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Evaluating Projects and Assessing Sustainable Development in Imperfect Economies

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Author Info
Kenneth Arrow
Partha Dasgupta
Karl-Göran Mäler

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Abstract

We are interested in three related questions:(1) How should accounting prices be estimated?(2) How should we evaluate policy change in animperfect economy? (3) How can we check whetherintergenerational well-being will be sustainedalong a projected economic programme? We do notpresume that the economy is convex, nor do weassume that the government optimizes on behalfof its citizens. We show that the same set ofaccounting prices should be used both forpolicy evaluation and for assessing whether ornot intergenerational welfare along a giveneconomic path will be sustained. We also showthat a comprehensive measure of wealth,computed in terms of the accounting prices, canbe used as an index for problems (2) and (3)above. The remainder of the paper is concernedwith rules for estimating the accounting pricesof several specific environmental naturalresources, transacted in a few well knowneconomic institutions. Copyright Kluwer Academic Publishers 2003

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File URL: http://hdl.handle.net/10.1023/B:EARE.0000007353.78828.98
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Publisher Info
Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 26 (2003)
Issue (Month): 4 (December)
Pages: 647-685
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Handle: RePEc:kap:enreec:v:26:y:2003:i:4:p:647-685

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Related research
Keywords: accounting prices; bifurcation points; cost-benefit analysis; environmental Kuznets curve; genuine investment; genuine wealth; hysteresis; intertemporal welfare; irreversibility; non-convexity; Pontryagin Principle; population growth; property rights; separatrix; social discount rate; structural stability; sustainable development; technological change; thresholds;

