Advances in Measuring Sustainable Development
11. Summary and conclusions This book has dealt with what has been one of the fundamental questions in the sustainability debate: how can governments, most of whom have made a commitment to achieving sustainable development, know whether they are in fact on a sustainable path? Or, to state the problem slightly differently, how can current indicators tell us about future welfare? The theory we have expounded gives an unequivocal answer to the second question: the present value of utility will be increasing or decreasing along an optimal development path if genuine saving is positive or negative. If genuine saving is negative at a point on the optimal path, then this path is not sustainable. The theory presented in this book concerns the properties of saving and the measurement of saving on the optimal development path for the economy. ‘Real world’ economies are not optimal, and often diverge substantially from optimality. Indeed, much of modern environmental and resource economics is premised on exactly this observation. Where does this leave the measurement of sustainability and future welfare? One solution is offered by Dasgupta and Mäler (2000) who show that net saving has the same basic properties on non-optimal development paths if accounting prices are deﬁned appropriately. However, this approach requires a forecast of future utility in order to deﬁne the accounting prices, in which case current saving indicators are not required in order to determine whether the economy is on a sustainable path. The analysis and discussion in a...
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