paying down the environmental debt we reflect on scenarios of sustain able development constant utility paths in which the stock of pollution is drawn down by investments in environmental cleanup we also report on con stant utility as interest on the vector of capital stocks in our economy jel 02 the costs of cleaning up the environment involve multiyear programs for many sites and or problems and sums in the billions of dollars we have superfund activities in the united states in mind but obviously the site cleanup problems facing the people of eastern europe are also very large scale cleanup expenditures resemble programs of investment in infrastructure rather than once over disbursements for troubleshoot

sustainability policy and environmental policy a theoretical representative agent economy with a depletable resource stock polluting emissions and productive capital is used to contrast environmental policy which internalises externalised environmental values with sustainability policy which achieves some form of intergenerational equity the obvious environmental policy comprises an emissions tax and a resource stock subsidy each equal to the respective external cost or benefit sustainability policy comprises an incentive affecting the choice between consumption and investment and can be a consumption tax capital subsidy or investment subsidy or a combination thereof environmental policy can reduce the strength of the sustainability policy needed more specialised results are derived in a small open economy with no environmental effects on utility

using genuine savings for climate policy evaluation with an integrated assessment model there has been a recent increase in efforts to develop broader models to assess the impact of climate change and climate change policies both in terms of impact measures beyond gdp and in terms of modelling complexity beyond dice rice models climate policies aimed at reducing co2 emissions can have impacts in multiple sectors of the economy and can change consumption levels over time we show how the sustainability indicator genuine savings can be endogenised within a general equilibrium model and used as a criterion for judging the impacts of such policies in terms of future well being differences in genuine savings rates between co2 emission reduction scenarios are discussed we show how a broader genuine savings based assessment of climate change can result in a re evaluation of the consequences and costs of inaction in terms of various climate change related policies and how multiple environmental and well being outcomes can be analysed within a unified modelling framework

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

historical wealth accounts for britain progress and puzzles in measuring the sustainability of economic growth we thank the leverhulme trust for funding this research under the project history and the future

welfare measurement under threats of environmental catastrophes abstract welfare measures under threats of environmental catastrophes are studied using the parable apparatus of weitzman and lofgren on the welfare significance of green accounting as taught by parable j environ econ manage 32 1997 139 153 the occurrence probability of the catastrophic events is driven at least partly by anthropogenic activities such as natural resource exploitation without external effects the green nnp is a genuine welfare measure vis a vis a particular parable economy often however the occurrence hazard constitutes a public bad treated as an externality by agents who ignore their own contribution to its accumulation in such cases the green nnp although accounting for the event hazard rate per se fails to properly internalize future effects on the hazard rate of current economic activities and as a result overestimates welfare the bias term associated with the green nnp is derived and expressed in a simple and interpretable form

forward integration by a monopolist some extensions vertical integration by imperfectly competitive firms poses both positive and normative economic questions the positive questions concern the incentives of such firms to engage in forward or backward integration on the other hand the normative questions concern the impact of integration by such firms on social welfare if the incentives of imperfectly competitive firms lead to a welfare gain then there is no need for public intercession in the process say by antitrust authorities however if private incentives are at odds with social welfare then public policy attention may be needed these matters are considered in an extensive theoretical and empirical literature on vertical integration a review of the central issues in this literature is provided by machlup and taber 5 and warren boulton 12 here i shall focus on the recent work by schmalensee 8 and warren boulton 11 on forward integration by a monopolist the basic insight of their models is as follows suppose a monopolist is producing a product used as an input by a competitive downstream industry in variable proportions with another input monopoly pricing of the first input induces inefficient input utilization by the downstream industry in the production of the final good the monopoly input price exceeds its marginal costs of production the resulting efficiency loss represents an incentive for the monopolist to integrate forward by producing the final product in an integrated firm the monopolist transfer prices the otherwise monopolized input at marginal costs and thereby converts the efficiency loss into profit this point was originally made by burstein 3 but the recent work appears to have been motivated by the graphical formulation of vernon and graham 10 after developing the case of a fixed proportions technology we present the vernon and graham illustration

