Sustainability and the Measurement of Wealth

Kenneth Arrow, Partha Dasgupta, Lawrence H. Goulder, Kevin Mumford and Kirsten Oleson

No 16599, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a consistent and comprehensive theoretical framework for assessing whether economic growth is compatible with sustaining well-being over time. The framework focuses on whether a comprehensive measure of wealth - one that accounts for natural capital and human capital as well as reproducible capital - is maintained through time. Our framework also integrates population growth, technological change, and changes in health. We apply the framework to five countries that differ significantly in stages of development and resource bases: the United States, China, Brazil, India, and Venezuela. With the exception of Venezuela, significant increases in human capital enable comprehensive wealth to be maintained (and sustainability to be achieved) despite significant reductions in the natural resource base. We find that the value of "health capital" is very large relative to other forms of capital. As a result, its growth rate critically influences the growth rate of per-capita comprehensive wealth.

JEL-codes: D69 O10 O47 O50 Q32 Q39 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-ene, nep-env, nep-hap and nep-hrm
Note: EEE EFG
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Citations: View citations in EconPapers (37)

Published as Arrow, Kenneth J. & Dasgupta, Partha & Goulder, Lawrence H. & Mumford, Kevin J. & Oleson, Kirsten, 2012. "Sustainability and the measurement of wealth," Environment and Development Economics, Cambridge University Press, vol. 17(03), pages 317-353, June.

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Journal Article: Sustainability and the measurement of wealth (2012)
Working Paper: Sustainability and the Measurement of Wealth (2010)
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