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Sustainability and the Measurement of Wealth

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  • Kenneth J Arrow

    ()

Abstract

The last two decades have witnessed growing concern that the pattern of economic growth in many countries is not sustainable because of the depletion in stocks of many natural resources and the deterioration in the quality of various environmental services. These concerns have helped spawn a growing literature on 'sustainable development.' This emerging literature expands traditional growth-accounting approaches by giving considerable attention to natural resource stocks and environmental quality. This paper aims to advance this literature. We extend earlier work by offering a fully consistent theoretical framework that offers a clear criterion for sustainable development. This framework yields an empirically implementable measure of whether a given national economy is following a sustainable path. We apply this framework to five countries that differ significantly in terms of their stages of development and resource bases: the United States, China, Brazil, India, and Venezuela.

Suggested Citation

  • Kenneth J Arrow, 2010. "Sustainability and the Measurement of Wealth," National Institute of Economic and Social Research (NIESR) Discussion Papers 369, National Institute of Economic and Social Research.
  • Handle: RePEc:nsr:niesrd:2856
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    References listed on IDEAS

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    1. Hamilton, Kirk & Clemens, Michael, 1999. "Genuine Savings Rates in Developing Countries," World Bank Economic Review, World Bank Group, vol. 13(2), pages 333-356, May.
    2. Kenneth J. Arrow & Partha Dasgupta & Karl-Göran Mäler, 2003. "The genuine savings criterion and the value of population," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 21(2), pages 217-225, March.
    3. 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.
    4. repec:reg:rpubli:132 is not listed on IDEAS
    5. William D. Nordhaus, 2002. "The Health of Nations: The Contribution of Improved Health to Living Standards," NBER Working Papers 8818, National Bureau of Economic Research, Inc.
    6. Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2007. "The external wealth of nations mark II: Revised and extended estimates of foreign assets and liabilities, 1970-2004," Journal of International Economics, Elsevier, vol. 73(2), pages 223-250, November.
    7. מחקר - ביטוח לאומי, 2006. "Annual Survey 2005," Working Papers 15, National Insurance Institute of Israel.
    8. Richard S. J. Tol, 2009. "The Economic Effects of Climate Change," Journal of Economic Perspectives, American Economic Association, vol. 23(2), pages 29-51, Spring.
    9. Dasgupta, Partha, 2001. "Human Well-Being and the Natural Environment," OUP Catalogue, Oxford University Press, number 9780199247882.
    10. Hamilton, Kirk, 1994. "Green adjustments to GDP," Resources Policy, Elsevier, vol. 20(3), pages 155-168, September.
    11. Pearce, David W. & Atkinson, Giles D., 1993. "Capital theory and the measurement of sustainable development: an indicator of "weak" sustainability," Ecological Economics, Elsevier, vol. 8(2), pages 103-108, October.
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    More about this item

    JEL classification:

    • D69 - Microeconomics - - Welfare Economics - - - Other
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q39 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Other

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