown to be particularly prevalent for clothing footwear and takeaway food the tendency to regret purchases appears to reduce with age and to be more common amongst white collar rather than blue collar workers combining survey results with average price estimates gives an estimated aggregate annual expenditure on regretted purchases of 5 25bn equivalent to 2 10 of annual consumer spending on goods in great britain these findings are interesting because they suggest that there is a degree of self assessed over consumption that if reduced could help to reduce pressures on the environment

a dynamic analysis of human welfare in a warming planet anthropogenic greenhouse gas ghg emissions have caused atmospheric concentrations with no precedents in the last half a million years inducing serious uncertainties about future climates and their effects on human welfare recent climate science supports the view that the climate stabilization will require very low ghg emissions in the future we ask is a path of low emissions compatible with sustainable levels of human welfare with steady growth in human quality of life addressing these questions requires both defining welfare criteria and empirically estimating the possible paths of the economy we specify and calibrate a dynamic model with four intertemporal links education physical capital knowledge and the environment in line with nordhaus 2008a and with the stern review 2007 we assume that ghg emissions allow increased production while a higher stock of atmospheric carbon decreases production our index of human welfare which we call quality of life quol emphasizes education knowledge and the environment affected by greenhouse gas emissions in addition to consumption and leisure thus we avoid a consumptionist fallacy that welfare depends only on commodity consumption and perhaps leisure we reject discounted utilitarianism as a normative criterion and consider two alternatives the first is an intergenerational maximin criterion which maximizes the quality of life of the first generation subject to maintaining at least that level for all successive generations the second is human development optimization that seeks the maximization of the quol of the first generation subject to achieving a given constant rate of growth in all subsequent generations hence our analysis focuses on a human notion of sustainability as opposed to the conventional green sustainability limited to keeping the quality of the environment constant because our dynamic optimization programs defy explicit analytical solutions our approach has been computational as a benchmark we consider a simple model with physical and human capital for which we prove a turnpike theorem we then devise a computational algorithm inspired by the turnpike property to construct feasible although not necessarily optimal paths in the more complex and realistic model our analysis indicates that with ghg emission paths entailing very low emissions in the future positive rates of growth in quol are possible while the first generation experiences a quol higher than the historical reference level we also observe a tradeoff between the quality of life of the first generation and the rate of growth in the quality of life yet generation 1 s sacrifice for the sake of a higher growth rate appears to be small the paths that we compute involve investments in knowledge at noticeably higher levels than in the past

the economic analysis of biodiversity an assessment biodiversity is complex difficult to define difficult to measure and often involves international and intergenerational considerations biodiversity loss presents significant economic challenges a great deal of economics is required to understand the issues but a simple and important observation is that most species and ecosystems are not traded in markets so prices are often absent and biodiversity is under provided despite the formidable obstacles to high quality economic analysis economics has plenty to offer to biodiversity policy first economic valuation techniques can be employed to roughly estimate the value of the benefits provided by biodiversity and ecosystems second assessing the optimum amount of biodiversity involves recognizing that the conversion of natural capital into manufactured and human capital has so far generated vast amounts of wealth while there may have been too much biodiversity in the past economic analysis suggests that this is a difficult position to hold now third econometric techniques and carefully designed policy studies can assist in determining what policies are most suited to different contexts to cost effectively reduce biodiversity loss fourth political economy is helpful because international coordination is often required ecosystems do not respect national borders and many biodiverse ecosystems are in poorer countries this paper synthesizes the issues and proposes a research agenda which includes improving the measurement and accounting of natural capital improving valuation techniques and theory to provide greater guidance as to the optimum biodiversity and developing our understanding of the merits of different alternatives for government intervention to reduce biodiversity loss

subject mix and productivity in portuguese universities abstract recent changes in higher education especially associated with its massification have led to calls for more accountability and to an increasing need to evaluate universities performance however comparing universities with different subject mixes poses some significant problems in this article a linear mixed effect model methodology allowing for random effects at university level is used to measure the productivity of portuguese public universities taking into account their subject composition for a period of five years 1997 2001 the results show that subject mix is an important factor in explaining the variability in productivity between universities however even taking account of subject mix a lot of inefficiency is found in the system and a significant variability in productivity among universities exists

