Economic Theory and Global Warming

By Hirofumi Uzawa | Go to book overview

5
Dynamic Optimality and Sustainability

1. INTRODUCTION

Global warming involves international and intergenerational equity and justice. Although global warming is largely caused by the emission of carbon dioxide and other greenhouse gases associated with economic activities mostly in developed countries and by the disruption of forests – particularly tropical rain forests – again mostly resulting from the industrial activities of the developed countries, it is the people in developing countries who have to bear the burden. The current generation may enjoy the fruits of the economic activities that cause global warming, but it is the people in all future generations who will have to suffer from a significant increase in atmospheric instability as a consequence.

In this chapter, we examine the problems of global warming and other global environmental issues primarily from the viewpoint of the international and intergenerational distribution of utility. We introduce the concept of sustainability, which may capture some aspects of international and intergenerational equity, and derive the conditions under which processes of capital accumulation and changes in environmental quality over time are sustainable. The conceptual framework for the dynamic analysis of environmental quality developed in previous chapters will be extended to deal with the problems of the irreversibility of processes of capital accumulation due to the Penrose effect. The concept of the Penrose effect was originally introduced by Uzawa (1968, 1969) in the context of macroeconomic analysis.

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Economic Theory and Global Warming
Table of contents

Table of contents

  • Title Page *
  • Contents v
  • List of Tables and Figures vii
  • Preface ix
  • Introduction - Global Warming: Problems and Perspectives 1
  • 1 - Global Warming and Carbon Taxes 22
  • 2 - Pareto Optimality and Social Optimum 60
  • 3 - Global Warming and Tradable Emission Permits 92
  • 4 - Dynamic Analysis of Global Warming 115
  • 5 - Dynamic Optimality and Sustainability 138
  • 6 - Global Warming and Forests 169
  • 7 - Global Warming as a Cooperative Game 193
  • Summary and Concluding Notes 241
  • References 261
  • Index 275
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