analysis of genuine saving and potential green net national income portugal 1990 2005 abstract the context of this paper is the measurement of welfare and weak sustainability defined as non declining utility in dynamic economies i e comprehensive or green accounting we estimate green net national income gnni and genuine saving gs for portugal for the years 1990 to 2005 accounting for the disamenity of air pollution emissions the depreciation of commercial forests and the value of time discussing the implications of the assumptions underlying the inclusion of these terms in the green accounting model the influence of short run cycles is analyzed by estimating gnni excluding business cycles our results suggest that business cycles affect the sustainability message of gnni we find that potential gnni is growing and gs is positive in the analyzed period thereby not indicating a weak sustainability problem in portugal although both depict a trend towards unsustainability excluding technological progress there is a contradiction in the sustainability message of gnni and gs

sustainability and technical progress a rigorous model connects together the following three basic concepts 1 sustainability meaning the generalized future power of an economy to consume over time 2 green nnp meaning a current measure of national income that subtracts off from gnp not just depreciation of capital but also more generally depletion of environmental assets evaluated at current efficiency prices 3 technological progress meaning a projection onto the future of the so called solow residual a simple general formula is derived some crude calculations suggest a possibly strong effect of the residual which hints that our best present estimates of long term sustainability may be largely driven by predictions of future technological progress

air pollution and green accounts a simple model treating air emissions as cumulative pollutants is used to derive measures of green net national product the model implies that pollution emissions are properly valued at their marginal social costs in the measurement of green nnp the level of genuine savings net savings less the value of resource depletion and pollution emissions is shown to provide a useful indicator of sustainable development recent figures on the social costs of fuel cycles are used to derive genuine savings measures for the uk and other european nations several countries had negative genuine savings during the 1980s

social accounting and welfare measurement in a growth model with human capital this paper addresses social accounting and welfare measurement in an economy where human capital is an important factor in the economic system human capital accumulation depends on the time consumers spend in education however human capital is also a separate argument in the production function facing firms which gives rise to a production externality in a command optimum where the externality is internalized we show that an augmented nnp measure is the appropriate welfare indicator we also discuss the taxtransfer system required for the decentralized economy to reach a command optimum

the role of technological progress in testing adjusted net savings evidence from oecd countries abstract in this paper we investigate the relationship between comprehensive measures of savings and changes in future consumption in oecd countries this relationship is at the basis of the interpretation of adjusted net savings as a weak sustainability indicator and so evidence of its validity provides support to the use of this indicator we construct various measures of comprehensive savings for 20 oecd countries to include depletion from non renewable resources human capital investment and technological progress given their importance especially for rich countries we focus on the role of technical progress and human capital in the form of changes in education level we do not find strong evidence in favor of including green adjustments in the conventional net savings however we find compelling evidence for the inclusion of technological progress since this involves a forward looking term the above result suggests that to construct an indicator of weak sustainability from conventional net savings some estimate of future technological progress is needed

investment and economic growth abstract the paper revisits the old question how much does investment contribute to economic growth building on recent work of maurice scott it suggests that the analysis of growth in developing as in the industrial countries would benefit from a capital accumulation approach in the following analysis economic growth is related to three variables all greatly influenced by the quality of economic policies the rate of investment the social rate of return to investment and the investment induced returns to labor

does nnp growth indicate welfare improvement abstract we show that instantaneous increases in real nnp over time are an accurate indicator of true dynamic welfare improvements this highlights a connection between the theory of green or comprehensive national income accounting and the theory of real price indices

global welfare comparisons to provide a normative foundation for transfers between dierent economies one needs information on their per capita welfare this paper considers various methods for doing this and reaches the following main conclusions i such global welfare comparisons are more demanding than usually thought ii the ranking of methods diers from that of local e g over time comparisons with real comprehensive per capita nnp being the least impractical method the lesson is that global welfare comparisons should be performed with great care the comparisons must be made in local real prices calculated according to purchasingpower parity where non traded environmental amenities play an important role

