Sustainable Development: Renewable Resources and Technological Progress
Conflicts between optimality and sustainability are typical in the literature on sustainable development. Using the 'capital-resource' growth model, Pezzey and Withagen (1998) have proved that if natural resources are exhaustible, the time-path of consumption is single-peaked, declining from some point in time onwards. This paper extends the model to include technical progress, resource renewability, extraction costs and population growth. The main result is that, for any constant returns to scale technology, optimal paths can be sustainable only if the social discount rate does not exceed the sum of the rates of resource regeneration and augmentation. The development of resource-saving techniques is crucial for sustaining consumption per capita in the long run, whereas capital depreciation and extraction costs are neutral with respect to this sustainability condition.
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- Jeffrey A. Krautkraemer & JRaymond G. Batina, 1999. "On Sustainability and Intergenerational Transfers with a Renewable Resource," Land Economics, University of Wisconsin Press, vol. 75(2), pages 167-184.
- Heal, G., 1990.
"The Optimal Use Of Exhaustible Resources,"
fb-_90-10, Columbia - Graduate School of Business.
- Pezzey, John C V & Withagen, Cees A, 1998. " The Rise, Fall and Sustainability of Capital-Resource Economies," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(2), pages 513-27, June.
- Heal, G.M., 1995. "Interpreting Sustainability," Papers 95-24, Columbia - Graduate School of Business.
- Chichilnisky, Graciela & Beltratti, Andrea & Heal, Geoffrey, 1998. "Sustainable use of renewable resources, Chapter 2.1," MPRA Paper 8815, University Library of Munich, Germany.
- R. M. Solow, 1973. "Intergenerational Equity and Exhaustable Resources," Working papers 103, Massachusetts Institute of Technology (MIT), Department of Economics.
- Mourmouras, Alex, 1993. "Conservationist government policies and intergenerational equity in an overlapping generations model with renewable resources," Journal of Public Economics, Elsevier, vol. 51(2), pages 249-268, June.
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