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The welfare economics of measuring sustainability: a new approach based on social choice theory and systems analysis

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  • Sardar M. N. Islam

    (Victoria University, Australia)

  • Matthew F. Clarke

    (RMIT University, Australia)

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    Abstract

    This paper presents a new measure of sustainability within a welfare economics framework. Gross domestic product (GDP) can be used as an indicator of sustainability if the GDP estimates are undertaken within a cost-benefit analysis framework based on social choice perspectives. Sustainability is dependent on a healthy and functioning socio-economic and environmental (SEE) system. Economic development can damage the SEE system through resource degradation, over-harvesting and pollution. This paper addresses the tensions between economic development and sustainability by undertaking a number of SEE-based adjustments to GDP based on social choice perspectives in order to measure sustainability. These adjustments include the environmental and social costs caused by economic development such as water pollution, the depletion of non-renewable resources, and deforestation. Thailand is used as a case study for a 25 year period (1975-1999). The results show a divergence in terms of GDP per capita and the SEE-adjusted GDP per capita figure. The paper concludes that, with increasing environmental and social costs of economic development, pursuing such extreme high growth objectives without due environmental and social considerations can threaten present social welfare and future sustainability. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.

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    File URL: http://hdl.handle.net/10.1002/sd.254
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    Bibliographic Info

    Article provided by John Wiley & Sons, Ltd. in its journal Sustainable Development.

    Volume (Year): 13 (2005)
    Issue (Month): 5 ()
    Pages: 282-296

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    Handle: RePEc:wly:sustdv:v:13:y:2005:i:5:p:282-296

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    Web page: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-1719

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    1. Nordhaus, William D, 1991. "To Slow or Not to Slow: The Economics of the Greenhouse Effect," Economic Journal, Royal Economic Society, vol. 101(407), pages 920-37, July.
    2. William D. Nordhaus & James Tobin, 1973. "Is Growth Obsolete?," NBER Chapters, in: The Measurement of Economic and Social Performance, pages 509-564 National Bureau of Economic Research, Inc.
      • William D. Nordhaus & James Tobin, 1972. "Is Growth Obsolete?," NBER Chapters, in: Economic Research: Retrospect and Prospect Vol 5: Economic Growth, pages 1-80 National Bureau of Economic Research, Inc.
    3. Amartya Sen, 1999. "The Possibility of Social Choice," American Economic Review, American Economic Association, vol. 89(3), pages 349-378, June.
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    6. John C. V. Pezzey, 1997. "Sustainability Constraints versus "Optimality" versus Intertemporal Concern, and Axioms versus Data," Land Economics, University of Wisconsin Press, vol. 73(4), pages 448-466.
    7. Pezzey, J., 1992. "Sustainable Development Concepts; An Economic Analysis," Papers 2, World Bank - The World Bank Environment Paper.
    8. Solow, Robert M, 1986. " On the Intergenerational Allocation of Natural Resources," Scandinavian Journal of Economics, Wiley Blackwell, vol. 88(1), pages 141-49.
    9. Richard T. Woodward & Richard C. Bishop, 1997. "How to Decide When Experts Disagree: Uncertainty-Based Choice Rules in Environmental Policy," Land Economics, University of Wisconsin Press, vol. 73(4), pages 492-507.
    10. Maler, Karl-Goran, 1985. "Welfare economics and the environment," Handbook of Natural Resource and Energy Economics, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 1, chapter 1, pages 3-60 Elsevier.
    11. Munasinghe, M., 1993. "Environmental Economics and Sustainable Development," Papers 3, World Bank - The World Bank Environment Paper.
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    13. Kneese, Allen V. & Schulze, William D., 1985. "Ethics and environmental economics," Handbook of Natural Resource and Energy Economics, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 1, chapter 5, pages 191-220 Elsevier.
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    Cited by:
    1. Nuray Kizilaslan & A. Zafer Gürler & Halil Kizilaslan, 2007. "An analytical approach to sustainable development in Turkey," Sustainable Development, John Wiley & Sons, Ltd., vol. 15(4), pages 254-266.

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