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Making long-term economic growth more sustainable: evaluating the costs and benefits

journal contribution
posted on 2003-12-01, 00:00 authored by S Islam, M Munasinghe, Matthew ClarkeMatthew Clarke
Currently, traditional development issues such as economic stagnation, poverty, hunger, and illness as well as newer challenges like environmental degradation and globalisation demand attention. Sustainable development, including its economic, environmental and social elements, is a key goal of decisionmakers. Optimal economic growth has also been a crucial goal of both development theorists and practitioners. This paper examines the conditions under which optimal growth might be sustainable, by assessing the costs and benefits of growth. Key environmental and social aspects are considered. The Ecol-Opt-Growth-1 model analyses economic–ecological interactions, including resource depletion, pollution, irreversibility, other environmental effects, and uncertainty. It addresses some important issues, including savings, investment, technical progress, substitutability of productive factors, intergenerational efficiency, equity, and policies to make economic growth more sustainable—a basic element of the sustainomics framework. The empirical results support growing concerns that costs of growth may outweigh its benefits, resulting in unsustainability. Basically, in a wide range of circumstances, long term economic growth is unsustainable due to increasing environmental damage. Nevertheless, the model has many options that can be explored by policy makers, to make the development path more sustainable, as advocated by sustainomics. One example suggests that government supported abatement programs are needed to move towards sustainable development, since the model runs without abatement were infeasible. The optimal rate of abatement increases over time. Abatement of pollution is necessary to improve ecosystem viability and increase sustainability. Further research is necessary to seek conditions under which alternative economic growth paths are likely to become sustainable.

History

Journal

Ecological economics

Volume

47

Issue

2-3

Pagination

149 - 166

Publisher

Elsevier BV

Location

Amsterdam, Netherlands

ISSN

0921-8009

eISSN

1873-6106

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal

Copyright notice

2003, Elsevier Science B.V.