Abstract
A stochastic growth model with a list of capital assets (i.e., reproducible capital, non-renewable resources, the knowledge base and institutions) is studied to evaluate the effects of different sources of uncertainty on sustainability. It is also discussed which measure can serve as an index of intergenerational welfare to evaluate sustainable development under uncertainty. The aim is to consider a more comprehensive setting than is usually explored in the literature and to generalize Arrow, Dasgupta and Mäler results to the case of uncertainty.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Arrow KJ, Dasgupta P, Mäler K-G (2003a) Evaluating projects and assessing sustainable development in imperfect economies. Environ Resour Econ 26(4): 647–685
Arrow KJ, Dasgupta P, Mäler K-G (2003b) The genuine savings criterion and the value of population. Econ Theory 21(2): 217–225
Arrow KJ, Dasgupta P, Goulder L, Daily G, Ehrlich PR, Heal GM, Levin S, Mäler K-G, Schneider S, Starrett DA, Walker B (2004) Are we consuming too much? J Econ Perspect 18(1): 147–172
Black F, Cox J (1976) Valuing corporate securities: some effects of bond indenture provisions. J Finance 31: 351–367
Brock WA (1973) A polluted golden age. In: Smith VL (eds) Economics of natural and environmental resources. Gordon & Breach, New York
Brock WA, Taylor MS (2004) Economic growth and the environment: a review of theory and empirics. In: Handbook of growth economics. North Holland, Amsterdam
Carpenter SR, Brock WA (2004) Spatial complexity, resilience and policy diversity: fishing on lake-rich landscapes. Ecol Soc 9(1): 8
Crandall MG, Lions PL (1983) Viscosity solutions of Hamilton-Jacobi equations. Trans AMS 277: 1–42
Crandall MG, Ishii H, Lions PL (1992) User’s guide to viscosity solutions of second order PDE’s. Bull AMS 27: 1–67
Dasgupta P (2000) Economic progress and the idea of social capital. In: Dasgupta P, Serageldin I (eds) Social capital: a multifaceted perspective. World Bank, Washington, pp 325–424
Dasgupta P (2001a) Human well-being and the natural environment, 2nd edn. Oxford University Press, Oxford (2004)
Dasgupta P (2001b) Valuing objects and evaluating policies in imperfect economies. Econ J 111: 1–29
Dasgupta P (2007) Economics: a very short introduction. Oxford University Press, Oxford
Dasgupta P (2008a) The welfare economic theory of green national accounts. Environ Resour Econ. doi:10.1007/s10640-008-9223-y
Dasgupta P (2008b) Nature in economics. Environ Resour Econ 39: 1–7
Dasgupta P (2008c) Discounting climate change. J Risk Uncertain
Dasgupta P (2009) The place of nature in economic development. In: Rodrik D, Rosenzweig M (eds) Handbook of development economics, vol 5. North Holland, Amsterdam
Dasgupta P, Heal G (1974) The optimal depletion of exhaustible resources. Rev Econ Stud. Symposium 3–28
Dasgupta P, Mäler K-G (2000) Net national product, wealth and social well-being. Environ Dev Econ 5(1): 69–93
Dixit A, Pindyck R (1994) Investment under uncertainty. Princeton University Press, Princeton
Karatsas I, Shreve SE (1988) Brownian motion and stochastic calculus. Springer, New York
Lafforgue G (2008) Stochastic technical change, non-renewable resources and optimal sustainable growth. Resour Energy Econ 30: 540–554
Li CZ, Löfgren K-G (2009) Genuine saving under stochastic growth. In: EAERE conference
Mäler K-G (2008) Sustainable development and resilience in ecosystems. Environ Resour Econ 39: 17–24
Mäler K-G, Li C-Z, Destouni G (2006) Pricing resilience in dynamic economy-environment system: a capital theoretic approach, Beijer DP. 208
Marsili M (2008) A note on wealth in a volatile economy. arXiv:0804.2772v1[q-fin.GN] 17 Apr 2008
Merton R (1975) An asymptotic theory for growth under uncertainty. Rev Econ Stud 42: 375–393
Rao NJ, Borwankar JO, Ramkrishana D (1974) Numerical solution of Ito Integral equations. SIAM J Control 12: 124–139
Solow R (1974) Intergenerational equity and exhaustible resources. Rev Econ Stud Sympos 29–45
Vouvaki D, Xepapadeas A (2008) Total factor productivity growth when factor of production generate environmental externalities, MPRA 10237. http://mpra.ub.uni-muenchen.de/10237/
Vouvaki D, Xepapadeas A (2009) Productive base sustainability under climate change: theoretical results and empirical evidence. http://www.economics-ejournal.org/economics/discussionpapers/2009-11
Walker B, Pearson L, Harris M, Mäler K-G., Li C-Z, Biggs R, Baynes T (2010) Incorporating resilience in the assessment of inclusive wealth: an example from south east Australia. Environ Resour Econ 45: 183–202
Weitzman ML (1976) On the welfare significance of national product in a dynamic economy. Q J Econ 90(1): 156–162
Weitzman ML (1998) On the welfare significance of national product under interest-rate uncertainty. Eur Econ Rev 42: 1581–1594
Weitzman ML (2003) Income, wealth, and the maximum principle. Harvard University Press, Cambridge
Weitzman ML (2009) On modeling and interpreting the economics of catastrophic climate change. Rev Econ Stat 91: 1–19
World Commission on Environment and Development (1987) Our common future. Oxford University Press, New York
Xepapadeas A (1999) Environmental policy and firm behaviour: abatement investment and location decisions under uncertainty and irreversibility, NBER, WP 243
Xepapadeas A (2005) Economic growth and the environment. In: Mäler K-G, Vincent JR (eds) Handbook of environmental economics, vol 3, chap 23. Elsevier, Amsterdam, pp 1219–1271
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Agliardi, E. Sustainability in Uncertain Economies. Environ Resource Econ 48, 71–82 (2011). https://doi.org/10.1007/s10640-010-9398-x
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10640-010-9398-x