Constraints on Dematerialisation and Allocation of Natural Capital along a Sustainable Growth Path

José Belbute, João Rodrigues (), Tiago Domingos and Pedro Conceição
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João Rodrigues: PhD Student, IDMEC, Instituto Superior Técnico
Pedro Conceição: IIN+, Center for Innovation, Technology and Policy Research, Instituto Superior Técnico

Economics Working Papers from University of Évora, Department of Economics (Portugal)

Abstract: This paper extends the neoclassical growth model with natural capital by introducing two new concepts: allocation of natural capital and materialization. We consider that anthropogenic environmental impact is correlated with the throughput of the economy (materialisation). Materialisation is the material throughput per unit of economic activity. We capture the effect of the reduction of this throughput dematerialisation in the elasticities of materialisation and aggregate environmental impact. In our framework the fraction of natural capital devoted to production does not provide direct environmental services nor does it contribute to ecosystem functioning namely affecting the carrying capacity of natural capital.We analyse an optimal sustainable growth path, in the context of exogenous technological change. Our main conclusion is that the ratio of dematerialisation elasticities must equal the inverse of the share of natural capital in order to assure unbounded economic growth with constant natural capital.

Keywords: Economic growth; environmental concerns; sustainability constraints; materialisation and allocation of natural capital (search for similar items in EconPapers)
JEL-codes: C62 O40 Q01 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2003
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Journal Article: Constraints on dematerialisation and allocation of natural capital along a sustainable growth path (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:evo:wpecon:1_2003

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