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.

Chapter 10: International Flows of Resource Rents

Kirk Hamilton and Giles Atkinson

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


INTRODUCTION The role that international trade plays in measuring sustainable development has come under recent scrutiny, reflecting in part the wider and diverse debate about trade and sustainability. For example, by relaxing domestic natural resource constraints it has been argued that international trade allows any particular country to deplete natural assets abroad by importing its natural resource requirements. While the onus is on resource-extracting countries to make provision for the loss of domestic natural assets whether for export or not, some importing countries have expressed interest in measuring their derived demand for the depletion of resources elsewhere. For both selfish and altruistic reasons, such information may be of particular interest where an exporter is believed to be on an unsustainable path. In this chapter, we examine international resource flows using an Input/ Output framework that is akin to an ‘ecological balance of payments’ analysis. This framework allows us to calculate the derived demand for resources in the country of final use. The empirical section of this chapter applies this model to data on global trade and natural resource depletion in 1980, 1985 and 1990. Our results provide a quantitative assessment of the significance of imports of resources – direct and indirect – required by, say, Japan, the United States and the European Union. These results can also be disaggregated to permit an examination of trade relations vis-àvis individual resource exporting countries. It is interesting to note that a number of these resource exporters appear to be unsustainable at...

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