Pearce and Atkinson take up Victor’s challenge and make a indicator of sustainability. They say that if the savings rate exceeds the combined depreciation of physical and natural capital, that the economy is ‘weakly’ sustainable.
Of course, they assume that natural capital and physical capital are interchangeable. This is a big assumption, and one with which Victor would disagree. They also do not consider the rate at which natural and physical capital can be substituted, nor that natural capital is an input for physical capital.
On the upside: the paper is simple!
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