Incorporating Environment into a Keynesian Model for Estimation of Sustainable Income of Pakistan and Bangladesh

Mehnaz Ahmed and Seeme Mallick
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Mehnaz Ahmed: Graduate School of Environment, Macquarie University, Australia
Seeme Mallick: Graduate School of Environment, Macquarie University, Australia

Bangladesh Development Studies, 1997, vol. 25, issue 3-4, 175-195

Abstract: It is now widely accepted that the indicators of the national accounts do not correctly portray the state of an economy. Gross Domestic Product (GDP) is the widely used measure of economic activity, and is generally used in formulating demand management and stabilisation policies. A major shortcoming of relying solely on GDP is that it ignores the effects of environmental degradation and depletion of natural resources. As Ahmed, Serafy and Lutz (1990) have rightly stated "where the environment is concerned 'there is no such thing as a free lunch', and the burden of the excessive use will have to be borne by the coming generations". In environmental economics, the environment is regarded as capital which is durable and provides services overtime. If managed properly it can provide services indefinitely. -As human-made capital depreciates over time, the environment also deteriorates if not maintained. Thus the allowance for the depreciation of environmental capital has to be deducted from a country's income to ensure its proper maintenance; that is to offset the wear and tear of natural endowment

Keywords: Sustainable agriculture; Ecological sustainability; Income estimates; Natural resources; Fertilizers; Forest resources; Sustainable growth; Green economics; Renewable energy; Energy consumption (search for similar items in EconPapers)
JEL-codes: A12 (search for similar items in EconPapers)
Date: 1997
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