the economics of special interest politics the case of the tariff this paper investigates the interaction of politicians and special interest lobbies the goal is to model the equilibrium levels of redistributive policies such as taxes subsidies tariffs and regulatory decisions the model is applied throughout to the setting of tariffs by contributing to political campaigns special interest lobbies generate economic returns higher tariffs generate revenue for import competing industries through higher product prices higher milk support prices raise dairy farm income and so forth the lobby invests to maximize these net economic returns in evaluating their chances of election politicians weigh the favorable effects of special interest money against the unfavorable association with the lobby and the social cost of the redistributive policy section i explores the lobby s problem it describes a formalization of mancur olson s discussion of the voluntary provision of public goods and optimal contributions by lobbies to political campaigns section ii describes determination of the equilibrium tariff positions of each politician in a political campaign

performance assessment in higher education in britain all public sector organisations in the uk have witnessed changes in funding arrangements during the 1980s as part of the government s drive to make them more accountable to the tax payer the development of performance indicators is seen as an essential step to ensure that such organisations provide value for money this paper examines the possibility of constructing measures of the performance of uk universities a methodology is developed in the framework of production theory and uses multiple regression techniques to estimate the relationship between the outputs and inputs of universities around 80 of the inter university variation in four output measures can be explained by corresponding variations in several input measures this highlights the need to take into account the inputs available to a university when comparing its output performance with that achieved by other institutions the problems of interpreting an array of performance indicators are also clearly demonstrated

u s trade policies in a changing world economy this collection of original essays focuses on issues of international trade and trade policy in a world that is undergoing structural adaptation and in the face of a serious increase in the us trade deficit they bring a new consolidation of analytical perspective to a wide variety of current trade policy issues in their overview chapter alan v deardorff and robert m stern discuss developments in trade and protectionism review the case for free trade and address the arguments in favor of trade intervention rudiger dornbusch and jeffrey frankel analyze the macroeconomic setting in which changes have been made in us tariffs and ntbs stephen p magee and leslie young develop a model of endogenous protection and use it to search for microeconomic and macroeconomic variables that may help to explain changes in tariff and nontariff protection in the us since 1900 paul krugman takes up the question of identifying strategic sectors and the extent to which international competition and national government policies may affect the returns to such sectors under conditions of imperfect competition or when externalities are present avinash dixit analyzes the responses that the us might make to other countries trade policies in terms of how these policies affect us real national income and national security he concludes that the us could use strategic advance responses to alter other countries trade policies in a mutually beneficial way richard n cooper evaluates trade policy as foreign policy by looking at changes through three periods of us history t n srinivasan scrutinizes the national defense argument for government intervention in foreign trade john h jackson in discussing alternative negotiation approaches for the conduct of us trade policies observes that the pursuit of multilateralism may be frustrating and that what may be needed instead is a minilateral approach to trade liberalization in conclusion w max corden offers a package of rules that he believes may be both desirable and possible for the international trading system to attain robert m stern is professor of economics at the university of michigan and director of the institute of public policy studies he is coauthor with allan v deardorff of the michigan model of world production and trade mit press 1985

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

ownership risk investment and the use of natural resources the effect of insecure ownership on ordinary investment and natural resource use is examined insecure ownership is postulated to depend on the type of government regime in power and the prevalence of political violence or instability the political determinants of economy wide investment are estimated from cross country data and the results are used to form an index of ownership security when introduced into empirical models of natural resource use this index has a significant and quantitatively important effect on the use of forests and petroleum contrary to conventional wisdom ownership risk slows resource use in some circumstances

