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One-sided Unsustainability Tests and NNP Measurement with Multiple Consumption Goods

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Author Info
John C. V. Pezzey () (Australian National University, Centre for Resource and Environmental Studies, University of Bath, Department of Economics)
Abstract

In an economy with multiple consumption goods (including environmental amenities) that uniquely maximises the present value of utility with constant or falling augmented green net national product, or zero or negative augmented investment, at any time implies that the economy is unsustainable then. "Augmented" means that time is included as a productive stock, which incorporates future exogenous technical progress and changes in world prices in a unified accounting framework. Examples are given of calculating accounting prices for multiple goods. The practical and philosophical rationale for testing sustainability in a present-value maximising, and therefore fully prescribed, development path is discussed.

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Publisher Info
Paper provided by Australian National University, Economics and Environment Network in its series Economics and Environment Network Working Papers with number 0208.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 39 pages
Date of creation: Apr 2002
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Handle: RePEc:anu:eenwps:0208

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Web page: http://een.anu.edu.au/

For technical questions regarding this item, or to correct its listing, contact: (Jack Pezzey).

Related research
Keywords: sustainability; net investment; net national product; optimality; green accounting;

Find related papers by JEL classification:
D90 - Microeconomics - - Intertemporal Choice and Growth - - - General
Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

This paper has been announced in the following NEP Reports:

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.:
  1. Pezzey, J., 1992. "Sustainable Development Concepts; An Economic Analysis," Papers 2, World Bank - The World Bank Environment Paper.
  2. Martin L. Weitzman, 1970. "Aggregation and Disaggregation in the Pure Theory of Capital and Growth: A New Parable," Cowles Foundation Discussion Papers 292, Cowles Foundation, Yale University. [Downloadable!]
  3. Richard Howarth & Richard Norgaard, 1993. "Intergenerational transfers and the social discount rate," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 3(4), pages 337-358, August. [Downloadable!] (restricted)
  4. Asheim,G.B. & Weitzman,M.L., 2001. "Does NNP growth indicate welfare improvement?," Memorandum 02/2001, Oslo University, Department of Economics. [Downloadable!]
    Other versions:
  5. Asheim, Geir B, 1994. " Net National Product as an Indicator of Sustainability," Scandinavian Journal of Economics, Blackwell Publishing, vol. 96(2), pages 257-65.
  6. 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)
  7. Solow, Robert M, 1986. " On the Intergenerational Allocation of Natural Resources," Scandinavian Journal of Economics, Blackwell Publishing, vol. 88(1), pages 141-49.
  8. Vellinga, Nico & Withagen, Cees, 1996. "On the Concept of Green National Income," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 499-514, October. [Downloadable!] (restricted)
  9. Hamilton, Kirk, 1994. "Green adjustments to GDP," Resources Policy, Elsevier, vol. 20(3), pages 155-168, September. [Downloadable!] (restricted)
  10. 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)
  11. Asheim, Geir B., 2000. "Green national accounting: why and how?," Environment and Development Economics, Cambridge University Press, vol. 5(01), pages 25-48, February. [Downloadable!]
    Other versions:
  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. Weitzman, Martin L, 1997. " Sustainability and Technical Progress," Scandinavian Journal of Economics, Blackwell Publishing, vol. 99(1), pages 1-13, March. [Downloadable!] (restricted)
  14. Hanley, Nick & Moffatt, Ian & Faichney, Robin & Wilson, Mike, 1999. "Measuring sustainability: A time series of alternative indicators for Scotland," Ecological Economics, Elsevier, vol. 28(1), pages 55-73, January. [Downloadable!] (restricted)
  15. Weitzman, Martin L, 1976. "On the Welfare Significance of National Product in a Dynamic Economy," The Quarterly Journal of Economics, MIT Press, vol. 90(1), pages 156-62, February. [Downloadable!] (restricted)
    Other versions:
  16. Asheim, Geir B, 1997. " Adjusting Green NNP to Measure Sustainability," Scandinavian Journal of Economics, Blackwell Publishing, vol. 99(3), pages 355-70, September. [Downloadable!] (restricted)
  17. Asheim, Geir B. & Buchholz, Wolfgang & Tungodden, Bertil, 2001. "Justifying Sustainability," Journal of Environmental Economics and Management, Elsevier, vol. 41(3), pages 252-268, May. [Downloadable!] (restricted)
    Other versions:
  18. John M. Hartwick, 1990. "Natural Resources, National Accounting and Economic Depreciation," Working Papers 771, Queen's University, Department of Economics.
    Other versions:
  19. Hamilton, Kirk, 1996. "Pollution and Pollution Abatement in the National Accounts," Review of Income and Wealth, Blackwell Publishing, vol. 42(1), pages 13-33, March.
  20. Hamilton, Kirk & Clemens, Michael, 1999. "Genuine Savings Rates in Developing Countries," World Bank Economic Review, Oxford University Press, vol. 13(2), pages 333-56, May.
  21. Pemberton, Malcolm & Ulph, David, 2001. " Measuring Income and Measuring Sustainability," Scandinavian Journal of Economics, Blackwell Publishing, vol. 103(1), pages 25-40, March. [Downloadable!] (restricted)
  22. 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)
  23. Karl-Göran Mäler, 1991. "National accounts and environmental resources," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 1(1), pages 1-15, March. [Downloadable!] (restricted)
  24. Solow, Robert, 1993. "An almost practical step toward sustainability," Resources Policy, Elsevier, vol. 19(3), pages 162-172, September. [Downloadable!] (restricted)
Full references

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 & Wolfgang Buchholz & Cees Withagen, 2003. "The Hartwick Rule: Myths and Facts," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 25(2), pages 129-150, June. [Downloadable!] (restricted)
    Other versions:
  2. 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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