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Constraints on Dematerialisation and Allocation of Natural Capital along a Sustainable Growth Path

  • José Manuel Madeira Belbute

    ()

    (Department of Economics, University of Évora)

  • João Rodrigues

    ()

    (PhD Student, IDMEC, Instituto Superior Técnico)

  • Tiago Domingos

    (IDMEC, Institute of Mechanical Engineering, Instituto Superior Técnico)

  • Pedro Conceição

    (IIN+, Center for Innovation, Technology and Policy Research, Instituto Superior Técnico)

This paper extends the neoclassical growth model with natural capital by introducing two new concepts: allocation of natural capital and materialization. We consider that anthropogenic environmental impact is correlated with the throughput of the economy (materialisation). Materialisation is the material throughput per unit of economic activity. We capture the effect of the reduction of this throughput dematerialisation in the elasticities of materialisation and aggregate environmental impact. In our framework the fraction of natural capital devoted to production does not provide direct environmental services nor does it contribute to ecosystem functioning namely affecting the carrying capacity of natural capital.We analyse an optimal sustainable growth path, in the context of exogenous technological change. Our main conclusion is that the ratio of dematerialisation elasticities must equal the inverse of the share of natural capital in order to assure unbounded economic growth with constant natural capital.

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File URL: http://hdl.handle.net/10174/8403
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Paper provided by University of Évora, Department of Economics (Portugal) in its series Economics Working Papers with number 1_2003.

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Length: 21 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:evo:wpecon:1_2003
Contact details of provider: Postal: Largo dos Colegiais 2, 7000 - 803ÉVORA
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