a portfolio balancing approach to natural capital and liabilities managing livestock and wildlife diseases with cross species transmission researchers often refer to stocks of desirable natural resources as natural capital and stocks of undesirable species as natural liabilities the logical extension is that when these natural resources interact then the ecosystem is a collection or portfolio of natural capital and liabilities however natural capital and liabilities held in an ecosystem portfolio are more complex to manage than financial asset portfolios the key problem in a financial asset portfolio is adjusting the rates of return on assets for risk and correlation of risk in contrast the returns on natural assets and liabilities require many other adjustments arising from stock related returns and depreciation that endogenously depend on both stocks and controls including interactions among these variables this means ecosystem portfolio analysis extends beyond the consideration of uncertainty and involves understanding complex economic ecological tradeoffs even in a deterministic setting we use capital theory in the context of a deterministic bioeconomic model of valuable wildlife livestock and a pathogen that can be passed between them to develop a portfolio balancing approach to understanding the tradeoffs associated with ecosystem management this specific ecosystem is highly relevant to conservation health and livestock agriculture within the context of this example we also explore issues of mitigation and adaptation to disease risks and the management implications of cross species transmission a final contribution is to examine how exports and infection risks influence the ecological thresholds that epidemiologists often focus on to guide disease management

assessing the role of energy in development and climate policies conceptual approach and key indicators summary the paper discusses a number of key conceptual issues related to the role of energy in development and its potential synergies and tradeoffs with climate change the relationship between economic development and energy over time is discussed and illustrated by data from china india and south africa and some other countries it concludes that energy plays an important role as a productivity enhancing factor in economic development and in human well being several policy goals related to sustainable development energy and climate can be integrated however meeting all these policy goals requires a special effort and has significant cost implications

ethics politics and nonsatiation in consumption a synthesis in contrast with the production of goods and services by firms where the production costs are minimized under appropriate behavioral assumptions consumer producers in neoclassical theory maximize consumption expenditure i e production costs of their outputs according to kenneth boulding were the impact upon the limited resources available on planet earth taken into account consumption expenditure should be minimized we propose that we keep consumer theory as a reasonable description of reality however we should evaluate the long run consequences of such postulated behavior in a larger context which as a consequence of larger population with increasing per capita consumption comprises the overburdening of natural resources by decomposing the time horizon of cultural evolution into shorter periods of adjustment we may then distinguish several types of institutional determination of how societies take decisions as a group and individually the consumer theory simply reflects the predominant ethical values of which ideologies political platforms and demand patterns are shorter run adjustments

spatial aggregation and the value of natural capital abstract location matters for the value of capital assets the value of changes in natural capital wealth can depend on whether natural capital asset prices are measured locally and then aggregated or whether average values are applied over aggregate representative areas spatial heterogeneity of resource characteristics and institutions impact approximations of the intertemporal welfare function and accounting price function because when spatial aggregation precedes valuation it implies greater arbitrage opportunities leading to more inelastic shadow accounting price functions than when valuation is done locally and then aggregated aggregation of observed values across varying resource and institutional characteristics can lead to omitted variables bias we illustrate these results in the context of groundwater in the kansas high plains aquifer and demonstrate that the accounting price function is less elastic when the accounting price is measured locally failure to measure locally and then aggregate could lead to undervaluing scarce resources and overvaluing plentiful ones which biases wealth accounts in favor of passing the non declining wealth sustainability test

the economics of the climate i review the economic characteristics of the climate problem focusing on the choice of discount rates in the presence of a stock externality risk and uncertainty ambiguity and the role of integrated assessment models iams in analyzing policy choices i suggest that iams can play a role in providing qualitative understanding of how complex systems behave but are not accurate enough to provide quantitative insights arguments in favor of action on climate issues have to be based on aversion to risk and ambiguity and the need to avoid a small but positive risk of a disastrous outcome

