Dodo Jesuthason Thampapillai

Benefits of meteorological services: evidence from recent research in Australia

This report is a summary of the methods and findings of a research project that evaluated the social and economic benefits of meteorological services in Australia. The meteorological services evaluated were the basic public weather services and several specialist user-pay and commercial services used by business firms in several sectors of the national economy. Overall, the results indicated that the quality of the selected services was high. In addition, the benefits of these services were extensive, resulting in high benefit–cost ratios. Copyright

Towards unitary economics: Valuation of environmental capital for environmental stewardship

The paper presents a simple method of valuation that can sit beside ideology of a unitary economics, which seeks a synergy between materialistic and non‐materialistic aspects of welfare. The non‐materialistic item considered here is environmental stewardship, the lack of which is widespread among neoclassical economists. This is due to the belief that technology could always offset the problems of resource scarcity. The paper uses the basic tools of neoclassical economics to illustrate that resource scarcity is a real issue and that an improved sense of environmental stewardship is warranted. This illustration involves the valuation of environmental capital from the statement of national accounts. Scarcity indicators are defined in terms of the price of environmental capital. This price, which consists of an interest rate and a cost of depreciation, is empirically estimated for Australia.

Perfect Competition and Sustainability – A Brief Note

Purpose - Perfect competition (PC), despite its abstract nature, is central to the literature on shadow prices and remains an important benchmark in economic policy analysis. Adding sustainability to the conditions of PC, results in a meaningful benchmark, especially in the context of pursuing sustainability as a policy goal. On this basis, some standard explanations involving the comparisons with imperfect competition can be questioned. But, importantly the recognition of sustainability besides the standard conditions of PC provides the basis for expositing voluntary environmental stewardship. This paper aims to address these issues. Design/methodology/approach - The paper focuses on PC and sustainability (PCS) and PC and PCS vs monopoly. Findings - The implications of this simple analysis are at least three-fold. First, in the sphere of applied economics and policy analysis, PC has served as an important benchmark – especially in the shadow pricing literature dealing with project appraisal and cost-benefit analysis. The main argument in this paper is that PCS would prove to be a better benchmark because it would facilitate the choice of decisions that would satisfy the criteria for sustainability. Second, the recognition PCS prompts the reassessment of comparisons with imperfect market organizations such as monopoly. Within an unregulated context, monopolies, if able to exploit economies of scale, can expand output beyond the limits dictated by PC and PCS and hence compromise the possibilities of sustainability. Finally, and more importantly, the introduction of PCS as a benchmark enables the exposition of voluntary stewardship as a potential measure towards sustainability. Originality/value - The paper offers insights into PCS.

Macroeconomics Versus Environmental‐Macroeconomics

When environmental macroeconomic frameworks replace standard macroeconomic frameworks differences in policy outcomes ensue. The non-recognition of real environmental capacity constraints could explain the inability of standard frameworks to deliver on certain macroeconomic goals. Herein, environmental capital depreciation is internalised into analytic frameworks of factor utilisation, aggregate demand and aggregate supply. The analyses reveal that restricted income and wage domains alongside limited environmental capacity constrain economic performance. Hence, environmental capacity expansion and initiatives towards sustainability warrant specific attention. Illustrations are made with reference to the Australian economy and her response to the 2008–2010 global financial crisis.

The Internalisation of Environmental Capital Stocks into an Aggregate Cobb-Douglas Function

Following Solow’s (1986) conceptual exposition, a Cobb-Douglas production function which contains environmental capital as an explicit argument and displays constant returns to scale, is illustrated with Australian data. An important aspect of the illustration is the estimation of stock values for environmental capital analogous to those for manufactured capital. When sustainability and the non-sustainability of at least some components of environmental capital are recognised, it is possible to show that all rents owing to the entire stock of environmental capital need to be set aside as a depreciation allowance. This interference has implications for regional and national policy formulation.

Ezra Mishan's Cost of Economic Growth: Evidence from the Entropy of Environmental Capital

Ezra Mishan’s (1967) famous articulation of the costs of economic growth included amongst others the rearrangement and loss of nature. This paper builds on this theme by recourse to two important concepts in science, namely the assimilative capacity of nature and the entropy of law of thermodynamics. These concepts enable the formulation of an alternative conceptual framework for the explanation of national income (Y) in terms of factor-utilization. In this framework, environmental capital (KN) is an explicit factor besides manufactured capital (KM) and labor (L). A simple methodology that permits the estimation of the volume of KN utilized is used towards demonstrating that economic growth is an entropic process. Empirical illustration of KN utilization as point-estimates is made for Australia and South Korea.

THE SCARCITY OF ENVIRONMENTAL CAPITAL AND ECONOMIC GROWTH: A COMPARATIVE STUDY OF AUSTRALIA AND THE UNITED STATES

The paper employs a methodology that enables the elicitation of the price and quantity of environmental capital (KN) at an aggregate macroeconomic level. The stock of KN considered here is confined to the air-shed of an economy that gets utilized in the process of economic growth. A time series study of the prices and quantities of KN enables an appreciation of the changing value of nature in economic growth. Despite improvements in the rate of utilization of KN, there is insufficient evidence of decreasing scarcity of KN in the case of both Australia and the United States.

Economic growth, the environment and employment: challenges for sustainable development in China

China has been heralded as the fastest growing economy in the world. However, this growth has been achieved significantly at the expense of its environment. Conventional measures of economic performance such as Gross Domestic Product (GDP) do not take into account environmental damages, and thus may be biased towards an unsustainable development path. In this paper, we compare Chinas economic performance as measured by GDP against a measure of sustainable GDP, estimated by adjusting GDP for the depreciation of air, soil and water resources. Our results indicate that Chinas performance may not be as remarkable as commonly perceived, and that its quest for sustainable development may be challenged by political and social considerations. The challenge includes the resolution of conflicts between the goals of employment and sustainability.

Sustainable income: extending some Tisdell considerations to macroeconomic analyses

The depreciation of environmental capital is internalized within a simple Keynesian framework to permit the determination of sustainable income. The framework is empirically applied to the US economy by integrating standard macroeconomic data with macro‐environmental data which were derived by the adoption of a proxy method of valuation. The analysis includes the simulation of sustainable income paths and the evaluation of wages and technology/ management policies for achieving convergence between full employment and sustainable income. The scope for further conceptual development is demonstrated by the illustration of aggregate supply in the context of environmental depreciation.

New Estimates of Factor Income Shares in Central Asian Economies

This paper illustrates a simple method to derive the income accounts in the context of limited macroeconomic data. The method is relevant for several developing countries where the statements on income are clearly absent and the national accounts are confined to statements on expenditure and/or value added. Furthermore, the method is illustrated for four Central Asian economies, namely Kazakhstan, Mongolia, Kyrgyzstan and Uzbekistan. A Cobb-Douglas factor utilisation function is then used to estimate factor income shares and the relative contributions of factors to economic growth. The analysis reveals limited contribution of labour to economic growth in these economies. This limitation appears to be strongest in the resource dependent economies of Kazakhstan and Mongolia.