one sided sustainability tests with amenities and changes in technology trade and population abstract if an economy with multiple consumption goods including environmental amenities uniquely maximises present value with constant discounting it is unsustainable at some time if either of two measures augmented net investment or the change in augmented green net national product are zero or negative then augmented denotes that time is treated as a productive stock which includes in each measure the value of future exogenous changes in technology or terms of trade adjustments are found to make each measure a test for individual sustainability when population grows exogenously the practical and philosophical rationale for testing sustainability in a present value maximising and therefore fully prescribed development path is discussed

the paradox of vertical integration antitrust policy and commentary include a persistent suspicion that vertical integration may increase market power in the integrated industries the facet of this suspicion that economists have analyzed most is conveyed as follows suppose that a pure monopoly sells an intermediate good to the firms in a final product industry and that the monopolist acquires all of those firms since the firms in the final product industry have been combined vertical integration has extended monopoly to a second industry the integration does not improve production technologies or product traits in either industry nor reduce transaction costs thus abstracting from any economies of integration this paper concerns the paradox that economic models usually show vertical integration increasing economic welfare in spite of the extension of monopoly and even in the absence of any economies since economies would also enhance welfare these models contradict the suspicion that vertical integration is harmful in a recent survey of these models blair and kaserman have commented that o n the basis of these results the economics profession generally argued that the appropriate antitrust policy regarding vertical integration was conciliation at best or neutrality at worst 2 2 the only contrary result is in models where inputs are substitutable in final production sometimes vertical integration reduces welfare however in order to focus sharply on the paradoxical welfare result this paper assumes fixed input proportions and ignores any economies of integration section i has a summary model that sets the stage for the succeeding analysis the principal discovery of this paper is that the paradox is not in general valid even for a simplified model this discovery appears when the assumption of pure input monopoly which is universal in the existing literature is relaxed in section ii the new model includes situations in which integration reduces welfare contrary to the usual result these contradictory situations have strong implications for antitrust policy because the analysis also shows that they ate the only kinds of situations that antitrust enforcers are likely to confront

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

the concept of income in a general equilibrium this paper derives a concept of aggregate real income for a competitive economy in general equilibrium consisting of heterogeneous infinitely lived people and relates it to current and future consumption possibilities an important characteristic of our measure of income which we call real income is that deflation is carried out using a consumption deflator rather than any price index of output we suggest that it may be inappropriate to regard capital gains as income we also present a coherent treatment of the effects of changes to the terms of trade on real income and explain the implications of this for resourceexporting economies hicks 1939 defined income as the maximum amount a man can spend and still be as well off at the end of the week as at the beginning since then there has been a succession of attempts to apply this definition the problem is as hicks acknowledged that the correct interpretation of as well off is by no means clear weitzman 1976 and asheim 1997 suggest that income is equal to the level of consumption which could be sustained indefinitely out of the capitalized value of current income and equate this to being as well off at the end of the week as at the beginning eisner 1988 argues specifically that in a total incomes system effects arising from asset price changes and conventionally regarded as capital gains should be included with income here building on earlier work by sefton and weale 1996 asheim and weitzman 2001 and pemberton and ulph 2001 we provide a comprehensive account of the implications of the idea that as well off should be understood to mean that the present discounted value of current and future utility should be unchanged over the interval considered we work in the context of a general equilibrium taking the prices established in the general equilibrium as given we first look at income from the production side showing that in an economy where prices and the interest rates satisfy an intertemporal efficiency condition income along an equilibrium path can be interpreted as a weighted average of the value of the current and future consumption bundle plus a term adjusting for changes in the nominal price level converting prices to real prices by deflating by the divisia consumption price index removes the need for this adjustment these results are suggestive first they offer a way of defining the income of a household entirely in terms of its consumption possibilities second they indicate that to calculate real income deflation is best carried out using a price index of consumption this is a substantial divergence from current national accounting practice third because we have assumed constant returns there is a trivial aggregation result that aggregate income is equal to the sum of the incomes from the individual sectors

pollution tax design and green national accounting abstract this paper concerns social accounting when pollution gives rise to a consumption externality the purpose of the paper is to reconcile the willingness to pay technique as a means of collecting information put forward in earlier studies with the growth theoretical approach to social accounting this is accomplished by designing approximations of pigouvian emission taxes on the basis of currently available willingness to pay information the paper analyses the welfare effects of these taxes as well as to what extent they can be used to measure approximately the value of depletion of environmental capital in the national accounts

