How substitutable is natural capital?

Springer Science and Business Media LLC - Tập 37 - Trang 297-312 - 2007
Anil Markandya1,2, Suzette Pedroso-Galinato3
1Department of Economics and International Development, University of Bath, Claverton Down, Bath, UK
2Foundation Eni Enrico Mattei (FEEM), Milan, Italy
3The World Bank, Washington, USA

Tóm tắt

One of the recurring themes in the sustainability literature has been the extent to which a loss of natural capital can be made up for in welfare terms by an increase in other forms of capital. This issue was raised early on in the debate on sustainability by Pearce and has never really been resolved. This paper is an empirical attempt to measure the degree of substitutability between different forms of capital. A nested CES production function is used to allow flexibility in the estimated elasticities of substitution. Also, within this specification, natural resources and other inputs are combined in different levels of the function, thus allowing for different levels of substitutability. Institutional and economic indicators are also incorporated in the production function estimated. Results show that the elasticities derived from functions involving land resources were generally around one or greater, implying a fairly high degree of substitutability. Furthermore, changes in trade openness and private sector investment have a statistically significant and direct relationship on the efficiency of production and hence on income generation. No statistically significant relationship between income and any of the institutional indicators was found.

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Springer Science and Business Media LLC

Tập 37

297-312

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