Environment and Development Economics

Research Article

Sustainability and the measurement of wealth: further reflections

Kenneth J. Arrowa1, Partha Dasguptaa2, Lawrence H. Gouldera3, Kevin J. Mumforda4 and Kirsten Olesona5

a1 Stanford University, Department of Economics, USA. E-mail: arrow@stanford.edu

a2 Faculty of Economics, University of Cambridge; and Sustainable Consumption Institute, University of Manchester, UK. E-mail: partha.dasgupta@econ.cam.ac.uk

a3 Department of Economics, Stanford University, Stanford, CA 94305, USA. E-mail: goulder@stanford.edu

a4 Department of Economics, Purdue University, USA. E-mail: mumford@purdue.edu

a5 Department of Natural Resources and Environmental Management, University of Hawaii, USA. E-mail: koleson@hawaii.edu

Abstract

The June 2012 issue of Environment and Development Economics published a symposium with considerable focus on our paper, ‘Sustainability and the measurement of wealth’. The Symposium also contained five articles in which other researchers offered valuable comments on our paper. The present note replies to those comments. It clarifies important issues and reveals how important questions relating to sustainability analysis can be fruitfully addressed within our framework. These include questions about the treatment of time, the use of shadow prices and the treatment of transnational externalities. This note also offers new theoretical results that help substantiate our earlier empirical finding that the value of human health is something very different from the value of the consumption permitted by health and survival.

(Received February 22 2013)

(Accepted March 01 2013)

(Online publication April 23 2013)