Wealth, Welfare and Sustainability

Annual Review of Resource Economics, Forthcoming

45 Pages Posted: 4 Feb 2016

See all articles by Elena G. Irwin

Elena G. Irwin

Ohio State University (OSU) - Department of Agricultural, Environmental & Development Economics

Sathya Gopalakrishnan

Ohio State University (OSU)

Alan Randall

Ohio State University (OSU) - Department of Agricultural, Environmental & Development Economics; Ohio State University - Sustainable & Resilient Economy Discovery Theme; The University of Sydney - School of Economics

Date Written: January 16, 2016

Abstract

Growing concerns over climate change and the potential for large damages due to non-linear processes underscore the need for meaningful sustainability assessment of an economy. Economists have developed rigorous approaches to conceptualizing sustainability based on the paradigm of weak sustainability, which assumes infinite substitution between manufactured and natural capital stocks. In contrast, strong sustainability emphasizes physical limits to this substitution and the importance of maintaining the resilience of normally functioning biophysical processes. Recent progress in resource and environmental economics has demonstrated the feasibility of incorporating strong sustainability features, including tipping points, uncertainties and resilience, into welfare theoretic models to assess efficiency and optimal policies. Given that weak sustainability and intertemporal efficiency share the same concept of welfare, we ask: to what extent can these approaches be applied to evaluate sustainability? We highlight recent work on assessing sustainability in imperfect economies and dynamic models of intertemporal welfare that embed strong sustainability features.

Keywords: non-convexities, uncertainty, resilience, coupled human-natural systems, benefit cost analysis

Suggested Citation

Irwin, Elena G. and Gopalakrishnan, Sathya and Randall, Alan John, Wealth, Welfare and Sustainability (January 16, 2016). Annual Review of Resource Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2726849

Elena G. Irwin (Contact Author)

Ohio State University (OSU) - Department of Agricultural, Environmental & Development Economics ( email )

2120 Fyffe Rd
Columbus, OH 43210-1067
United States
614-292-6449 (Phone)

HOME PAGE: http://www-agecon.ag.ohio-state.edu/people/display.cfm?User_ID=irwin78

Sathya Gopalakrishnan

Ohio State University (OSU) ( email )

Dept. of Ag, Env & Dev Economics
2120 Fyffe Rd
Columbus, OH 43210

Alan John Randall

Ohio State University (OSU) - Department of Agricultural, Environmental & Development Economics ( email )

2120 Fyffe Road
Columbus, OH 43210-1067
United States
614-292-6423 (Phone)

Ohio State University - Sustainable & Resilient Economy Discovery Theme ( email )

Blankenship Hall-2010
901 Woody Hayes Drive
Columbus, OH OH 43210
United States

The University of Sydney - School of Economics ( email )

Rm 370 Merewether (H04)
The University of Sydney
Sydney, NSW 2006 2008
Australia

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