Measuring sustainability under regime shift uncertainty: A resilience pricing approach

Chuan-Zhong Li () and Karl‑Göran Mäler

No 2010:16, Working Paper Series from Uppsala University, Department of Economics

Abstract: This paper is concerned with the theory of resilience pricing and sustainability measurement in the presence of risk for regime shift in a dynamic economy-environment system. Following Holling (1973),we consider resilience as the maximal perturbation that the system can absorb without flipping into a qualitatively different state. Using a multisector growth model under uncertainty, we derive the shadow price of resilience that affects the probabilities of the system to flip in the future. We also analyze the role of resilience on sustainability with both ex-ante and ex-post welfare measures.

Keywords: Regime shift; resilience; ecosystem; valuation; and inclusive wealth (search for similar items in EconPapers)
JEL-codes: D60 D90 Q50 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2010-07-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Journal Article: Measuring sustainability under regime shift uncertainty: a resilience pricing approach (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:uunewp:2010_016

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