Wealth, Welfare and Sustainability
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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.
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Chapter 8: Accounting for Technological Change

Kirk Hamilton and Giles Atkinson

Extract

8. Accounting for technological change INTRODUCTION To what extent will delivering sustainable development depend critically on the rate of technological change? For example, questions surrounding the importance of technological improvements in enhancing economic prospects and how these improvements come into being have been a lively source of debate in the economic growth literature (see, for a review, Barro and Salai-Martin, 1995; Jones, 1998). Much of this discussion is highly relevant to the problem of sustainability; that is, the conditions for its achievement and the measurement of progress towards sustainable development. It is perhaps surprising then that few proposed indicators of sustainability currently integrate technological change in any meaningful way. For example, the theory underpinning much of this literature, as for example outlined in chapters 2 and 3, is in large part a cautionary tale about the (net) accumulation of (per capita) total wealth rather than improvements in productivity. By and large, models which have been used to underline the importance of this savings approach have assumed, for simplicity, fixed technology, largely in order to examine critical but previously neglected measurement issues surrounding the liquidation of resource and environmental assets. If, in reality, there is technological change, estimates of income and saving based on these simple models may not accurately inform prospects for sustainable development. This last point has been made forcefully in Nordhaus (1995), Weitzman (1997) and Weitzman and Löfgren (1997).1 For example, in Weitzman and Löfgren, a green national accounting framework is extended in order to...

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