are we consuming too much this paper articulates and applies frameworks for examining whether consumption is excessive we consider two criteria for the possible excessiveness or insufficiency of current consumption one is an intertemporal utility maximization criterion actual current consumption is deemed excessive if it is higher than the level of current consumption on the consumption path that maximizes the present discounted value of utility the other is a sustainability criterion which requires that current consumption be consistent with non declining living standards over time we extend previous theoretical approaches by offering a formula for the sustainability criterion that accounts for population growth and technological change in applying this formula we find that some poor regions of the world are failing to meet the sustainability criterion in these regions genuine wealth per capita is falling as investments in human and manufactured capital are not sufficient to offset the depletion of natural capital

low climate stabilisation under diverse growth and convergence scenarios abstract in the last decade a number of papers have analysed the consequences of achieving the greenhouse gas concentration levels necessary to maintain global temperature increases below 2 c above preindustrial levels most models and scenarios assume that future trends in global gdp will be similar to the growth experienced in the past century which would imply multiplying current output by about 19 times in the 21st century however natural resource and environmental constraints suggest that future global economic growth may not be so high furthermore the environmental implications of such growth depend on how it is distributed across countries this paper studies the implications on ghg abatement policies of low global gdp growth and high convergence levels in gdp per capita across countries a partial equilibrium model poles of the world s energy system is used to provide detailed projections up to 2050 for the different regions of the world the results suggest that while low stabilisation could be technically feasible and economically viable for the world in all the scenarios considered it is more likely to occur with more modest global growth however that will imply higher global abatement costs relative to gdp convergence in living standards on the other hand places greater pressures in terms of the required reduction in emissions in general we find that there are major differences between regions in terms of the size and the timing of abatement costs and economic impact

regime shifts and resilience in fisheries management a case study of the argentinean hake fishery we investigate the role of potential regime shifts in argentinean hake fishery and the inter linkage between ecological and economic resilience we develop a theoretical model incorporated with the hazard function for resource management under alternative conditions and derive the corrective tax applying the model to the case of argentinean hake fishery we obtain insights for fishery management in the presence of risk for a regime shift based on three value functions our model simulation indicates that the higher the relative loss from the fishery collapse the more important the risk management would be with the resilience value taken into account a higher level of fish stock leads to a higher optimized value and a lower corrective tax rate when the stock level is lower we need to introduce a higher tax rate to best avoid the fishery collapse decomposing the marginal value of the fish stock into a stock service value for fish production and a resilience value for flip risk reduction we find that a higher fish stock leads to a lower tax rate because of the higher resilience of the fish stock and hence the corrective tax rate as an instrument for managing fishery becomes less important

the shallow or the deep ecological economics movement ecological economics and its policy recommendations have become overwhelmed by economic valuation shadow pricing sustainability measures and squeezing nature into the commodity boxes of goods services and capital in order to make it part of mainstream economic financial and banking discourses there are deeper concerns which touch upon the understanding of humanity in its various social psychological political and ethical facets the relationship with nature proposed by the ecological economics movement has the potential to be far reaching however this is not the picture portrayed by surveying the amassed body of articles from this journal or by many of those claiming affiliation a shallow movement allied to a business as usual politics and economy has become dominant and imposes its preoccupation with mainstream economic concepts and values if instead ecological economists choose a path deep into the world of interdisciplinary endeavour they will need to be prepared to transform themselves and society the implications go far beyond the pragmatic use of magic numbers to convince politicians and the public that ecology still has something relevant to say in the 21st century author s abstract

sustainability in uncertain economies a stochastic growth model with a list of capital assets i e reproducible capital non renewable resources the knowledge base and institutions is studied to evaluate the effects of different sources of uncertainty on sustainability it is also discussed which measure can serve as an index of intergenerational welfare to evaluate sustainable development under uncertainty the aim is to consider a more comprehensive setting than is usually explored in the literature and to generalize arrow dasgupta and maler results to the case of uncertainty

import prices and the political economy of tariffs evidence from germany japan and the united states 1954 1994 abstract endogenous protection theory suggests that macroeconomic conditions affect tariffs through policy responses to political pressure however import prices affect average tariffs even in the absence of policy changes i examine the effects of import prices and macroeconomic conditions in postwar germany japan and the united states finding strong evidence for the effect of import prices but little evidence consistent with endogenous protection theory