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References listed on IDEAS
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.:
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  2. Pearce, David W. & Atkinson, Giles D., 1993. "Capital theory and the measurement of sustainable development: an indicator of "weak" sustainability," Ecological Economics, Elsevier, vol. 8(2), pages 103-108, October. [Downloadable!] (restricted)
  3. 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. [Downloadable!] (restricted)
    Other versions:
  4. Levhari, David & Srinivasan, T N, 1969. "Optimal Savings under Uncertainty," Review of Economic Studies, Blackwell Publishing, vol. 36(106), pages 153-63, April. [Downloadable!] (restricted)
  5. Nordhaus, William D & Yang, Zili, 1996. "A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies," American Economic Review, American Economic Association, vol. 86(4), pages 741-65, September. [Downloadable!] (restricted)
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  8. Kenneth J. Arrow & Partha Dasgupta & Karl-Göran Mäler, 2003. "The genuine savings criterion and the value of population," Economic Theory, Springer, vol. 21(2), pages 217-225, 03. [Downloadable!] (restricted)
  9. Vincent, Jeffrey R. & Panayotou, Theodore & Hartwick, John M., 1997. "Resource Depletion and Sustainability in Small Open Economies," Journal of Environmental Economics and Management, Elsevier, vol. 33(3), pages 274-286, July. [Downloadable!] (restricted)
  10. Pearce, David & Hamilton, Kirk & Atkinson, Giles, 1996. "Measuring sustainable development: progress on indicators," Environment and Development Economics, Cambridge University Press, vol. 1(01), pages 85-101, February. [Downloadable!]
  11. Dasgupta, Partha, 2001. "Valuing Objects and Evaluating Policies in Imperfect Economies," Economic Journal, Royal Economic Society, vol. 111(471), pages C1-29, May. [Downloadable!] (restricted)
  12. Sefton, J. A. & Weale, M. R., 1996. "The net national product and exhaustible resources: The effects of foreign trade," Journal of Public Economics, Elsevier, vol. 61(1), pages 21-47, July. [Downloadable!] (restricted)
    Other versions:
  13. R. M. Solow, 1973. "Intergenerational Equity and Exhaustable Resources," Working papers 103, Massachusetts Institute of Technology (MIT), Department of Economics.
  14. Asheim, Geir B., 1996. "Capital gains and net national product in open economies," Journal of Public Economics, Elsevier, vol. 59(3), pages 419-434, March. [Downloadable!] (restricted)
  15. Thomas Aronsson & Karl-Gustaf Löfgren, 1998. "Green Accounting in Imperfect Market Economies," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 11(3), pages 273-287, April. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Geir Asheim & Taoyuan Wei, 2009. "Sectoral Income," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 42(1), pages 65-87, January. [Downloadable!] (restricted)
    Other versions:
    • Asheim , Geir B. & Wei , Taoyuan, 2007. "Sectoral income," Memorandum 23/2007, Oslo University, Department of Economics. [Downloadable!]
  2. 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. [Downloadable!] (restricted)
  3. Craig Bond & Y. Farzin, 2008. "Alternative Sustainability Criteria, Externalities, and Welfare in a Simple Agroecosystem Model: A Numerical Analysis," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 40(3), pages 383-399, July. [Downloadable!] (restricted)
  4. Partha Dasgupta, 2008. "Nature in Economics," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 39(1), pages 1-7, January. [Downloadable!] (restricted)
  5. Dimitra Vouvaki & Anastasios Xepapadeas, 2005. "Criteria for Assessing Sustainable Development: Theoretical Issues and Empirical Evidence for the Case of Greece," Working Papers 0511, University of Crete, Department of Economics. [Downloadable!]
    Other versions:
  6. Asheim, Geir B., 2005. "Can NNP be used for welfare comparisons?," Memorandum 24/2005, Oslo University, Department of Economics. [Downloadable!]
    Other versions:
  7. William Brock & Anastasios Xepapadeas, 2004. "Ecosystem Management in Models of Antagonistic Species Coevolution," Working Papers 0503, University of Crete, Department of Economics. [Downloadable!]
  8. Asheim, Geir B., 2005. "Welfare comparisons between societies with different population sizes and environmental characteristics," Memorandum 25/2005, Oslo University, Department of Economics. [Downloadable!]
  9. Glenn-marie Lange, 2004. "Wealth, Natural Capital, and Sustainable Development: Contrasting Examples from Botswana and Namibia," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 29(3), pages 257-283, November. [Downloadable!] (restricted)
  10. Li, Chuan-Zhong & Isacsson, Gunnar, 2009. "Valuing urban accessibility and air quality in Sweden: A regional welfare analysis," Working Paper Series 2009:2, Uppsala University, Department of Economics. [Downloadable!]
  11. Bazhanov, Andrei, 2008. "Sustainable growth in a resource-based economy: the extraction-saving relationship," MPRA Paper 12350, University Library of Munich, Germany. [Downloadable!]
  12. Sumaila, Ussif Rashid & Berman, Matthew, 2006. "Thalassorama - Discounting, Amenity Values, and Marine Ecosystem Restoration," Marine Resource Economics, Marine Resources Foundation, vol. 21(2). [Downloadable!]
  13. Bond, Craig, 2006. "Multi-Sector Sustainability in Agroecosystem Environments: Using Value Function Iteration for Numerical Solutions," 2006 Annual meeting, July 23-26, Long Beach, CA 21039, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  14. Bazhanov, Andrei, 2008. "Maximin-optimal sustainable growth in a resource-based imperfect economy," MPRA Paper 16245, University Library of Munich, Germany, revised 01 Aug 2009. [Downloadable!]
  15. Li, Chuan-Zhong & Löfgren, Karl-Gustaf, 2003. "Evaluating Projects in a Dynamic Economy: Some New Envelope Results," UmeÃ¥ Economic Studies 613, Umeå University, Department of Economics, revised 04 Dec 2006. [Downloadable!]
    Other versions:
  16. Sato, Masayuki & Samreth, Sovannroeun, 2008. "Assessing Sustainable Development by Genuine Saving Indicator from Multidimensional Perspectives," MPRA Paper 9996, University Library of Munich, Germany. [Downloadable!]
  17. Andrei V. Bazhanov, 2009. "A constant-utility criterion linked to an imperfect economy affected by irreversible global warming," EERI Research Paper Series EERI_RP_2009_03, Economics and Econometrics Research Institute (EERI). [Downloadable!]
  18. Bazhanov, Andrei & Belyaev, Alexander, 2009. "Адекватность Закрытой Модели Для Российской Экономики В Задаче Сравнительного Анализа Энергетической Стра�," MPRA Paper 15109, University Library of Munich, Germany. [Downloadable!]
  19. Partha Dasgupta, 2009. "The Welfare Economic Theory of Green National Accounts," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 42(1), pages 3-38, January. [Downloadable!] (restricted)
  20. Asheim, Geir, 2003. "Green national accounting for welfare and sustainability: A taxonomy of assumptions and results," Memorandum 31/2002, Oslo University, Department of Economics. [Downloadable!]
    Other versions:
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