IDEAS home Printed from https://ideas.repec.org/p/apu/wpaper/2010-02.html
   My bibliography  Save this paper

Risk and Sustainability: Is Viability that far from Optimality?

Author

Listed:
  • Michel De Lara
  • Vincent Martinet
  • Luc Doyen

Abstract

Economic analysis addresses risk and long-term issues with discounted expected utility, focusing on optimality. Viability theory is based on sustainability constraints to be satisfied over time, focusing on feasibility. We make a bridge between these two approaches by showing that viability is equivalent to an array of degenerate intertemporal optimization problems. This makes the approach more interpretable in economic terms, and especially regarding efficiency. First, the deterministic case is examined. A particular emphasis is put on the connections between the viability kernel and the minimal time of crisis function. Then, we present stochastic viability with the notions of viable scenario and maximal viability probability. We show that the maximal viability probability shares dynamic programming properties with optimal discounted expected utility. Thus, both exhibit time-consistency, which may be a basis for an axiomatization of criteria under risk and long run for public decision-making.

Suggested Citation

  • Michel De Lara & Vincent Martinet & Luc Doyen, 2010. "Risk and Sustainability: Is Viability that far from Optimality?," Working Papers 2010/02, INRA, Economie Publique.
  • Handle: RePEc:apu:wpaper:2010/02
    as

    Download full text from publisher

    File URL: https://www6.versailles-grignon.inra.fr/economie_publique/Media/fichiers/Working-Papers/Working-Papers-2010/WP_2010_02
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Martinet, Vincent & Thebaud, Olivier & Doyen, Luc, 2007. "Defining viable recovery paths toward sustainable fisheries," Ecological Economics, Elsevier, vol. 64(2), pages 411-422, December.
    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. V.Martinet & L. Doyen, 2003. "Sustainable management of an exhaustible resource:a viable control model," THEMA Working Papers 2003-36, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    4. Richard B. Howarth, 1995. "Sustainability under Uncertainty: A Deontological Approach," Land Economics, University of Wisconsin Press, vol. 71(4), pages 417-427.
    5. Béné, C. & Doyen, L., 2008. "Contribution values of biodiversity to ecosystem performances: A viability perspective," Ecological Economics, Elsevier, vol. 68(1-2), pages 14-23, December.
    6. Martin L. Weitzman, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 703-724, September.
    7. Baumgärtner, Stefan & Quaas, Martin F., 2009. "Ecological-economic viability as a criterion of strong sustainability under uncertainty," Ecological Economics, Elsevier, vol. 68(7), pages 2008-2020, May.
    8. Krawczyk, Jacek & Kim, Kunhong, 2009. "Satisficing Solutions To A Monetary Policy Problem," Macroeconomic Dynamics, Cambridge University Press, vol. 13(01), pages 46-80, February.
    9. repec:eee:ecomod:v:208:y:2007:i:2:p:353-366 is not listed on IDEAS
    10. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
    11. Vincent Martinet, 2009. "Defining sustainability objectives," EconomiX Working Papers 2009-7, University of Paris Nanterre, EconomiX.
    12. Philippe Michel & Marc Fleurbaey, 1999. "Quelques réflexions sur la croissance optimale," Revue Économique, Programme National Persée, vol. 50(4), pages 715-732.
    13. Philippe Artzner & Freddy Delbaen & Jean-Marc Eber & David Heath, 1999. "Coherent Measures of Risk," Mathematical Finance, Wiley Blackwell, vol. 9(3), pages 203-228.
    14. Daniel Cohen & Philippe Michel, 1988. "How Should Control Theory Be Used to Calculate a Time-Consistent Government Policy?," Review of Economic Studies, Oxford University Press, vol. 55(2), pages 263-274.
    15. Shaw, W. Douglass & Woodward, Richard T., 2008. "Why environmental and resource economists should care about non-expected utility models," Resource and Energy Economics, Elsevier, vol. 30(1), pages 66-89, January.
    16. 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.
    17. Cheve, M. & Schubert, K., 1999. "La croissance optimale d'une economie polluante: durabilite economique versus durabilite ecologique," Papiers d'Economie Mathématique et Applications 1999.47, Université Panthéon-Sorbonne (Paris 1).
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Grants; Sustainability; Uncertainty; Multicriteria; Viability;

    JEL classification:

    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

    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:apu:wpaper:2010/02. 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: (Régis Grateau). General contact details of provider: http://edirc.repec.org/data/epinrfr.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 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.

    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.