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Sustainability of an economy relying on two reproducible assets

Author

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  • Robert D. Cairns

    (Department of Economics, McGill University, Montreal, Quebec, Canada H3A 2T7)

  • Stellio Del Campo

    (EconomiX (UMR CNRS 7235-UPX), Université Paris Nanterre, France and Économie Publique, AgroParisTech, INRA, Université Paris Saclay, 78850 Thiverval-Grignon, France)

  • Vincent Martinet

    (Économie Publique, AgroParisTech, INRA, Université Paris Saclay, 78850 Thiverval-Grignon, France)

Abstract

Evaluating the sustainability of a society requires a system of shadow or accounting values derived from the sustainability objective. As a first step toward the derivation of such shadow values for a maximin objective, this paper studies an economy composed of two reproducible assets, each producing one of two consumption goods. The effect of the substitutability between goods in utility is studied by postulating, in turn, neoclassical diminishing marginal substitutability, perfect substitutability and perfect complementarity. The degree of substitutability has strong effects on the maximin solution, affecting the regularity or non-regularity of the program, and on the accounting values. This has important consequences for the computation of genuine savings and the sustainability prospects of future generations.

Suggested Citation

  • Robert D. Cairns & Stellio Del Campo & Vincent Martinet, 2017. "Sustainability of an economy relying on two reproducible assets," Working Papers 2017.03, FAERE - French Association of Environmental and Resource Economists.
  • Handle: RePEc:fae:wpaper:2017.03
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    Cited by:

    1. 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.
    2. Cairns, Robert D. & Martinet, Vincent, 2021. "Growth and long-run sustainability," Environment and Development Economics, Cambridge University Press, vol. 26(4), pages 381-402, August.
    3. Martinet, Vincent & Del Campo, Stellio & Cairns, Robert D., 2022. "Intragenerational inequality aversion and intergenerational equity," European Economic Review, Elsevier, vol. 144(C).

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    More about this item

    Keywords

    Sustainable development; maximin; sustainability accounting; substitutability;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • 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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