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Environmental and Resource Economics

, Volume 63, Issue 2, pp 313–338 | Cite as

Empirical Testing of Genuine Savings as an Indicator of Weak Sustainability: A Three-Country Analysis of Long-Run Trends

  • Nick Hanley
  • Les Oxley
  • David Greasley
  • Eoin McLaughlin
  • Matthias Blum
Article

Abstract

Genuine Savings has emerged as a widely-used indicator of sustainable development. This approach to conceptualising what sustainability is about has strong links to work published by Anil Markandya and colleagues over 20 years ago. In this paper, we use long-term data stretching back to 1870 to undertake empirical tests of the relationship between Genuine Savings (GS) and future well-being for three countries: Britain, the USA and Germany. Our tests are based on an underlying theoretical relationship between GS and changes in the present value of future consumption. Based on both single country and panel results, we find evidence supporting the existence of a cointegrating (long run equilibrium) relationship between GS and future well-being, and fail to reject the basic theoretical result on the relationship between these two macroeconomic variables. This provides some support for the GS measure of weak sustainability.

Keywords

Weak sustainability Genuine savings Comprehensive investment Economic history Sustainable development indicators Cointegration 

Notes

Acknowledgments

Nick Hanley thanks the University of Waikato for hosting him during the writing of this paper. We thank The Leverhulme Trust for funding this work under the project “History and the Future: the Predictive Power of Sustainable Development Indicators” (Grant Number F00241). We also thank three referees and the editor of this special issue for helpful comments on earlier versions of the paper. Thanks also to Giles Atkinson, Kirk Hamilton and Jack Pezzey for many suggestions.

Supplementary material

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Supplementary material 1 (docx 32 KB)

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Copyright information

© Springer Science+Business Media Dordrecht 2015

Authors and Affiliations

  • Nick Hanley
    • 1
  • Les Oxley
    • 2
  • David Greasley
    • 3
  • Eoin McLaughlin
    • 1
  • Matthias Blum
    • 4
  1. 1.Department of Geography and Sustainable DevelopmentUniversity of St. AndrewsFifeScotland
  2. 2.University of WaikatoWaikatoNew Zealand
  3. 3.University of EdinburghEdinburghScotland, UK
  4. 4.Queens University BelfastBelfastUK

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