Is Economic Growth Sustainable? A Trend Analysis for the Netherlands, 1990-1995

Marjan Hofkes, R. Gerlagh, W. Lise and Harmen Verbruggen

No 330984, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: In this paper, we present a measure of Sustainable National Income (SNI) , which corrects Net National Income (NNI) for the costs to bring back environmental resource use to a ‘sustainable’ level. The SNI measure is calculated for the Netherlands, for the years 1990 and 1995. We use an applied general equilibrium (AGE) model specifying 27 production sectors. The model includes emissions and abatement cost curves, based on large data sets for 9 environmental themes. The model combines the advantages of a top-down approach (the AGE model) with the information of a bottom-up approach (the environmental data and data on emissions reductions costs). We are specifically interested in the change of SNI in connection to changes in the standard measure of Net National Income (NNI). Economic change over the period 1990-1995 is analysed regarding changes in overall scale, sectoral composition of production and consumption, and technologies used for production. We show that economic growth per se is unsustainable, in the sense that the growth of the SNI-measure does not catch up with the growth in NNI, if we only consider economic expansion over the period 1990-1995, while disregarding compositional and technological change. The Dutch economy has, however, moved towards sectors less dependent on resource use, and furthermore, technological change has allowed output growth, using the same amounts of resource inputs. The numerical calculations show that this has resulted in a proportional growth of the SNI measure compared to the NNI, that is, the SNI as a percentage of NNI has almost remained constant. We conclude from this that the sources of growth were sustainable over the period 1990-1995.

Keywords: Research Methods/Statistical Methods; International Development (search for similar items in EconPapers)
Pages: 25
Date: 2002
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