Wealth, Welfare and Sustainability

Wealth, Welfare and Sustainability

Advances in Measuring Sustainable Development

Kirk Hamilton and Giles Atkinson

This important book presents fresh thinking and new results on the measurement of sustainable development. Economic theory suggests that there should be a link between future wellbeing and current wealth. This book explores this linkage under a variety of headings: population growth, technological change, deforestation and natural resource trade. While the relevant theory is presented briefly, the chief emphasis is on empirical measurement of the change in real wealth: this measure of net or ‘genuine’ saving is a key indicator of sustainable development. The methodological and empirical work is bolstered by tests of the predictive power of genuine saving in explaining future consumption and economic growth. Just as importantly, the authors show that many resource-abundant countries would be considerably wealthier today had they managed to save and invest the profits from natural resource exploitation in the past.

Preface and acknowledgements

Kirk Hamilton and Giles Atkinson

Subjects: economics and finance, environmental economics, valuation, environment, environmental economics, valuation

Extract

This book is concerned with how current decisions about consumption and saving have an impact upon future well-being, and in particular how current measurable indicators can shed light upon the prospects for future well-being. It is concerned, in short, with the concept and measurement of sustainable development. This task is beset by conceptual and empirical challenges. Yet at the heart of this book lies a very practical concern – if sustainability is to mean anything at all it needs to be measurable. We feel a sense of urgency in this task. Because current systems of economic indicators do not clearly signal whether an economy is on a sustainable path, policy errors based on these indicators will continue to be made and perpetuated. Moreover, these errors have a long reach, since they affect not only current well-being but also the well-being of those living in the future. Our book builds upon a body of knowledge linking growth theory, asset accounting and indicators of sustainable development. Moreover, what we are particularly interested in is the empirical application of this accumulated knowledge. We last approached the question of measuring sustainable development in Atkinson et al. (1997). With our co-authors in that volume we examined a broad array of proposals for the measurement of well-being and sustainability. The rationale for that approach was that a meaningful picture of whether countries are developing sustainably requires a judicious mix of indicators. Our aim in this current volume is more focused on the economics of sustainability and the...