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The Hartwick Rule: Myths and Facts

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  • Geir Asheim

    ()

  • Wolfgang Buchholz
  • Cees Withagen

Abstract

We shed light on the Hartwick rule for capital accumulation and resource depletion by providing semantic clarifications and investigating the implications and relevance of this rule. We extend earlier results by establishing that the Hartwick rule does not indicate sustainability and does not require substitutability between man-made and naturalcapital. We use a new class of simple counterexamples (i) to obtain the novel finding that a negative value of net investments need not entail that utility is unsustainable, and (ii) to point out deficiencies in the literature. Copyright Kluwer Academic Publishers 2003

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File URL: http://hdl.handle.net/10.1023/A:1023909217989
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Bibliographic Info

Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 25 (2003)
Issue (Month): 2 (June)
Pages: 129-150

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Handle: RePEc:kap:enreec:v:25:y:2003:i:2:p:129-150

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Web page: http://www.springerlink.com/link.asp?id=100263

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Keywords: natural resources; sustainability; the Hartwick rule;

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  1. Cass, David, 1990. "Indefinitely sustained consumption despite exhaustible natural resources," CEPREMAP Working Papers (Couverture Orange) 9027, CEPREMAP.
  2. Asheim, Geir B, 1994. " Net National Product as an Indicator of Sustainability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(2), pages 257-65.
  3. Withagen, C.A.A.M. & Vellinga, N., 1996. "On the concept of green national income," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3107027, Tilburg University.
  4. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, vol. 67(5), pages 972-74, December.
  5. Hanley, Nick & Shogren, Jason F. & White, Ben, 2001. "Introduction to Environmental Economics," OUP Catalogue, Oxford University Press, number 9780198775959.
  6. John C. V. Pezzey, 2002. "One-sided Unsustainability Tests and NNP Measurement with Multiple Consumption Goods," Economics and Environment Network Working Papers 0208, Australian National University, Economics and Environment Network.
  7. R. M. Solow, 1973. "Intergenerational Equity and Exhaustable Resources," Working papers 103, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. Dasgupta,P. S. & Heal,G. M., 1985. "Economic Theory and Exhaustible Resources," Cambridge Books, Cambridge University Press, number 9780521297615, October.
  9. Dixit, Avinash & Hammond, Peter & Hoel, Michael, 1980. "On Hartwick's Rule for Regular Maximin Paths of Capital Accumulation and Resource Depletion," Review of Economic Studies, Wiley Blackwell, vol. 47(3), pages 551-56, April.
  10. Heal, G., 1990. "The Optimal Use Of Exhaustible Resources," Papers fb-_90-10, Columbia - Graduate School of Business.
  11. Withagen, Cees & B. Asheim, Geir, 1998. "Characterizing sustainability: The converse of Hartwick's rule," Journal of Economic Dynamics and Control, Elsevier, vol. 23(1), pages 159-165, September.
  12. M. L. Weitzman, 1974. "On the Welfare Significance of National Product in Dynamic Economy," Working papers 125, Massachusetts Institute of Technology (MIT), Department of Economics.
  13. Dasgupta, Swapan & Mitra, Tapan, 1983. "Intergenerational Equity and Efficient Allocation of Exhaustible Resources," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(1), pages 133-53, February.
  14. Kirk Hamilton, 1995. "Sustainable development, the Hartwick rule and optimal growth," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 5(4), pages 393-411, June.
  15. Pezzey, John C V & Withagen, Cees A, 1998. " The Rise, Fall and Sustainability of Capital-Resource Economies," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(2), pages 513-27, June.
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