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

A two-region general equilibrium macro model is constructed to explore the impacts of oil prices on output, employment and prices of goods in industrial economies. 

The industrial region is a competitive market economy that produces two goods (consumer and industrial) with three inputs (capital, labor and oil). It trades industrial goods for oil with another region. The oil-exporting region is a monopoly which sets the price of oil. The general equilibrium of the model determines endogenously the price and level of output of industrial goods, the volume of exports and imports, and the utilization and prices of factors in the industrial economy. 

The results show that an increase in oil prices can have a number of outcomes. Depending on the initial oil price, the real revenues of the oil exporter may either increase or decrease. The rate of profit and net value of output in the industrial economy may also either decrease or increase, depending on initial prices. This paper examines different regimes, looking at their policy implications, and in particular the possibility of the importer and exporter adopting cooperative pricing policies. 

A computer program (in BASIC) describing the model together with a number of runs are given in the Appendix.

Oil Prices, Industrial Prices and Outputs: A General Equilibrium Macro Analysis

This chapter analyzes the possibility of manipulation in futures markets, concentrating on the effects that manipulation may have on their informational efficiency . We use the concept of manipulation as it arises in the study of noncooperative games with imperfect information . 

The problem can be summarized as follows : disclosure that is, (less anonymity) may prevent manipulation and therefore improve the informational efficiency of the market . On the other hand, disclosure (less anonymity) may restrict entry, and therefore produce an efficiency loss. There is, in this sense, a tradeoff between informational efficiency and free entry.

Manipulations and repeated games in future markets

The theory of social choice introduced in [5,6] is robust; it is completely independent of the choice of topology on spaces of preference. This theory has been fruitful in linking diverse forms of resource allocation; it has been shown [17] that contractibility is necessary and sufficient for solving the social choice paradox; this condition is equivalent [11] to another- limited arbitrage- which is necessary and sufficient for the existence of a competitive equilibrium and the core of an economy [13, 14, 15, 16, 17]. The space of monotone preferences is contractible; as shown already in [6, 17] such that spaces admit social choice rules. However, monotone preferences are of little interest in social choice theory becasue the essence of the social choice problem, such as Condorcet triples, rules out monotonicity.

A robust theory of resource allocation

We study a growth model with an environmental asset which is a source of utility and an input to consumption and production The stock of this asset follows its own ecological dynamics, which are affected by economic activity We study the implications of an approach to ranking sequences of consumption and environment over time that place weight both on the characteristics of the sequence over any finite period and on its very long run or limiting characteristics Chichilnisky [5] has called these "sustainable preferences" The criterion shows more intertemporal symmetry than the discounted utilitarian approach which clearly emphasizes the immediate future at the expense of the long run In this respect Chichilniskys criterion captures some of the concerns of those who argue for sustainability and for a heightened sense of responsibility to the future To characterize optimal paths we define the "green golden rule", the path which maximizes long-run sustainable utility from consumption and environment

Sustainable Growth and the Green Golden Rule

Regional free trade zones have been unexpectedly successful in the last decade. Since 1980 the European Community enlarged significantly its membership and its scope. It now includes southern European countries, and market-integrating features allowing goods, people, services and capital to flow freely around an area accounting for about one fourth of world economic output. Based on economies of scale - we find a condition that determine whether trading blocks Such as NAFTA and the EU are complementary with and encourage global free trade - when this condition fails, instead, trading blocks undermine free trade. It is the purpose of this paper to re-examine the positive and negative aspects of trading blocs as they relate to gains from free trade. The paper is primarily a discussion of conceptual issues, although it is based on facts and on particular cases which are of interest to the trade liberalization in the Americas. We take a somewhat different approach to a familiar issue. Rather than asking the standard question of whether regional blocs help or hinder global free trade, we ask a more detailed question: what type of customs union is likely to lead to a trade war between the blocs, and what type of customs union is, instead, likely to lead to expanded global trade. In practical terms: what type of trade policies within the blocs will provide economic incentives for expanding free trade. We shall compare the impact on the world economy of free trade blocs which are organized around two alternative principles: one is traditional comparative advantages, the other is economies of scale. The aim is to determine how the patterns of trade inside the blocs determine the trade relations among the blocs.

Graciela Chichilnisky

Papers

Oil Prices, Industrial Prices and Outputs: A General Equilibrium Macro Analysis

Manipulations and repeated games in future markets

A robust theory of resource allocation

Sustainable Growth and the Green Golden Rule

Strategies for trade liberalization in the Americas