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Should we sustain? And if so, sustain what? Consumption or the quality of life?

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Author Info

  • Humberto Llavador
  • John E. Roemer
  • Joaquim Silvestre

    (Department of Economics, University of California Davis)

Abstract

Sustainability has been largely replaced by discounted utilitarianism in contemporary climate-change economics. Our approach rejuvenates sustainability by expanding the conception of the quality of life, along the lines of the UN Human Development Reports, to include not only consumption, but also education, leisure, the stock of knowledge and the quality of the biosphere. We report on our results showing that the quality of life can be sustained forever at levels higher than present levels, while reducing GHG emissions to converge to carbon concentrations of 450 ppm. Here we repeat our optimization but substituting consumption for the quality of life. Our sustainability results carry over. As it should be expected, optimal consumption is higher when the objective is consumption rather than the quality of life, but not by much (7% higher). On the other hand, the stock of knowledge is twice as large, and education is four times as large. So if the “true” social welfare index were consumption, a planner who “mistakenly” maximized the quality of life would be making a relatively small error. But the converse error would be large. If the quality of life provides an appropriate welfare index, but the public policy aims at maximizing consumption, the quality of life would be reduced by 60%. The expansion of the concept of welfare beyond consumption renders possible responding to the climate-change challenge by moving away from energy-intensive commodities and towards less intensive ones, like knowledge, education, and leisure.

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Bibliographic Info

Paper provided by University of California, Davis, Department of Economics in its series Working Papers with number 1222.

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Length: 41
Date of creation: 26 Sep 2012
Date of revision:
Handle: RePEc:cda:wpaper:12-22

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Related research

Keywords: Sustainability; climate change; growth; GHG; CO2 emissions; quality of life; education; knowledge.;

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References

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  1. John Roemer, 2011. "The Ethics of Intertemporal Distribution in a Warming Planet," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 48(3), pages 363-390, March.
  2. Cabeza Gutes, Maite, 1996. "The concept of weak sustainability," Ecological Economics, Elsevier, vol. 17(3), pages 147-156, June.
  3. Charles I. Jones & Peter J. Klenow, 2010. "Beyond GDP? Welfare across Countries and Time," NBER Working Papers 16352, National Bureau of Economic Research, Inc.
  4. Joaquim Silvestre & Joaquim Silvestre & John E. Roemer & Joaquim Silvestre, 2009. "“Intergenerational justice when future worlds are uncertain”," Working Papers 94, University of California, Davis, Department of Economics.
  5. Neumayer, Eric, 2001. "The human development index and sustainability -- a constructive proposal," Ecological Economics, Elsevier, vol. 39(1), pages 101-114, October.
  6. Asheim, G.B. & Buchholz, W. & Withagen, C.A.A.M., 2002. "The Hartwick Rule: Myths and Facts," Discussion Paper 2002-52, Tilburg University, Center for Economic Research.
  7. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
  8. Humberto Llavador & John E. Roemer & Joaquim Silvestre, 2008. "A dynamic analysis of human welfare in a warming planet," Economics Working Papers 1110, Department of Economics and Business, Universitat Pompeu Fabra, revised Feb 2010.
  9. Neumayer, Eric, 1999. "Global warming: discounting is not the issue, but substitutability is," Energy Policy, Elsevier, vol. 27(1), pages 33-43, January.
  10. 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.
  11. Simon Dietz & Chris Hope & Nicholas Stern & Dimitri Zenghelis, 2007. "REFLECTIONS ON THE STERN REVIEW (1) A Robust Case for Strong Action to Reduce the Risks of Climate Change," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 8(1), pages 121-168, January.
  12. Humberto Llavador & John E. Roemer & Joaquim Silvestre, 2011. "Sustainability in the Presence of Global Warming: Theory and Empirics," Human Development Research Papers (2009 to present) HDRP-2011-05, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
  13. Barrett, Scott, 1992. "Economic growth and environmental preservation," Journal of Environmental Economics and Management, Elsevier, vol. 23(3), pages 289-300, November.
  14. Gerlagh, Reyer & van der Zwaan, B. C. C., 2002. "Long-Term Substitutability between Environmental and Man-Made Goods," Journal of Environmental Economics and Management, Elsevier, vol. 44(2), pages 329-345, September.
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