the environment as a commodity all economic activity is based ultimately on re sources found in nature whether it is consumption the point in exposing the morphology of produced or production or whether it is exchange the comgoods and services is not to construct a resource moditi es which are involved are made of constitutheory of a value there are any number of natural ents provided by nature thus the ingredients of resources and this alone precludes such an at any manufactured good are other produced goods tempted theory from being coherent my purpose labour time and skills and natural resources each rather is to use it to express surprise at the fact that of these constituent produced goods is in turn made despite the centrality of natural resources in eco up from the ingredients that went into its manufacnomic activity they find little room in economics ture namely labour time and skills natural rediscourses interest in resource economics more sources and further produced goods it follows particularly environmental economics has only that any manufactured commodity is ultimately a been intermittent and if we are currently witness combination of labour and natural resources ing a resurgence and this special issue is an ex ample of it we have also just lived through a labour too is a produced good even raw labour is decade long neglect during which much valuable an output manufactured by those natural resources research could have been done 2 we are way behind which sustain life resources such as the multitude where we should have been and could have been

regulating environmental threats environmental consequences of natural resource exploitation often entail threats of future occurrences of detrimental abrupt events rather than or in addition to inflicting a damage gradually the possibility of abrupt occurrence of climate change related calamities is a case in mind the uncertainty associated with the realization of these threats and their public bad nature complicate the design of optimal economic response we derive a pigouvian hazard tax schedule that implements the socially optimal outcome the tax is based on the expected cost of the hazard generating activities and serves to reduce hazardous emissions well in advance of the catastrophic occurrence a numerical example illustrates possible effects of the proposed regulation scheme implications for climate policy are discussed

sustainable development and resilience in ecosystems two new important developments in environmental and resource economics is presented non convex dynamics of ecosystems and wealth as an indicator of sustainable development non convex dynamics imply existence of resilience that is the robustness of systems to withstand exogenous perturbations resilience can be regarded as an insurance against flips of the system into different basins of stability sustainable development according to the bruntland report is the provision of productive resources to future generations to make it possible for them to live as well as the present generation thus the value of changes in productive assets is therefore an index of whether an economy is on a sustainable path or not resilience can be regarded as one such productive asset and the paper discusses how one can define the value of this asset

status effects and negative utility growth this paper explains the observed stagnation of happiness measures through a growth model in which agents care about conspicuous consumption normal goods confer direct utility while status goods confer utility only at the expense of others firms can improve the quality of both goods through r d the nash equilibrium of the consumer game results in the share of expenditure on status goods increasing with the number of times the status good has been improved as the economy grows resources for innovation are transferred entirely to status good r d the resulting long run rate of utility growth is negative

environmental sustainability as the first principle of distributive justice towards an ecological communitarian normative foundation for ecological economics abstract the ecological economic concern with environmental sustainability embodies the normative orientations of the field this concern is foremost a matter of distributive justice the definition of which determines the relevance of the appropriate scale and efficient allocation criteria yet it would appear that the discipline lacks a shared internally consistent set of ethical premises by which this concern might be legitimized various authors have embraced a rawlsian conception of liberal justice as the appropriate banner for ecological economics in place of the consequentialist libertarian foundations of neoclassical economics including environmental economics it is argued here that this is insufficient in so far as it is premised on a vision of a discrete self sufficient economic actor instead it is posited that an ecological economic ethic must proceed from an understanding of the economic actor as community member a recognition implicit in recent ecological economic contributions focused on discourse ethics and deliberative democracy an ecological communitarian conception of distributive justice which views the well being of the individual as inseparable from the integrity of its implicate mutually constituting human and non human natural communities is advanced as the appropriate basis for the ecological economic world view in this light the thermodynamic foundations of ecological economics are seen to provide the necessary departure point for normative decision making oriented towards ensuring sustainability in economic organization

