Sustainable Use of Renewable Resources

Sustainability: Dynamics and Uncertainty

Posted: 19 Nov 1996

See all articles by Andrea Beltratti

Andrea Beltratti

Bocconi University - Department of Finance

Graciela Chichilnisky

Columbia University

Geoffrey M. Heal

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

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Abstract

We study paths which involve optimal use of a renewable resource under several alternative definitions of optimality, including the discounted utilitarian, Chichilnisky's, the Rawlsian and the green golden rule. Initially we consider an economy where the only good is the resource: subsequently, we embed the resource in a productive economy with capital accumulation. Our aim is to investigate how the alternative approaches contribute to the understanding of the issues underlying concerns about sustainable use of the earth's resources. We show that Chichilnisky's criterion has several interesting characteristics: it leads the economy to asymptote to the green golden rule (the configuration giving the highest sustainable utility level) and requires that the discount rate fall asymptotically to zero, which can be interpreted as an application to intertemporal preferences of the well-known Webe-Fechner law of physics and physiology.

JEL Classification: Q20, D90

Suggested Citation

Beltratti, Andrea and Chichilnisky, Graciela and Heal, Geoffrey M., Sustainable Use of Renewable Resources. Sustainability: Dynamics and Uncertainty, Available at SSRN: https://ssrn.com/abstract=4445

Andrea Beltratti

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

Graciela Chichilnisky

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States
212 678 1148 (Phone)
212 678 0405 (Fax)

HOME PAGE: http://www.chilchilnisky.com

Geoffrey M. Heal (Contact Author)

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States
212-854-6459 (Phone)
212-316-9219 (Fax)

HOME PAGE: http://www.gsb.columbia.edu/faculty/gheal/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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