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Revisiting ISEW Valuation Approaches: The Case of Spain Including the Costs of Energy Depletion and of Climate Change

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  • O'Mahony, Tadhg
  • Escardó-Serra, Paula
  • Dufour, Javier

Abstract

This paper develops an Index of Sustainable Economic Welfare for Spain from 1970 to 2012 and seeks to update valuation approaches to a number of items. Two approaches have proven particularly controversial over recent decades; the costs of energy depletion and of climate change. The valuation implications in measuring present welfare have proven problematic, as both include future sustainability consequences arising from resource depletion and environmental impacts. This study includes a ‘transition cost’ approach to energy depletion, a modified approach to costs of climate change and water pollution, and removes the cost of ozone depletion. The results illustrate that while GDP per capita increased significantly, the ISEW per capita shows a widening gap. Household labour contributes strongly, but income distribution, energy depletion and costs of climate change limit improvement. Sensitivity analysis shows that accumulating climate change costs and escalating energy depletion costs have significant effects. Nevertheless, the new valuation approaches do not alter conclusions that welfare has shown little improvement. The ISEW provides a useful alternative to current indicators such as GDP subject to awareness of limitations. It is a measure of welfare that uses sustainability accounting methods when estimating costs, but is not an indicator of whether welfare is actually sustainable.

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  • O'Mahony, Tadhg & Escardó-Serra, Paula & Dufour, Javier, 2018. "Revisiting ISEW Valuation Approaches: The Case of Spain Including the Costs of Energy Depletion and of Climate Change," Ecological Economics, Elsevier, vol. 144(C), pages 292-303.
  • Handle: RePEc:eee:ecolec:v:144:y:2018:i:c:p:292-303
    DOI: 10.1016/j.ecolecon.2017.07.024
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    References listed on IDEAS

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    Cited by:

    1. Daniel Francisco Pais & Tiago Lopes Afonso & António Cardoso Marques & José A Fuinhas, 2019. "Are Economic Growth and Sustainable Development Converging? Evidence from the Comparable Genuine Progress Indicator for Organisation for Economic Co-operation and Development Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 9(4), pages 202-213.
    2. Long, Xianling & Ji, Xi, 2019. "Economic Growth Quality, Environmental Sustainability, and Social Welfare in China - Provincial Assessment Based on Genuine Progress Indicator (GPI)," Ecological Economics, Elsevier, vol. 159(C), pages 157-176.
    3. Rugani, Benedetto & Marvuglia, Antonino & Pulselli, Federico Maria, 2018. "Predicting Sustainable Economic Welfare – Analysis and perspectives for Luxembourg based on energy policy scenarios," Technological Forecasting and Social Change, Elsevier, vol. 137(C), pages 288-303.
    4. Jonas Van der Slycken & Brent Bleys, 2019. "A conceptual exploration and critical inquiry into the theoretical foundation(s) of economic welfare measures," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 19/977, Ghent University, Faculty of Economics and Business Administration.

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