An axiomatic approach to sustainable development
AbstractThe paper proposes two axioms that capture the idea of sustainable development and derives the welfare criterion that they imply. The axioms require that neither the present nor the future should play a dictatorial role. Theorem 1 shows there exist sustainable preferences, which satisfy these axioms. They exhibit sensitivity to the present and to the long-run future, and specify trade-offs between them. It examines other welfare criteria which are generally utilized: discounted utility, lim inf. long run averages, overtaking and catching-up criteria, Ramsey's criterion, Rawlsian rules, and the criterion of satisfaction of basic needs, and finds that none satisfies the axioms for sustainability. Theorem 2 gives a characterization of all continuous independent sustainable preferences. Theorem 3 shows that in general sustainable growth paths cannot be approximated by paths which approximate discounted optima. Proposition 1 shows that paths which maximize the present value under a standard price system may fail to reach optimal sustainable welfare levels, and Example 4 that the two criteria can give rise to different value systems.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 8609.
Date of creation: 23 Oct 1995
Date of revision:
sustainable development; economic development; welfare;
Other versions of this item:
- D9 - Microeconomics - - Intertemporal Choice
- C0 - Mathematical and Quantitative Methods - - General
- Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
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- > Environmental and Natural Resource Economics > Climate economics > Discounting, equity, uncertainty
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