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

Islam, Sardar M. N and Munasinghe, Mohan and Clarke, Matthew (2003) Making long-term economic growth more sustainable: evaluating the costs and benefits. Ecological Economics, 47 (2-3). pp. 149-166. ISSN 0921-8009

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Abstract

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.

Item Type: Article
Uncontrolled Keywords: ResPubID5529, costs and benefits, economic growth, sustainability
Subjects: Faculty/School/Research Centre/Department > Centre for Strategic Economic Studies (CSES)
FOR Classification > 1401 Economic Theory
Depositing User: VUIR
Date Deposited: 21 Apr 2011 04:42
Last Modified: 30 Jan 2015 01:23
URI: http://vuir.vu.edu.au/id/eprint/2446
DOI: 10.1016/S0921-8009(03)00162-9
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Citations in Scopus: 19 - View on Scopus

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