IDEAS home Printed from https://ideas.repec.org/p/ags/aaea08/6486.html
   My bibliography  Save this paper

Conservation Needs Assessment: Sustainability with Substitution and Biased Technical Change

Author

Listed:
  • Sesmero, Juan P.
  • Fulginiti, Lilyan E.

Abstract

This study explores the role of rate and biases of technological change in the sustainability of an economy with an exhaustible resource. In order to achieve this goal, the mathematical concept of viability kernel is introduced as a sustainability indicator and necessary conditions for sustainability are completely depicted in terms of technological parameters. The literature has historically assumed substitutability between human capital and natural resources and technological progress that is neutral in terms of relative input productivity and minimum efficient scale of production. Both assumptions have been widely criticized given the patterns of technological change and substitution observed empirically. Hence the theoretical contribution developed here allows calculation of sustainability thresholds in a manner that permits two of the most important drivers of economic behavior, substitution possibilities and biased technical change. As a result, necessary conditions for sustainability are derived in terms of rate and bias of technical change and elasticity of substitution. Results previously derived in the literature are reviewed and comparisons are made with new results derived from more flexible technological specifications. Several important results are found. First, the identification between elasticity of substitution and sustainability breaks down. Second, a rather optimistic result is obtained by which Increasing Returns to Scale sometimes can prevent the economy from extinction even with zero technological progress and positive capital depreciation. Third, input bias of technical change is critical in determining sustainability and further, size-increasing bias of technical change increases the likelihood of an economy to be sustainable in all cases.

