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Sustainable Growth and the Green Golden Rule

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  • Andrea Beltratti
  • Graciela Chichilnisky
  • Geoffrey Heal

Abstract

We study a growth model with an environmental asset which is a source of utility and an input to consumption and production. The stock of this asset follows its own ecological dynamics, which are affected by economic activity. We study the implications of an approach to ranking sequences of consumption and environment over time that place weight both on the characteristics of the sequence over any finite period and on its very long run or limiting characteristics. Chichilnisky [5] has called these "sustainable preferences". The criterion shows more intertemporal symmetry than the discounted utilitarian approach. which clearly emphasizes the immediate future at the expense of the long run. In this respect Chichilniskys criterion captures some of the concerns of those who argue for sustainability and for a heightened sense of responsibility to the future. To characterize optimal paths we define the "green golden rule", the path which maximizes long-run sustainable utility from consumption and environment.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4430.

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Date of creation: Aug 1993
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Publication status: Published as "The Green Golden Rule", EL, Vol. 49, no. 2 (1995): 175-179.
Handle: RePEc:nbr:nberwo:4430

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  1. Partha Dasgupta & Geoffrey Heal & Joseph E. Stiflitx, 1980. "The Taxation of Exhaustible Resources," NBER Working Papers 0436, National Bureau of Economic Research, Inc.
  2. Dasgupta,P. S. & Heal,G. M., 1985. "Economic Theory and Exhaustible Resources," Cambridge Books, Cambridge University Press, number 9780521297615, 9.
  3. 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.
  4. Chichilnisky, Graciela, 1980. "Social choice and the topology of spaces of preferences," MPRA Paper 8006, University Library of Munich, Germany.
  5. Heal, Geoffrey M., 1993. "The optimal use of exhaustible resources," Handbook of Natural Resource and Energy Economics, Elsevier, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 3, chapter 18, pages 855-880 Elsevier.
  6. R. M. Solow, 1973. "Intergenerational Equity and Exhaustable Resources," Working papers 103, Massachusetts Institute of Technology (MIT), Department of Economics.
  7. Krautkraemer, Jeffrey A, 1985. "Optimal Growth, Resource Amenities, and the Preservation of Natural Environments," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 52(1), pages 153-70, January.
  8. Lauwers, Luc, 1993. "Infinite Chichilnisky rules," Economics Letters, Elsevier, vol. 42(4), pages 349-352.
  9. Wilen, James E., 1985. "Bioeconomics of renewable resource use," Handbook of Natural Resource and Energy Economics, Elsevier, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 1, chapter 2, pages 61-124 Elsevier.
  10. Dutta, P.K., 1991. "What Do Discounted Optima Converge To? A Theory of Discount Rate Asymptotics in Economic Models," RCER Working Papers 264, University of Rochester - Center for Economic Research (RCER).
  11. William R. Cline, 1992. "Economics of Global Warming, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, Peterson Institute for International Economics, number 39, July.
  12. 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.
  13. Chichilnisky Graciela & Heal Geoffrey M., 1993. "Competitive Equilibrium in Sobolev Spaces without Bounds on Short Sales," Journal of Economic Theory, Elsevier, vol. 59(2), pages 364-384, April.
  14. Solow, Robert, 1993. "An almost practical step toward sustainability," Resources Policy, Elsevier, vol. 19(3), pages 162-172, September.
  15. Dutta, Prajit K., 1991. "What do discounted optima converge to?: A theory of discount rate asymptotics in economic models," Journal of Economic Theory, Elsevier, vol. 55(1), pages 64-94, October.
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Citations

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Cited by:
  1. Jeffrey A. Krautkraemer, 1998. "Nonrenewable Resource Scarcity," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 2065-2107, December.
  2. Chichilnisky, Graciela & Beltratti, Andrea & Heal, Geoffrey, 1998. "Sustainable use of renewable resources, Chapter 2.1," MPRA Paper 8815, University Library of Munich, Germany.
  3. Farzin, Y. H., 1996. "Optimal pricing of environmental and natural resource use with stock externalities," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 31-57, October.
  4. James A Roumasset & Lee H Endress, 2000. "Sustainable Development Without Constraints," Working Papers 200009, University of Hawaii at Manoa, Department of Economics.
  5. Isabel Almudi & Julio Sánchez Chóliz, 2011. "Sustainable use of renewable resources: an identity approach," Journal of Bioeconomics, Springer, vol. 13(2), pages 97-123, July.
  6. Carlo Carraro, 1998. "New Economic Theories," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 11(3), pages 365-381, April.
  7. Chichilnisky, Graciela & Beltratti, Andrea & Heal, Geoffrey, 1998. "Uncertain future preferences and conservation," MPRA Paper 7912, University Library of Munich, Germany.
  8. Grüne, Lars & Kato, Mika & Semmler, Willi, 2005. "Solving ecological management problems using dynamic programming," Journal of Economic Behavior & Organization, Elsevier, vol. 57(4), pages 448-473, August.
  9. Semmler, Willi & Sieveking, Malte, 2000. "Critical debt and debt dynamics," Journal of Economic Dynamics and Control, Elsevier, vol. 24(5-7), pages 1121-1144, June.
  10. Charles-Henri Dimaria, 2013. "Sustainability matters," Post-Print halshs-00827315, HAL.
  11. Zhang Wei-Bin, 2011. "Economic Growth And Dynamics Of Renewable Resource With Housing, Agricultural And Resource Land Use," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 6(2), pages 151-174, August.
  12. Domenico Scalera, 1996. "Optimal consumption and the environment Choosing between ‘clean’ and ‘dirty’ goods," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 7(4), pages 375-389, June.
  13. Endress, Lee H. & Roumasset, James A. & Zhou, Ting, 2005. "Sustainable growth with environmental spillovers," Journal of Economic Behavior & Organization, Elsevier, vol. 58(4), pages 527-547, December.
  14. Sanchirico, James N. & Smith, Martin D., 2003. "Trophic Portfolios In Marine Fisheries: A Step Towards Ecosystem Management," 2003 Annual meeting, July 27-30, Montreal, Canada 22191, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  15. Graciela Chichilnisky, 2009. "Avoiding Extinction: Equal Treatment of the Present and the Future," Working Papers, LAMETA, Universtiy of Montpellier 09-07, LAMETA, Universtiy of Montpellier, revised Aug 2009.
  16. Geir B. Asheim, 1996. "Ethical preferences in the presence of resource constraints," Nordic Journal of Political Economy, Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 23, pages 55-67.

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