Measuring sustainability under regime shift uncertainty: a resilience pricing approach
AbstractThis paper is concerned with the theory of resilience pricing and sustainability measurement in the presence of risk for regime shift in a dynamic economy-environment system. Following Holling (1973),we consider resilience as the maximal perturbation that the system can absorb without flipping into a qualitatively different state. Using a multisector growth model under uncertainty, we derive the shadow price of resilience that affects the probabilities of the system to flip in the future. We also analyze the role of resilience on sustainability with both ex-ante and ex-post welfare measures.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal Environment and Development Economics.
Volume (Year): 15 (2010)
Issue (Month): 06 (December)
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Other versions of this item:
- Li, Chuan-Zhong & Mäler, Karl-Göran, 2010. "Measuring sustainability under regime shift uncertainty: A resilience pricing approach," Working Paper Series 2010:16, Uppsala University, Department of Economics.
- D60 - Microeconomics - - Welfare Economics - - - General
- D90 - Microeconomics - - Intertemporal Choice and Growth - - - General
- Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Karl-Göran Mäler, 2008. "Sustainable Development and Resilience in Ecosystems," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 39(1), pages 17-24, January.
- Stephen Polasky & Aart de Zeeuw & Florian Wagener, 2010.
"Optimal Management with Potential Regime Shifts,"
Tinbergen Institute Discussion Papers
10-111/1, Tinbergen Institute.
- De Zeeuw, A. & Polasky, S. & Wagener, F.O.O., 2010. "Optimal Management with Potential Regime Shifts," CeNDEF Working Papers 10-10, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
- Stephen Polasky & Aart de Zeeuw & Florian Wagener, 2010. "Optimal Management with Potential Regime Shifts," CESifo Working Paper Series 3237, CESifo Group Munich.
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