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Preference constraint for sustainable development

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  • Ken-Ichi Akao

Abstract

This paper defines a sustainable development path as a balanced growth path with environmental conservation. In the framework of endogenous growth theory, it is known that a sustainable development path is optimal only if the following three conditions are satisfied: (1) the engine of economic growth is clean; (2) the assimilation capacity of the environment is high enough to endure the increasing environmental load with economic growth; and (3) the population has an egalitarian propensity with the elasticity of the marginal utility of consumption that is greater than or equal to one. While all of these three conditions are intuitively plausible, there are distinctions between the first two and the last one: the former can be obtained by our endeavors, whereas the latter concerns preference that is endowed rather than obtained. We show that this preference constraint can be relaxed if the production technology satisfies the condition that the elasticity of transformation to the production factor and the environmental service, after appropriate monotone transformation, is greater than one. Copyright Springer Japan 2014

Suggested Citation

  • Ken-Ichi Akao, 2014. "Preference constraint for sustainable development," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 16(4), pages 343-357, October.
    • Handle: RePEc:spr:envpol:v:16:y:2014:i:4:p:343-357
    DOI: 10.1007/s10018-012-0053-3
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    References listed on IDEAS

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    1. Kamihigashi, Takashi, 2001. "Necessity of Transversality Conditions for Infinite Horizon Problems," Econometrica, Econometric Society, vol. 69(4), pages 995-1012, July.
    2. Stokey, Nancy L, 1998. "Are There Limits to Growth?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 1-31, February.
    3. Akao, Ken-Ichi & Managi, Shunsuke, 2007. "Feasibility and optimality of sustainable growth under materials balance," Journal of Economic Dynamics and Control, Elsevier, vol. 31(12), pages 3778-3790, December.
    4. Jeroen C.J.M. van den Bergh (ed.), 1999. "Handbook of Environmental and Resource Economics," Books, Edward Elgar Publishing, number 801.
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    Citations

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    Cited by:

    1. George Halkos & Iacovos Psarianos, 2016. "Exploring the effect of including the environment in the neoclassical growth model," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 18(3), pages 339-358, July.
    2. George Halkos & Shunsuke Managi & Kyriaki Tsilika, 2018. "Measuring air polluters’ responsibility in transboundary pollution networks," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(3), pages 619-639, July.
    3. Halkos, George & Managi, Shunsuke & Tsilika, Kyriaki, 2017. "Evaluating a continent-wise situation for capital data," Economic Analysis and Policy, Elsevier, vol. 55(C), pages 57-74.
    4. George Halkos & Argyro Zisiadou, 2018. "Relating environmental performance with socioeconomic and cultural factors," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(1), pages 69-88, January.
    5. George E. Halkos & Dimitra C. Kitsou, 2018. "Weighted location differential tax in environmental problems," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(1), pages 1-15, January.

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    More about this item

    Keywords

    Sustainable development path; Endogenous growth model; Elasticity of the marginal utility; Elasticity of transformation; O11; O13; Q20;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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