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Genuine Savings and Sustainability with Resource Diffusion

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  • Rintaro Yamaguchi

    (National Institute for Environmental Studies (NIES))

Abstract

We consider a spatial extension of genuine savings and wealth as a capital-based indicator of sustainability. In both inefficient and efficient economies, where well-being is locally or globally maximized, respectively, the well-known Hotelling rule and Hartwick (Dixit–Hammond–Hoel) investment rules and results are extended, depending on the extent of the spatial diffusion of natural capital. It is shown that the net present value of any future change in neighboring resource stocks affects the current change in intergenerational well-being. Numerical examples show the relevance of such parameters as the diffusion rate, discount rate, and marginal utility of consumption. Moreover, they suggest the exact adjustments to be made in aggregating or disaggregating the sustainability of different spatial units, which is not addressed in the current practice of green or wealth accounting.

Suggested Citation

  • Rintaro Yamaguchi, 2021. "Genuine Savings and Sustainability with Resource Diffusion," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 80(2), pages 451-471, October.
  • Handle: RePEc:kap:enreec:v:80:y:2021:i:2:d:10.1007_s10640-021-00592-8
    DOI: 10.1007/s10640-021-00592-8
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    Cited by:

    1. Geir B. Asheim & Rintaro Yamaguchi, 2023. "Comprehensive National Accounting for Carbon Emissions," CESifo Working Paper Series 10562, CESifo.

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    More about this item

    Keywords

    Genuine savings; Inclusive wealth; Sustainable development; Spatial diffusion;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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