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

pricing the limits to growth from minerals depletion this paper evaluates the loss of global welfare from exhaustion of nonrenewable resources such as oil the underlying methodology represents an empirical application of some recent developments in the theory of green accounting and sustainability the paper estimates that the world loses the equivalent of about 1 percent of final consumption per year from finiteness of the earth s resources compared with a counterfactual trajectory where global extraction of minerals is allowed to remain forever constant at today s flow rates and extraction costs

national accounts and environmental resources in the paper optimal growth theory is used to derive the appropriate definition of the net national product concept when there are environmental resources and environmental damage to take into account the basic conclusions are that conventional defined np should be corrected by deducting environmental damage and adding the value of the net change of all resources

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

on the welfare significance of national product under interest rate uncertainty abstract this paper examines the effects of uncertainty on the relationship between comprehensive nnp and sustainable equivalent consumption it is shown that the classical identity continues to hold in expectations when the discount factor is a stochastic diffusion process taking the form of geometric brownian motion with drift such a result may be useful as a point of departure for classifying the effects that various forms of uncertainty have on the welfare significance of national product

investment specific technological change and growth accounting greenwood et al 1997 long run implications of investment specific technological change american economic review 87 3 342 362 and 2000 the role of investment specific technological change in the business cycle european economic review 44 91 115 and hercowitz 1998 the embodiment controversy a review essay journal of monetary economics 41 217 224 have claimed that the jorgenson form of growth accounting is conceptually flawed and severely understates the importance of technological progress embodied in new capital goods for explaining growth to the contrary this paper shows that in its technology aspects their model is a special case of the jorgensonian growth accounting model what they call investment specific technological change is shown to be closely related to the more familiar concept of total factor productivity tfp growth statements about the one can be translated into statements about the other empirically differences between their conclusions and those of growth accounting studies about the extent to which embodiment explains us economic growth are found to relate more to data than to methodology

weak support for weak sustainability genuine savings and long term wellbeing in sweden 1850 2000 we study genuine savings as an indicator of long term welfare for sweden for the period 1850 to 2000 sweden has developed long series of comprehensive green national accounts for this entire per

this blessed plot when should capital gains on land be regarded as income national balance sheets for a number of advanced economies show land to be a valuable form of natural capital whose value has increased sharply over the last twenty years or so this paper investigates when or whether capital gains on land should be counted as a component of income while development projects can lead to increases in rental rates and land values it is shown that although the benefits any project should be counted as income increases in rental rates and land values should not normally be seen as additional real income however if land benefits from exogenous land saving technical progress the resulting capital gains can be seen as income applying the same principle to human capital it is shown on a steady growth path that these capital gains are equal to weitzman s 1997 growth premium in the relationship between income and sustainable consumption

adjusting green nnp to measure sustainability weitzman provides a foundation for nnp as the stationary equivalent of a wealth maximizing path when there is a constant interest rate and no exogenous technological progress here the implications of weitzman s foundation are explored in a case encountered in resource models i e the case of non constant interest rates in a setting that allows for exogenous technological progress an expression for nnp is obtained that adjusts green nnp for anticipated capital gains and interest rate effects to produce a measure that indicates sustainability this result is important when measuring the relative sustainability of resource rich and resource poor countries i introduction how should net national product nnp be adjusted for the depletion of natural and environmental resources a prerequisite for examining this problem is to decide on an underlying notion of income at the personal level hicks 1946 defines income as the consumption that if kept constant would yield the same present value as a person s actual future receipts since market prices are not influenced by any single person this notion of income equals a person s maximal sustainable consumption at the national level national income can likewise be defined as the consumption that if kept constant would yield the same present value as the actual future consumption path unless the nation is a small open economy faced with given international prices this notion of national income will exceed

