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Growth and long-run sustainability

Published online by Cambridge University Press:  08 January 2021

Robert D. Cairns  and
Vincent Martinet Open the ORCID record for Vincent Martinet [Opens in a new window]
Robert D. Cairns
Affiliation:
Department of Economics, McGill University, Montreal, H3A 0E6 Quebec, Canada
Vincent Martinet*
Affiliation:
Université Paris-Saclay, INRAE, AgroParisTech, Economie Publique, Thiverval-Grignon, 78850, France ENS Paris-Saclay, Gif-sur-Yvette, France
*
*Corresponding author. E-mail: [email protected]
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Abstract

From any state of economic and environmental assets, the maximin value defines the highest level of utility that can be sustained forever. Along any development path, the maximin value evolves over time according to investment decisions. If the current level of utility is lower than this value, there is room for growth of both the utility level and the maximin value. For any resource allocation mechanism (ram) and economic dynamics, growth is limited by the long-run level of the maximin value, which is an endogenous dynamic sustainability constraint. If utility reaches this limit, sustainability imposes growth to stop, and the adoption of maximin decisions instead of the current ram. We illustrate this pattern in two canonical models, the simple fishery and a two-sector economy with a nonrenewable resource. We discuss what our results imply for the assessment of sustainability in the short and the long run in non-optimal economies.

Keywords

growthmaximin valuenon-optimal economiesresource allocation mechanismsacrificesustainability improvementsustainable development

JEL classification

Q56: Environment and Development • Environment and Trade • Sustainability • Environmental Accounts and Accounting • Environmental Equity • Population Growth O44: Environment and Growth
Type
Research Article
Information
Environment and Development Economics , Volume 26 , Issue 4 , August 2021 , pp. 381 - 402
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press

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