Evaluating Projects and Assessing Sustainable Development in Imperfect Economies

We are interested in three related questions:(1) How should accounting prices be estimated?(2) How should we evaluate policy change in animperfect economy? (3) How can we check whetherintergenerational well-being will be sustainedalong a projected economic programme? We do notpresume that the econom...

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Bibliographic Details
Published inEnvironmental & resource economics Vol. 26; no. 4; pp. 647 - 685
Main Authors Arrow, Kenneth J, Dasgupta, Partha, Mäler, Karl-Göran
Format Journal Article
LanguageEnglish
Published Dordrecht European Association of Environmental and Resource Economists 01.12.2003
Springer Nature B.V
SeriesEnvironmental & Resource Economics
Subjects
accounting prices
bifurcation points
Capital assets
Consumption
Cost benefit analysis
Economic conditions
Economic forecasts
Economic models
Economics
Ecosystems
Environment
Environmental economics
environmental Kuznets curve
Expenditures
genuine investment
genuine wealth
Human capital
hysteresis
Imperfect competition
intertemporal welfare
irreversibility
Mineral reserves
Natural resources
non-convexity
Pontryagin Principle
Population growth
Prices
Property rights
separatrix
social discount rate
Stock exchanges
structural stability
Studies
Sustainable development
Technological change
Technology
thresholds
Wealth
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Summary:We are interested in three related questions:(1) How should accounting prices be estimated?(2) How should we evaluate policy change in animperfect economy? (3) How can we check whetherintergenerational well-being will be sustainedalong a projected economic programme? We do notpresume that the economy is convex, nor do weassume that the government optimizes on behalfof its citizens. We show that the same set ofaccounting prices should be used both forpolicy evaluation and for assessing whether ornot intergenerational welfare along a giveneconomic path will be sustained. We also showthat a comprehensive measure of wealth,computed in terms of the accounting prices, canbe used as an index for problems (2) and (3)above. The remainder of the paper is concernedwith rules for estimating the accounting pricesof several specific environmental naturalresources, transacted in a few well knowneconomic institutions. Copyright Kluwer Academic Publishers 2003
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ISSN:0924-6460
1573-1502
DOI:10.1023/b:eare.0000007353.78828.98