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

towards a more inclusive and precautionary indicator of global sustainability abstract we construct a hybrid economic indicator of the sustainability of global well being which is more inclusive than existing indicators and incorporates an environmentally pessimistic physical constraint on global warming our methodology extends the world bank s adjusted net saving ans indicator to include the cost of population growth the benefit of technical progress and a much higher precautionary cost of current co 2 emissions future warming damage is so highly unknowable that valuing emissions directly is rather arbitrary so we use a novel inductive approach we modify damage and climate parameters in the deterministic dice climate economy model so it becomes economically optimal to control emissions in a way likely to limit warming to an agreed target here 2 c if future emissions are optimally controlled our ans then suggests that current global well being is sustainable but if emissions remain uncontrolled our base case ans is negative now and our corresponding modified dice model has an unsustained development path with well being peaking in 2065 current ans on an uncontrolled path may thus be a useful heuristic indicator of future unsustainability our inductive method might allow ans to include other very hard to value environmental threats to global sustainability like biodiversity loss and nitrogen pollution

a contribution to the theory of welfare accounting a kind of unified theory is proposed as a dynamic generalization of the standard consumer surplus methodology for evaluating welfare changes the unified theory allows rigorous dynamic welfare comparisons to be inferred between any two economic situations from just knowing current incomes and observing a short run market demand schedule essentially the change in present discounted future utility is exactly captured by the formula difference in current income plus consumer surplus this well known formula is thereby shown to cover a far wider class of welfare comparisons than is customarily treated in the textbook static case

comparing augmented sustainability measures for scotland is there a mismatch we estimate and compare two empirical measures of the weak sustainability of an economy for the first time the change in augmented green net national product gnnp and the interest on augmented genuine savings gs yearly calculations are given for each measure for scotland during 1992 1999 augmentation means including using projections to 2020 changed production possibilities enabled by exogenous technical progress or changing oil prices the change in augmented gnnp and the interest on augmented gs are both always positive showing no sustainability problem for scotland then according to the assumptions underlying our weak sustainability calculations however the former greatly exceeds the latter even when macroeconomic fluctuations are taken into account this is a mismatch which poses an unresolved problem with the theory resolving it may require respecifying the utility functions used in mainstream growth theory

augmenting the world bank s estimates ireland s genuine savings through boom and bust abstract the world bank computes estimates of genuine savings gs a leading indicator of sustainable development for most countries a well established literature has called for methodological enhancement this paper presents augmented estimates of irish gs throughout a period of unprecedented economic expansion and decline 1990 2016 a time series constructed predominantly from national sources includes the most comprehensive coverage of pollutants in the literature surveyed we apply a novel method to aid the property rights designation assessment required for transboundary pollutant accounting in sharp contrast to the world bank s estimates our findings suggest that a modern developed economy can exhibit signs of unsustainability furthermore extended environmental damages drive these results suggesting expanded country specific gs may diverge considerably from the world bank s estimates we find rapid economic development and rapid declines in environmental damages can occur concurrently and on the transition away from an unsustainable path

green accounting in imperfect market economies the idea of measuring the national welfare level by using the green nnp net national product has gained much attention lately this paper summarizes the research on social accounting in imperfect market economies by putting the results into a unified framework the main contribution of the paper is to relate the form of the national welfare measure to the functioning of the economic system and therefore to explicitly address the informational requirements implicit in social accounting

quantitative restrictions market power and productivity growth abstract this paper shows that when compared to tariffs quantitative restrictions qrs have a negative effect on innovation and productivity growth first qrs lead to stagnation in the steady state in the absence of domestic competition while tariffs allow for positive steady state growth second the replacement of a qr by a tariff equivalent leads to an increase in the short run incentives to innovation

genuine savings leading indicator of sustainable development abstract the world bank recently began publishing estimates of countries genuine savings a comprehensive measure of net investment across all forms of capital natural and human as well as produced this article presents the first empirical investigation of the consistency of the bank s estimates with the hypothesis that net investment should equal the difference between a country s average future consumption and its current consumption results show that the bank s estimates are consistent only with weak versions of this hypothesis and then only for developing countries moreover a simple autoregressive integrated moving average arima model outperforms any net investment measure comprehensive or conventional as a predictor of the difference between current and future consumption in sum the bank s net investment estimates tend to move in the same direction as the difference between current and average future consumption in developing countries but they have little value for predicting the mag

