Emerging recognition of two fundamental errors under-pinning past polices for natural resource issues heralds awareness of the need for a worldwide fundamental change in thinking and in practice of environmental management. The first error has been an implicit assumption that ecosystem responses to human use are linear, predictable and controllable. The second has been an assumption that human and natural systems can be treated independently. However, evidence that has been accumulating in diverse regions all over the world suggests that natural and social systems behave in nonlinear ways, exhibit marked thresholds in their dynamics, and that social-ecological systems act as strongly coupled, complex and evolving integrated systems. This article is a summary of a report prepared on behalf of the Environmental Advisory Council to the Swedish Government, as input to the process of the World Summit on Sustainable Development (WSSD) in Johannesburg, South Africa in 26 August 4 September 2002. We use the concept of resilience—the capacity to buffer change, learn and develop—as a framework for understanding how to sustain and enhance adaptive capacity in a complex world of rapid transformations. Two useful tools for resilience-building in social-ecological systems are structured scenarios and active adaptive management. These tools require and facilitate a social context with flexible and open institutions and multi-level governance systems that allow for learning and increase adaptive capacity without foreclosing future development options.

https://bioone.org/journals/AMBIO-A-Journal-of-the-Human-Environment/volume-31/issue-5/0044-7447-31.5.437/Resilience-and-Sustainable-Development--Building-Adaptive-Capacity-in-a/10.1579/0044-7447-31.5.437.pdf

Resilience and sustainable development: building adaptive capacity in a world of transformations

https://mimoza.marmara.edu.tr/~mtekce/Dinda_2004.pdf

Environmental Kuznets Curve Hypothesis: A Survey

(2002). Modelling Extremal Events for Insurance and Finance. Journal of the American Statistical Association: Vol. 97, No. 457, pp. 360-360.

Modelling Extremal Events for Insurance and Finance

Will the world be able to sustain economic growth indefinitely without running into resource constraints or despoiling the environment beyond repair? What is the relationship between steadily increasing incomes and environmental quality? This paper builds on the author's earlier work (1993), in which he argued that the relationship between economic growth and environmental quality – whether inverse or direct -- is not fixed along a country's development path. Indeed, he hypothesized, it may change as a country reaches a level of income at which people can demand and afford a more efficient infrastructure and a cleaner environment. This implied inverted-U relationship between environmental degradation and economic growth came to be known as the "Environmental Kuznets Curve," by analogy with the income-inequality relationship postulated by Kuznets (1965, 1966). The objective of this paper is to critically review, synthesize and interpret the literature on the relationship between economic growth and environment. This literature has followed two distinct but related strands of research: an empirical strand of ad hoc specifications and estimations of a reduced form equation, relating an environmental impact indicator to income per capita; and a theoretical strand of macroeconomic models of interaction between environmental degradation and economic growth, including optimal growth, endogenous growth and overlapping generations models. The author concludes that the macroeconomic models generally support the empirical findings of the Environmental Kuznets Curve literature. He suggests further empirical investigation related to the assumption of additive separability, as well as development of additional macroeconomic models that allow for a more realistic role for government.

Economic Growth and the Environment

For the last ten years environmentalists and the trade policy community have engaged in a heated debate over the environmental consequences of liberalized trade. The debate was originally fueled by negotiations over the North American Free Trade Agreement and the Uruguay round of GATT negotiations, both of which occurred at a time when concerns over global warming, species extinction and industrial pollution were rising. Recently it has been intensified by the creation of the World Trade Organization (WTO) and proposals for future rounds of trade negotiations. The debate has often been unproductive. It has been hampered by the lack of a common language and also suffered from little recourse to economic theory and empirical evidence. The purpose of this essay is set out what we currently know about the environmental consequences of economic growth and international trade. We critically review both theory and empirical work to answer three basic questions. What do we know about the relationship between international trade, economic growth and the environment? How can this evidence help us evaluate ongoing policy debates? Where do we go from here?

