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Sustainable Development Without Constraints

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  • James A Roumasset

    ()
    (Department of Economics, University of Hawaii at Manoa)

  • Lee H Endress

    (Asia-Pacific Center for Security Studies)

Abstract

We explore the possibility of representing sustainability concerns in the objective function of an optimal growth problem instead of as a constraint. In a general model with capital accumulation and resource depletion, we represent intergenerational equity using the pure rate of time preference and the elasticity of the marginal social utility of income and that a sustainability constraint would be either redundant or render the optimization problem indeterminate. The model also provides a basis for evaluating the deprecation of natural capital for adjusted national income accounts such that maximizing adjusted national income is equivalent to a period- by - period solution of the intertemporal welfare problem. This approach to sustainability rests on the firm theoretical foundations establish by three pioneers of economic dynamics and growth: Frank Ramsey, Harold Hotelling, and Tjalling Koopmans.

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File URL: http://www.economics.hawaii.edu/research/workingpapers/009.pdf
File Function: First version, 2000
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Bibliographic Info

Paper provided by University of Hawaii at Manoa, Department of Economics in its series Working Papers with number 200009.

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Length: 35 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:hai:wpaper:200009

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  1. Tjalling C. Koopmans, 1959. "Stationary Ordinal Utility and Impatience," Cowles Foundation Discussion Papers 81, Cowles Foundation for Research in Economics, Yale University.
  2. Heal, G., 1990. "The Optimal Use Of Exhaustible Resources," Papers fb-_90-10, Columbia - Graduate School of Business.
  3. 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.
  4. Endress, Lee H & Roumasset, James A, 1994. "Golden Rules for Sustainable Resource Management," The Economic Record, The Economic Society of Australia, vol. 70(210), pages 267-77, September.
  5. Lewis, Tracy R, 1982. "Sufficient Conditions for Extracting Least Cost Resource First," Econometrica, Econometric Society, vol. 50(4), pages 1081-83, July.
  6. Dasgupta, Partha, 1974. "On some alternative criteria for justice between generations," Journal of Public Economics, Elsevier, vol. 3(4), pages 405-423, November.
  7. Xavier Sala-i-Martin, 1994. "Lecture notes on economic growth (I): Introduction to the literature and Neoclassical models," Economics Working Papers 77, Department of Economics and Business, Universitat Pompeu Fabra.
  8. Burton Peter S., 1993. "Intertemporal Preferences and Intergenerational Equity Considerations in Optimal Resource Harvesting," Journal of Environmental Economics and Management, Elsevier, vol. 24(2), pages 119-132, March.
  9. Diewert, W. E., 1983. "Cost-benefit analysis and project evaluation : A comparison of alternative approaches," Journal of Public Economics, Elsevier, vol. 22(3), pages 265-302, December.
  10. Solow, Robert M, 1986. " On the Intergenerational Allocation of Natural Resources," Scandinavian Journal of Economics, Wiley Blackwell, vol. 88(1), pages 141-49.
  11. Andrea Beltratti & Graciela Chichilnisky & Geoffrey Heal, 1993. "Sustainable Growth and the Green Golden Rule," NBER Working Papers 4430, National Bureau of Economic Research, Inc.
  12. Johansson,Per-Olov, 1993. "Cost-Benefit Analysis of Environmental Change," Cambridge Books, Cambridge University Press, number 9780521447928, October.
  13. 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.
  14. Tjalling C. Koopmans, 1963. "On the Concept of Optimal Economic Growth," Cowles Foundation Discussion Papers 163, Cowles Foundation for Research in Economics, Yale University.
  15. Solow, Robert, 1993. "An almost practical step toward sustainability," Resources Policy, Elsevier, vol. 19(3), pages 162-172, September.
  16. Asheim, Geir B, 1988. "Rawlsian Intergenerational Justice as a Markov-Perfect Equilibrium in a Resource Technology," Review of Economic Studies, Wiley Blackwell, vol. 55(3), pages 469-83, July.
  17. Olson, Mancur & Bailey, Martin J, 1981. "Positive Time Preference," Journal of Political Economy, University of Chicago Press, vol. 89(1), pages 1-25, February.
  18. P. A. Diamond & J. A. Mirrlees, 1975. "Private Constant Returns and Public Shadow Prices," Working papers 151, Massachusetts Institute of Technology (MIT), Department of Economics.
  19. 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.
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