accounting for the wealth of nations the net versus gross output controversy and its ramifications there has been a longstanding controversy over the use of net versus gross measures of national product in accounting for economic growth most recently reflected in several papers which have examined the role of environmental variables it is argued in this paper that the two measures are not substitutes but complements which reveal different aspects of the growth process gross product is the correct output concept for estimating the structure of production while net product is the correct concept for measuring the welfare consequences of economic growth an alternative to the conventional solow growth accounting framework is then presented in which the change in national wealth is decomposed into its component elements copyright 1992 by the editors of the scandinavian journal of economics

measuring technical progress in gross and net products abstract on the optimal path of a constant returns economy with capital and non renewable resource inputs the rate of exogenous technical progress in nnp for use in weitzman s technical progress premium equals the rate of progress in gross production divided by one minus the production elasticity of the resource flow

assessment of the theory of comprehensive national accounting with data for portugal we present time series tests of the quality of genuine savings and green net national income for predicting welfare changes these tests check the validity of the theory of comprehensive national accounting and more broadly of the theory of economic growth the value of technological progress is included as well as the effects of business cycles we use estimates for portugal as inputs overall our results indicate that both genuine savings and changes in green net national income have the same sign as changes in welfare but reject the hypothesis that the estimated comprehensive national accounting measures coincide with the theoretical expressions the results also suggest that comprehensive accounting indicators perform better than conventional national accounting indicators implying that in general the corrections proposed by the comprehensive accounting theory add explanatory power to conventional measures the exception is the inclusion of education expenditures and technological progress which decrease explanatory power excluding business cycles from green net national income increases the agreement with the theory comparing both indicators in general genuine savings presents better results

a dynamic approach to pes pricing and finance for interlinked ecosystem services watershed conservation and groundwater management a theory of payment for ecosystem services pes pricing consistent with dynamic efficiency and sustainable income requires optimized shadow prices since ecosystem services are generally interdependent this requires joint optimization across multiple resource stocks we develop such a theory in the context of watershed conservation and groundwater extraction the optimal program can be implemented with a decentralized system of ecosystem payments to private watershed landowners financed by efficiency prices of groundwater set by a public utility the theory is extended to cases where land is publicly owned conservation instruments exhibit non convexities on private land or the size of a conservation project is exogenous in these cases conservation investment can be financed from benefit taxation of groundwater consumers while volumetric conservation surcharges induce inefficient water use a dynamic lump sum tax finances investment without distorting incentives since the optimal level of conservation is generated as long as payments are correct at the margin any surplus can be returned to consumers through appropriate block pricing the present value gain in consumer surplus generated by the conservation induced reduction in groundwater scarcity serves as a lower bound to the benefits of conservation without explicit measurement of other benefits such as recreation biodiversity and cultural values

measuringincome and measuring sustainability we examine what interpretation can be given to inclusive income understood to be consumption plus the value of the net increase in all relevant capital stocks we introduce the concept of instantaneously constant value income defined as the maximum amount the economy can consume at a moment of time and keep the expected present value of utility of current and future generations constant we argue that this income concept captures some of the concerns underlying sustainability our main result is that inclusive income equals instantaneously constant value income we show that this result holds in a very general setting and in particular carries over to models incorporating technological progress when such progress can be captured by augmented stocks of knowledge an important implication of our main result is that it provides a very simple method for deriving inclusive income which does not involve any linearization of the hamiltonian

data envelopment analysis for unified efficiency evaluation an assessment of regional industries in china abstract data envelopment analysis has recently gained popularity and attention in operational and environmental assessment a common feature of previous studies is decreasing an input vector to decrease the vector of undesirable outputs which is referred to as natural disposability however little research has considered how to increase the amount of capital input for clean production technology to decrease the amount of undesirable outputs in a data envelopment analysis framework which is referred to as managerial disposability thus this paper proposes an improved approach that considers measuring unified operational and environmental efficiency for managerial disposability and compares this approach with the one for natural disposability the proposed approach provides a positive strategy to reduce undesirable outputs and improve unified efficiency through increasing capital investment in clean production technology a case study of regional industries in china in 2006 2010 utilizing this approach is also presented the empirical study shows that the unified efficiencies of regional industries in china have relatively high scores for managerial disposability and increasing capital investment is vital to achieve sustainable development in clean production technology