Trade, Growth and the Environment

Preface 1. Introduction, by Graciela Chichilnisky and Geoffrey Heal 2. Markets for Tradable Carbon Dioxide Emission Quotas: Principles and Practice, by Graciela Chichilnisky and Geoffrey Heal 3. Equity and Efficiency in Environmental Markets: Global Trade in Carbon Dioxide Emissions, by Graciela Chichilnisky, Geoffrey Heal, and David Starrett 4. Emissions Constraints, Emission Permits, and Marginal Abatement Costs, by Geoffrey Heal 5. Equilibrium and Efficiency: International Emission Permits Markets, by Geoffrey Heal and Yun Lin 6. Efficiency Properties of a Constant-Ratio Mechanism for the Distribution of Tradable Emission Permits, by Andrea Prat 7. Who Should Abate Carbon Emissions? An International Viewpoint, by Graciela Chichilnisky and Geoffrey Heal 8. Differentiated or Uniform International Carbon Taxes: Theoretical Evidences and Procedural Constraints, by Jean-Charles Hourcade and Laurent Gilotte 9. Efficiency and Distribution in Computable Models of Carbon Emission Abatement, by Joaquim Oliveira Martins and Peter Sturm 10. Securitizing the Biosphere, by Graciela Chichilnisky and Geoffrey Heal 11. Equity and Efficiency in Emission Markets: The Case for an International Bank for Environmental Settlements, by Graciela Chichilnisky 12. The Clean Development Mechanism: Unwrapping the "Kyoto Surprise',' by Jacob Werksman 13. Knowledge and the Environment: Markets with Privately Produced Public Goods, by Graciela Chichilnisky 14. A Commentary on the Kyoto Protocol, by Raul Estrada-Oyuela Appendix. The Kyoto Protocol of the United Nations Framework Convention on Climate Change List of Contributors Index

Environmental markets : equity and efficiency

Section 1 Overview: interpreting Sustainability, G. Heal global environmental risks, G. Chichilnisky, G. Heal. Section 2 Dynamics: sustainable use of renewable resources, A. Beltratti, et al north south trade and the dynamics of the environment, R. Abraham, et al trade, migration and the environment - a general equilibrium analysis, G. Chichilnisky, M. Di Matteo a simple model of optimal sustainable growth, G. Cazzavillan, I. Musu environmental externalities disconnected generations and policy, G. Marini, P. Scaramozzino stochastic sustainability, M.P. Tucci sustainability of economics development and the freedom of future generations, A. Vercelli. Section 3 Uncertainty: hard uncertainty and environmental policy, A. Vercelli environmental option values, uncertainty aversion and learning, M. Basili, A. Vercelli environmental bonds - a critical assessment, L. Torsello, A. Vercelli uncertain future preferences and conservation, G. Heal, et al catastrophe futures - financial markets and changing climate risks, G. Chichilnisky, G. Heal stochastic sustainability in the presence of unknown parameters, M.P. Tucci climate change and emission permits, A. Beltratti.

Sustainability : dynamics and uncertainty

A general equilibrium macro model is constructed to explore effects of export-led growth policies on the terms of trade and the domestic distribution of a developing region with abundant labour. This region, the South, trades with another, the North; they have different technologies and supplies of factors. It is shown that under certain conditions of dualism in the production of goods and of abundant labour supply in the South, an increase in the volume of exports from the South may bring about at sustained worsening of the South's terms of trade with the North even if this increase in exports is due to a positive shift in demand from the North. This change in the terms of trade is accompanied by a sustained loss of purchasing power of wages within the South. These results take plane in a Walrassian stable market. When technologies are more homogeneous and labour less abundant, the results are reversed: increased exports will take place together with improvements in terms of trade and a tendency to equalise factor prices between the regions. The results argue for coordination of domestic and international policies with special attention to technologies and labour markets.

Terms of Trade and Domestic Distribution: Export Led Growth with Abundant Labor Supply

Basic goods, the effects of commodity transfers and the international economic order

This paper examines how, in the presence of individual risk, economic efficiency can be achieved without an unrealistically large number of contingent claims. Market uncertainty is specified in such a way that general types of individual risk and collective risk are properly accounted for and so that, specifically, market clearing is always satisfied ex post as well as ex ante. We show that consistency of beliefs and optimality of allocation can he guaranteed with an appropriate array of pure Arrow securities to spread collective risk and mutual insurance policies to pool individual risk. When there is individual riskcommon to like groups of individuals, pooling risk by means of mutual insurance permits substantial economizing on market transactions, as compared to those required if dealing instead with the full complement of pure Arrow securities. We show that if there are N households (consisting of H types), each facing the possibility of being in S individual states together with T collective States, then ensuring Pareto optimality requires only H(S-1)T independent mutual insurance policies plus T pure Arrow securities. Our results also help to clarify the question of which missing markets may affect allocational efficiency.

Graciela Chichilnisky

Papers

Environmental markets : equity and efficiency

Sustainability : dynamics and uncertainty

Terms of Trade and Domestic Distribution: Export Led Growth with Abundant Labor Supply

Basic goods, the effects of commodity transfers and the international economic order

Individual Risk and Mutual Insurance