Real capital investments and sustainability - The case of Sweden

Eva C. Alfredsson and J. Mikael Malmaeus

Ecological Economics, 2019, vol. 161, issue C, 216-224

Abstract: Real capital investments are important for a transition to a more sustainable economy and for the continuous process of creative destruction and economic development. At the same time investments have negative environmental effects. In this paper we analyze to what extent the current investments in real capital (i.e., buildings, machinery and infrastructures) in Sweden are sustainable in regard of the most important resources used in investments and in terms of CO2 emissions. This is evaluated based on Sweden's share of a sustainable use of these resources and our share of the remaining carbon budget for achieving the Paris agreement. In the analysis we have used best publicly available data and methods to indicatively establish sustainable levels of resource use and emissions. We find that 1 million invested SEK (US$ 110,000) generate 15–75 tonnes of CO2 emissions and use 80–260 MWh of energy, and on average 4.8 tonnes of iron, 0.2 tonnes of aluminum, 260 tonnes of gravel and sand and 6 tonnes of timber. Our analysis shows that within 50 years current investment would use up Sweden's CO2 budget available for achieving the Paris agreement, leaving no room for emissions from consumption. The use of timber, gravel and sand is above Sweden's share of a global yearly sustainable production. The current use of iron and aluminum can be maintained for 20–50 years, but approaches the sustainability criteria with a 200 year perspective.

Keywords: Economic growth; Real capital; Physical capital; Resource use; CO2 emissions (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:161:y:2019:i:c:p:216-224

DOI: 10.1016/j.ecolecon.2019.04.008

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