natural resources national accounting and economic depreciation abstract the current value hamiltonian in an aggregate optimal growth problem with heterogeneous capital stocks including exhaustible renewable and environmental stocks is the nnp function routine substitutions reveal that the using up of natural resource stocks is representable as easy to interpret economic depreciation magnitudes we obtain true nnp inclusive of natural resource stock diminution implications for actual national accounting practices are also discussed

the capital gains from trade are not enough evidence from the environmental accounts of venezuela and mexico abstract in principle a country cannot endure negative genuine savings for long periods of time without experiencing declining consumption nevertheless theoreticians envisage two alternatives to explain how an exporter of non renewable natural resources could experience permanent negative genuine savings and still ensure sustainability the first one alleges that the capital gains arising from the expected improvement in the terms of trade would suffice to compensate for the negative savings of the resource exporter the second alternative points at technological change as a way to avoid economic collapse this paper uses the data of venezuela and mexico to empirically test the first of these two hypotheses the results presented here prove that the terms of trade do not suffice to compensate the depletion of oil reserves in these two open economies

capital gains and net national product in open economies it is shown within a given framework that with the world economy following an egalitarian path the aggregate capital gains being positive is equivalent to the interest rate tending to decrease this result is of importance for the concept of net national product in open economies in particular with positive aggregate capital gains an open economy cannot sustain consuming the return on its capital stocks since some part of the return must be used to augment the country s national wealth it is established that a country s share of world wide sustainable consumption equals its share of worldwide wealth

sustainability economics where do we stand abstract environmental economics which is a branch of resource economics the environment as a scarce resource is essentially about market failures the costs of pollution and pollution abatement and the economics of regulation sustainability economics includes the problem of maintaining economic growth while reducing pollution and or its impacts with special attention to the linked problems of energy supply not to mention the supply other exhaustible resources climate change and most urgently fossil fuel consumption there is a need for integration of resource and environmental economics under a new rubric sustainability economics

resource depletion and sustainability in small open economies abstract exogenous price changes affect the amount that a small country exporting natural resource commodities must invest to sustain its consumption level the necessary amount is given by the difference between hotelling rent and the discounted sum of future terms of trade effects capital gains the latter term is found to be large relative to the former in the case of petroleum depletion in indonesia this suggests that resource rich countries will need to invest more than previously expected to sustain their consumption levels if natural resource prices continue their long term historical decline

a dynamic general equilibrium analysis on fostering a hydrogen economy in korea hydrogen is anticipated to become one of the major alternative energy technologies for a sustainable energy system this study analyzes the dynamic economic impacts of building a hydrogen economy in korea employing a dynamic computable general equilibrium cge model as a frontier technology hydrogen is featured as having a slow diffusion rate due to option value positive externality resistance of old technology and complementary vintages without government intervention hydrogen derived energy will supply up to 6 5 of final energy demand by 2040 simulation outcomes show that as price subsidy rates increase by 10 20 and 30 hydrogen demand will increase by 9 2 15 2 and 37 7 respectively of final energy demand by 2040 the output of the transportation sector will increase significantly while demands for oil and electricity will decline demands for coal and lng will experience little change household consumption will decline because of the increase of income taxes overall gdp will increase because of the increase in exports and investments co2 emission will decline for medium and high subsidy rate cases but increase for low subsidy cases ultimately subsidy policy on hydrogen will not be an effective measure for mitigating co2 emission in korea when considering dynamic general equilibrium effects

on the welfare significance of green accounting as taught by parable abstract green nnp is a national accounting concept that subtracts off from gnp not just depreciation of capital but also depletion of environmental assets for a time autonomous technology green nnp has a rigorous welfare interpretation as an exact measure of the economy s future power to consume the present paper extends the standard framework to cover the case of labor augmenting technological progress for this special case of time dependence a powerful conceptual parable applies it is as if the conclusion from a simple minded welfare story told by the standard neoclassical one sector growth model covers a far more general situation involving any number of different types of capital any convex production possibilities set and fully optimizing behavior implications and applications are discussed

