Sustainability under limited natural capital substitutability
Measuring whether a country is growing sustainably remains one of the most challenging, and unresolved, problems in Environmental Economics.
Richard Damania, World Bank
Sjak Smulders, Tilburg University, The Netherlands
Moritz Drupp, Universitat Hamburg, Germany
Stefanie Onder, American University, Washington DC, USA
Martin Quaas, German Centre for Integrative Biodiversity Research (iDiv), Germany
Special issue information:
Measuring whether a country is growing sustainably remains one of the most challenging, and unresolved, problems in Environmental Economics. Conventional approaches to tracking whether an economy is on a sustainable trajectory are based on the weak sustainability framework. Over 90 countries have so far compiled at least one Natural Capital Account using variants of this approach. For the past two decades, the World Bank has also produced a global database of wealth estimates as part of its The Changing Wealth of Nations work program to compare sustainability trends across countries and over time. A key assumption has been that natural capital and other forms of capital are close substitutes. As a result, investment in any form of capital generates sustainable increases in welfare, since a decline in (say) natural capital can be compensated through investments in, for example, produced or human capital. If overall wealth increases, development is, thus, considered to be weakly sustainable.
Yet, it seems unlikely that the assumption of perfect (or high) substitutability is an appropriate assumption in a world where natural resources and ecosystem services are in limited supply and experience widespread overexploitation and degradation. The degree of substitutability will thus likely vary as natural resources become scarcer and may approach critical levels due to climate change, biodiversity loss, tipping points, and the crossing of planetary boundaries. With poor substitution, depletion of resources and threats of critical scarcity or tipping points in future would translate into giving a considerably higher weight – typically through higher shadow prices – for the depletion of natural capital. The great theoretical, empirical, and practical challenge is to determine appropriate shadow prices of natural capital and estimate the elasticity of substitution both across and within asset classes. This is of acute relevance for environmental economics and sustainable natural resource management more broadly as we are currently witnessing major revisions of guidelines on assessing ecosystem services and natural capital in numerous countries across the world, including the United Kingdom and the United States, as well as in the international statistical community.
It is in this context that we solicit submissions to a Special Issue of the Journal of Environmental Economics and Management (JEEM) on the challenges of measuring and managing sustainable development in the presence of limited substitutability.
Methodologically, we welcome the full breadth of this new research area, which includes theoretical models on the role of substitution for growth, the implications for fragility of open resource-dependent economies, proposals for adjusting current valuation methods and wealth measures, analyses to expand the use of existing measures in decision-making, and empirical estimates of the degree of limited substitutability.
All submissions will be subject to JEEM’s rigorous peer-review process. An accompanying cover letter should briefly summarize how the paper adds value to the existing literature in a substantial way. To warrant publication in JEEM, papers must be consistent with the Aims and Scope of the journal and include carefully identified empirical findings, or insightful theoretical analyses, or creative methodologies that are both novel and of broad interest to the readership.
Manuscript submission information:
Submission deadline: 1st June 2024