Valuing the Future - Economic Theory & Sustainability

Preface xi What is Sustainability? 1(26) History of Sustainability 5(2) Possible Formalizations 7(4) Limitations of Earlier Approaches 11(1) Discounted utilitarianism 12(1) Sustainability: A Preliminary Definition 13(1) Valuing Environmental Assets 14(6) The Analytical Framework 20(1) Summary 21(1) Outline of the Book 21(3) Conclusions 24(3) Conservation 24(1) Valuation 25(1) National Income 25(2) Part I Sustainability Within a Classical Framework The Classical Formulation 27(9) Declining Discount Rate 30(1) Conclusion 31(1) Hamiltonians and Adjoint Variables 32(4) Valuing a Depletable Stock 36(10) Corner Solutions 37(1) Optimal Paths 38(5) The Green Golden Rule 43(1) The Rawlsian Optimum 44(1) Nonseparable Utility Functions 44(1) Summary 45(1) Renewable Resources 46(12) Stationary Solutions 48(2) Dynamic Behavior 50(2) The Green Golden Rule 52(1) Ecological Stability 53(2) The Rawlsian Solution 55(1) Conclusions 55(3) Part II A Broader Perspective Alternative to utilitarianism 58(23) Formalizing Utilitarianism 60(1) Empirical Evidence 61(1) Logarithmic Discounting and the Weber-Fechner Law 62(1) Zero Discount Rate 63(2) Overtaking 65(3) Limiting Payoffs 68(1) Chichilnisky's Criterion 69(7) Comparison with Overtaking 73(1) Constancy of Discount Rates 74(2) The Rawlsian Criterion 76(1) Discounting Utility of Consumption? 76(3) Final comments 79(2) Depletion Revisited 81(13) Optimization with chichilnisky's Criterion 82(7) Conservation and the Chichilnisky Criterion 89(2) Differences from Utilitarian Optima 91(1) Overtaking 92(2) Renewable Resources Revisited 94(21) Constant Discount Rates 94(4) Declining Discount Rates 98(6) Examples 103(1) Empirical Evidence on Declining Discount Rates 103(1) Time Consistency 104(6) Time Consistency and Chichilnisky's Criterion 107(1) Asymptotic Time Consistency 107(2) Is Consistency Desirable? 109(1) Overtaking 110(1) Equal Treatment over Finite Horizons 111(1) Summary 112(3) Investment in a Backstop 115(13) The Model 117(1) Utilitarian Investment 118(2) Optimality After the Backstop 118(1) Optimality When the Stock is Exhausted 119(1) Optimality Before the Stock Is Exhausted 119(1) Solving the Problem Recursively 120(6) Investing for the Long Run: The Green Golden Rule 122(1) The Rawlsian Solution 123(1) Investing for present and Future 123(2) Overtaking 125(1) Choosing When to Invest 125(1) Conclusions 126(2) Part III Capital Accumulation Exhaustibility and Accumulation 128(13) The Utilitarian Optimum 129(6) Stationary Solutions 131(1) Dynamics of the Utilitarian Optimum 132(3) The Green Golden Rule 135(2) The Chichilnisky Criterion 137(3) Conclusion 140(1) Capital and Renewable Resources 141(14) The Utilitarian Optimum 142(4) Stationary Solutions 142(3) Dynamics of the Utilitarian Solution 145(1) The Green Golden Rule 146(4) The Chichilnisky Criterion 150(2) Conclusions 152(3) Part IV Policy Issues Measuring National Income 155(20) Introduction 155(1) Two Concepts of National Income 156(2) A General Model 158(1) Hicksian Income and the Hamiltonian 159(4) Constant Discount Rates 159(3) Time-Varying Discount Rates 162(1) The Linearized Hamiltonian 163(5) Consumption and Hicksian National Income 167(1) Hicksian Income and the Discount Rate 168(1) Hicksian Income and Resources 168(5) Exhaustible Resources 168(3) Renewable Resources 171(1) National Income and Capital Accumulation 171(2) Nonutilitarian Objectives 173(2) National Welfare 175(21) A Mathematical Framework 175(5) National Welfare and Resources 180(5) National Welfare and Hicksian Income in the Hotelling Case 180(2) Exhaustible Resources and National Welfare 182(1) Renewable Resources and National Welfare 183(1) National Welfare and Capital Accumulation 184(1) Chichilnisky's Criterion 185(4) Sustainable Revenues and national Income 189(4) Summary 193(3) Project Evaluation 196(12) Exhaustible Resources 197(5) Initial Shadow Prices 198(3) Final Shadow Prices 201(1) Renewable Resources 202(2) Sustainable Net benefits 204(1) Investing in a Backstop Technology 205(1) Conclusions 206(2) Appendix 208(5) A.1 Existence of a Solution for the Exhaustible Resource Case 208(2) A.2 Existence of a Solution for the Renewable Resource Case 210(3) References 213(11) Index 224