symbolic convergence and the hydrogen economy this article documents that the hydrogen economy continues to attract significant attention among politicians the media and some academics we believe that an explanation lies in the way that the hydrogen economy fulfills psychological and cultural needs related to a future world where energy is abundant cheap and pollution free a fantasy that manifests itself with the idea that society can continue to operate without limits imposed by population growth and the destruction of the environment the article begins by explaining its research methodology consisting of two literature reviews research interviews of energy experts and the application of symbolic convergence theory a general communications theory about the construction of rhetorical fantasies we then identify a host of socio technical challenges to explain why the creation of a hydrogen economy would present immense and possibly intractable obstacles an argument supplemented by our research interviews next we employ symbolic convergence theory to identify five prevalent fantasy themes and rhetorical visions independence patriotism progress democratization and inevitability in academic and public discussions in favor of the hydrogen economy we conclude by offering implications for scholarship relating to energy policy more broadly

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

factor substitutability monopoly and vertical integration a heuristic analysis a monopolist of an intermediate good can extract profit from final consumers only indirectly since it only sells to other firms which in turn produce final products if those final producers substitute other inputs for the one the monopolist sells they would not see that their substitution cuts into the monopolist s profit because of this vertical externality 10 179 the monopolist would earn less than the maximum monopoly rent although the final producers would minimize their nominal costs their input combination would be suboptimal vernon and graham 11 showed that the monopolist would increase both its profit and economic welfare by vertically integrating to reverse such input substitution for a given final output schmalensee 9 then investigated what portion of a perfectly competitive final product industry the input monopolist would acquire while he found that complete integration would maximize profits schmalensee also discovered that the integration would affect final output and its price but that the effect was ambiguous obviously the welfare gain from lower real costs would be offset partially or entirely if integration also reduced output this ambiguity differed from analyses that had assumed a fixed input proportion in final production with fixed proportions integration never would reduce output and always would increase welfare the many refinements of schmalensee s analysis have shown that whether integration by the monopolist would increase or decrease final production depends on the elasticities of final demand and input substitution 3 6 7 12 13 the ambiguous effect on output that occurs when inputs are substitutable has become part of the lore about vertical integration and has been an element in the debates about antitrust policy toward vertical integration 2 168 this literature is very technical and does not have any single clear result comparable to that in the fixed proportions case for that reason it is difficult to convey intuitively this paper takes a heuristic approach that adds to this literature in several ways first the two components in the anatomy of integration are derived explicitly for the first time the first is a change in input proportions so as to reduce real costs the second is a broadening of monopoly 8 27 each of these components can affect final output revealing the anatomy shows that the component due to the change in the input proportions in final production not only reduces real cost it always con

sector level decisions in a sustainability constrained economy despite two decades of debate there remains little consensus about what sustainability is and how it should be achieved economists primarily portray sustainability as a macro level concern but there has been less attention on the implications of this social objective for policies related to the management of individual resources this paper derives guidance for sector level planning and project analysis from a macro level norm of intergenerational fairness optimal sustainable management involves making tradeoffs between sectors we derive a criteria for sector level planning and project analysis that help make those tradeoffs without losing site of the sustainability goal

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

a hydrogen economy and its impact on the world as we know it an assortment of governmental technological environmental and economic factors has combined to spur renewed interest in alternatives to petroleum and especially in hydrogen while there is no clear consensus on the viability of the technology governments and corporations alike have vigorous hydrogen research programs the result is that hydrogen may stand on the verge of becoming a true successor to oil a transition from oil to hydrogen would alter familiar global economic and political structures in profound ways the ramifications will influence developed and developing nations oil importers and exporters alike new alliances among governments corporations and other groups may challenge existing notions of governance although a hydrogen based economy may be decades away the vision for it requires near and mid term thinking to manage the transition smoothly further hydrogen is only a metaphor any change from the current oil economy will entail dramatic changes to the global status quo that must be planned for now