Suggested Citation

  • Sesmero, Juan P. & Fulginiti, Lilyan E., 2008. "Conservation Needs Assessment: Sustainability with Substitution and Biased Technical Change," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6486, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea08:6486
    DOI: 10.22004/ag.econ.6486
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/6486/files/470137.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.6486?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. R. M. Solow, 1974. "Intergenerational Equity and Exhaustible Resources," Review of Economic Studies, Oxford University Press, vol. 41(5), pages 29-45.
    2. Graciela Chichilnisky, 1996. "An axiomatic approach to sustainable development," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 13(2), pages 231-257, April.
    3. Avinash Dixit & Peter Hammond & Michael Hoel, 1980. "On Hartwick's Rule for Regular Maximin Paths of Capital Accumulation and Resource Depletion," Review of Economic Studies, Oxford University Press, vol. 47(3), pages 551-556.
    4. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, vol. 67(5), pages 972-974, December.
    5. Blackorby, Charles & Russell, R Robert, 1989. "Will the Real Elasticity of Substitution Please Stand Up? (A Comparison of the Allen/Uzawa and Morishima Elasticities)," American Economic Review, American Economic Association, vol. 79(4), pages 882-888, September.
    6. Martinet, V. & Doyen, L., 2007. "Sustainability of an economy with an exhaustible resource: A viable control approach," Resource and Energy Economics, Elsevier, vol. 29(1), pages 17-39, January.
    7. Kenneth Arrow & Partha Dasgupta & Lawrence Goulder & Gretchen Daily & Paul Ehrlich & Geoffrey Heal & Simon Levin & Karl-Göran Mäler & Stephen Schneider & David Starrett & Brian Walker, 2004. "Are We Consuming Too Much?," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 147-172, Summer.
    8. John C. V. Pezzey, 1997. "Sustainability Constraints versus "Optimality" versus Intertemporal Concern, and Axioms versus Data," Land Economics, University of Wisconsin Press, vol. 73(4), pages 448-466.
    9. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, May.
    10. Bonneuil, Noel, 1994. "Capital Accumulation, Inertia of Consumption and Norms of Reproduction," Journal of Population Economics, Springer;European Society for Population Economics, vol. 7(1), pages 49-62.
    11. Perrin, Richard K., 1997. "The Impact Of Technological Change On A Competitive Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 22(2), pages 1-11, December.
    12. L. Doyen & C Bene, 2003. "Sustainability of fisheries through marine reserves: a robust modeling analysis," Post-Print hal-00716683, HAL.
    13. Bene, C. & Doyen, L. & Gabay, D., 2001. "A viability analysis for a bio-economic model," Ecological Economics, Elsevier, vol. 36(3), pages 385-396, March.
    14. Solow, Robert, 1993. "An almost practical step toward sustainability," Resources Policy, Elsevier, vol. 19(3), pages 162-172, September.
    15. Griffin, Ronald C. & Montgomery, John M. & Rister, M. Edward, 1987. "Selecting Functional Form In Production Function Analysis," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 12(2), pages 1-12, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lee, Yunkyung, 2020. "Potential economic consequences of gene-edited technology on the U.S. soybean market," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304241, Agricultural and Applied Economics Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Doyen, L. & Martinet, V., 2012. "Maximin, viability and sustainability," Journal of Economic Dynamics and Control, Elsevier, vol. 36(9), pages 1414-1430.
    2. Cairns, Robert D. & Del Campo, Stellio & Martinet, Vincent, 2019. "Sustainability of an economy relying on two reproducible assets," Journal of Economic Dynamics and Control, Elsevier, vol. 101(C), pages 145-160.
    3. Martinet, V. & Doyen, L., 2007. "Sustainability of an economy with an exhaustible resource: A viable control approach," Resource and Energy Economics, Elsevier, vol. 29(1), pages 17-39, January.
    4. Toman, Michael & Pezzey, John C., 2002. "The Economics of Sustainability: A Review of Journal Articles," Discussion Papers dp-02-03, Resources For the Future.
    5. Martinet, Vincent, 2011. "A characterization of sustainability with indicators," Journal of Environmental Economics and Management, Elsevier, vol. 61(2), pages 183-197, March.
    6. Robert Cairns & Stellio Del Campo & Vincent Martinet, 2021. "Intragenerational inequality aversion and intergenerational equity," Working Papers 2021.04, FAERE - French Association of Environmental and Resource Economists.
    7. Cairns, Robert D. & Martinet, Vincent, 2014. "An environmental-economic measure of sustainable development," European Economic Review, Elsevier, vol. 69(C), pages 4-17.
    8. Martinet, Vincent, 2007. "A step beside the maximin path: Can we sustain the economy by following Hartwick's investment rule?," Ecological Economics, Elsevier, vol. 64(1), pages 103-108, October.
    9. Gerlagh, Reyer & Keyzer, Michiel A., 2003. "Efficiency of conservationist measures: an optimist viewpoint," Journal of Environmental Economics and Management, Elsevier, vol. 46(2), pages 310-333, September.
    10. Y. Hossein Farzin, 2010. "Sustainability, Optimality, and Development Policy," Review of Development Economics, Wiley Blackwell, vol. 14(2), pages 262-281, May.
    11. Geir B. Asheim & Tapan Mitra, 2018. "Characterizing Sustainability in Discrete Time," CESifo Working Paper Series 7206, CESifo.
    12. Cairns, Robert D. & Tian, Huilan, 2010. "Sustained development of a society with a renewable resource," Journal of Economic Dynamics and Control, Elsevier, vol. 34(6), pages 1048-1061, June.
    13. Geir B. Asheim & Tapan Mitra, 2021. "Characterizing sustainability in discrete time," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(2), pages 461-481, March.
    14. Mikesell, Raymond F., 1995. "The limits to growth : A reappraisal," Resources Policy, Elsevier, vol. 21(2), pages 127-131, June.
    15. Knapp, Keith C., 2006. "Recursive Sustainability: Intertemporal Efficiency and Equity," 2006 Annual meeting, July 23-26, Long Beach, CA 21472, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Cairns, Robert D., 2008. "Value and income," Ecological Economics, Elsevier, vol. 66(2-3), pages 417-424, June.
    17. Mitra, Tapan & Asheim, Geir B. & Buchholz, Wolfgang & Withagen, Cees, 2013. "Characterizing the sustainability problem in an exhaustible resource model," Journal of Economic Theory, Elsevier, vol. 148(5), pages 2164-2182.
    18. Withagen, C. A. A. M., 1996. "Sustainability and investment rules," Economics Letters, Elsevier, vol. 53(1), pages 1-6, October.
    19. Louis Dupuy, 2012. "International Trade and Sustainability : A survey," Working Papers hal-00701426, HAL.
    20. Robert D. Cairns, 2011. "Accounting for Sustainability: A Dissenting Opinion," Sustainability, MDPI, Open Access Journal, vol. 3(9), pages 1-16, August.

    More about this item

    Keywords

    Resource /Energy Economics and Policy;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea08:6486. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.