inclusive wealth with a changing but aging population we consider the effect of population age distribution in inclusive wealth accounting numerical results demonstrate that the wealth of nations with an aging demographic structure as well as those with a rapidly increasing working age generation may have been overestimated

the seea based integrated economic environmental modelling framework an illustration with guatemala s forest and fuelwood sector this paper develops and operationalizes the integrated economic environmental modelling ieem platform which integrates environmental data organized under the first international system of environmental economic accounting with a powerful dynamic economy wide modelling approach ieem enables the ex ante economic analysis of policies on the economy and the environment in a quantitative comprehensive and consistent framework ieem elucidates the two way interrelationships between the economy and environment considering how economic activities depend on the environment as a source of inputs and as a sink for their outputs in addition to standard economic impact indicators such as gross domestic product income and employment ieem generates indicators that describe policy impacts on the use of environmental resources wealth and environmental quality which together determine prospects for future economic growth and well being to illustrate the analytical capabilities of ieem the model is calibrated with guatemala s seea and applied to analysis of its forest and fuelwood sector where negative health and environmental impacts arise from inefficient fuelwood use

irreversibility and uncertainty cause an intergenerational equity efficiency trade off abstract two important policy goals in intergenerational problems are pareto efficiency and sustainability i e intergenerational equity we demonstrate that the pursuit of these goals is subject to an intergenerational equity efficiency trade off our analysis highlights two salient characteristics of intergenerational problems and policy i temporal irreversibility i e the inability to revise one s past actions and ii uncertainty of future consequences of present actions in human environment systems we employ a two non overlapping generations model that combines an intragenerational production decision on the use of circulating capital and a non renewable resource with a negative intergenerational externality as an unforeseen contingency if initially unknown problems become apparent and policy is enacted after irreversible actions were taken policy making faces a fundamental trade off between ex post pareto efficiency and sustainability that is one can achieve either one of these two goals but not both

estimating intergenerational distribution preferences resource management decisions influence not only the output of the economy but also the distribution of utility between groups within the community the theory of cost benefit analysis provides a means of incorporating distributional changes into the decision making calculus through the application of distributional or welfare weights however this practice has not been widely adopted in part due to difficulties in the estimation of distributional weights this paper addresses this problem by using the stated preference method of choice modelling to estimate distributional weights suitable for inclusion in a cost benefit analysis framework the findings of a choice modelling experiment designed to estimate community preferences with respect to intergenerational utility distribution illustrate the potential of this method in addressing distributional issues

discounting climate and sustainability climate policy recommendations differ widely because of disagreements over what discount rates to use disagreement reduces the impact of economic models and signals a need for improved methodology the problem is related to the choice of intergenerational welfare functions a first questionnaire finds that the standard welfare function swf fails to capture people s dislike of overshooting and fluctuating consumption paths a second questionnaire reveals that when very long term sustainability of well being is threatened people s implicit discount rates resemble the low estimates used by the stern review an alternative welfare function awf reflecting consumption growth can potentially capture the preference structure revealed in both questionnaires this makes the awf an interesting candidate when searching for policies for sustainable development under uncertainty importantly the questionnaires demonstrate that people are able to choose among policies by inspecting time graphs of policy consequences thus it is possible to circumvent the complexities and disagreements introduced by welfare functions and discounting

choices and the value of natural capital sustainability requires maintaining opportunities for future generations so they can meet their needs opportunities are passed to future generations through a set of capital assets nature provides an important class of these assets but markets seldom reveal the marginal value of natural capital rather the marginal social worth or asset price must be imputed based on intertemporal exchange in the context of assessing whether intertemporal allocation rules lead to sustainable development appropriate asset prices must be based on the actual allocations and trade offs society makes therefore measuring economic programmes that enable the measurement of asset prices is an important empirical task we review the theory of measuring natural capital asset prices and discuss the key elements of measuring economic programmes that enable the measurement of natural capital asset prices we place the measurement of economic programmes and natural capital asset prices in the context of wealth based sustainability metrics