M.W. Hofkes

Explaining slow diffusion of energy-saving technologies: a vintage model with returns to diversity and learning-by-using

This paper studies the adoption and diffusion of energy-saving technologies in a vintage model. An important characteristic of the model is that vintages are complementary: there are returns to diversity of using a mix of vintages. We analyse how diffusion patterns and adoption behaviour are affected by complementarity and learning-by-using. It is shown that the stronger the complementarity between different vintages and the stronger the learning-by-using, the longer it takes before firms scrap old vintages. We argue that this is a relevant part of the explanation for the observed slow diffusion of energy-saving technologies. Finally, we show that an energy price tax reduces energy consumption, because it speeds up the diffusion of new energy-saving technologies and induces substitution from capital to labour.

A measure of sustainable national income for the Netherlands

Abstract We present calculations on the sustainable national income (SNI) indicator, first proposed by Hueting, which corrects net national income (NNI) for the costs to bring back environmental resource use to a ‘sustainable’ level. Using an applied general equilibrium (AGE) model specifying 27 production sectors, we calculate different variants of SNI for the Netherlands in 1990, given a set of pre-determined sustainability standards. The AGE model is extended with emissions and abatement cost curves, based on large data sets for nine environmental themes. The model combines the advantages of a top-down approach (the AGE model) with the information of a bottom-up approach (the environmental data and data on emissions reductions costs). The presented numerical results show that in 1990 Dutch SNI is about 50% below NNI, though many uncertainties are still present in the data and the model. The enhanced greenhouse effect is the most expensive environmental theme.

Modelling sustainable development: An economy-ecology integrated model

This paper analyses sustainable development in an endogenous growth model which integrates a dynamic specification of both economic and ecological relations and all the interactions between the economy and the natural environment. It is common practice to solve growth models by looking at a balanced growth solution, which is often associated with sustainable development. We derive the conditions under which sustainable development is feasible and optimal. Finally, we discuss some comparative statics of the balanced growth solution and give a numerical example to illustrate the model and to provide further insight.

Theory and Implementation of Economic Models for Sustainable Development

Preface. 1. Sustainable Development and Formal Models: Background and Summary J. van den Bergh, M. Hofkes. Part I: Theoretical Approaches. 2. A Survey of Economic Modelling of Sustainable Development J. van den Bergh, M. Hofkes. 3. Technological Change, Economic Growth, and Sustainability S. Smulders. 4. Evolutionary Complex Systems and Sustainable Development P. Allen. 5. Theoretical Aspects of the Economic Modelling of Sustainable Development C. Withagen. Part II: Empirical Testing and Delinking. 6. Indicators of Natural Resource Scarcity: A Review and Synthesis C. Cleveland, D. Stern. 7. The Environmental Kuznets Curve A. Ansuategi, et al. 8. Delinking, Relinking and the Perception of Resource Scarcity H. Opschoor. Part III: Measurement and Implementation. 9. The Measurement of Sustainable Development D. Pearce, et al. 10. Industrial Metabolism: Work in Progress R. Ayres. 11. On the Paradigm and Spatial Dependency of Indicators H. Verbruggen. 12. Macroeconomic Modelling for Sustainable Development: The Dutch Experience F. den Butter. 13. Multidimensional Sustainability Analysis: The Flag Model P. Nijkamp, H. Ouwersloot. Part IV: Policy and the International Dimension. 14. Economic Aspects of Global Environmental Models R. Tol. 15. The International Policy Dimension of Sustainability: The Effect of Policy Harmonisation within the EU Using the GEM-E3 Model K. Conrad, T. Schmidt. 16. Policy Models for International Environmental Problems S. Proost. Index.

SUSTAINABLE DEVELOPMENT WITH EXTRACTIVE AND NON-EXTRACTIVE USE OF THE ENVIRONMENT IN PRODUCTION

This paper considers an economy in which the environment plays a role both in welfare and production. An endogenous growth model, which allows for abatement activities, is formulated in order to study the impact of pollution on welfare and long-term growth. Conditions for optimal and balanced economic growth are discussed and a numerical example is given to provide some insight in the mechanisms at work in the model.

Economic growth and technological change: a comparison of insights from a neo-classical and an evolutionary perspective

Abstract Over the last two decades, dissatisfaction with the traditional Solow-Swan model of economic growth resulted in two new classes of models of economic growth and technological change: neo-classical endogenous growth models, and evolutionary growth models. The first class of models has been labeled endogenous, because of its key feature of endogenizing technological change. The second class of models endogenizes technological change as well, but according to an evolutionary view on economic growth and technological change. In this paper we discuss the insights from both the neo-classical and the evolutionary perspectives. It is argued that in evolutionary models technological and behavioral diversity, uncertainty, path dependency, and irreversibility are elaborated in a more sophisticated and explicit way than in neo-classical growth models. However, this level of microeconomic diversity comes at a certain price. Due to the complexity of the models, which preclude analytical tractability, the mechanisms behind the aggregate dynamics are not always clearly exposed. In addition, it will be argued that the neo-classical and the evolutionary approach are converging in the Schumpeterian framework. The latter framework is developed in both classes of models as a means for theorizing on technological change. A challenging task for further research is to combine the fruitful insights of both the neo-classical and the evolutionary approach to improve our understanding of complex processes of technological change in relation to other micro- and macroeconomic processes.

Do Floods Have Permanent Effects? Evidence from the Netherlands

This study investigates the short- and long-run impact on population dynamics of the major flood in the Netherlands in 1953. A dynamic difference-in-differences analysis reveals that the flood had an immediate negative impact on population growth, but limited long term effects. In contrast, the resulting flood protection programme (Deltaworks), had a persisting positive effect on population growth. As a result, there has been an increase in population in flood prone areas.

A survey of economic modelling of sustainable development

An overview is offered of different approaches to economic modelling of sustainable development. First, conceptual-theoretical perspectives on sustainable development are shortly reviewed from the angle of model implications. Next, different model types are discussed. These include neoclassical growth models, sectorally disaggregated models, and integrated and co-evolutionary models. Special attention is also devoted to discounting in the context of concern for future generations, and to empirical issues involved inmodelling for sustainable development.

A NEO-CLASSICAL ECONOMICS VIEW ON TECHNOLOGICAL TRANSITIONS

Neo-classical economics assumes rational behaviour of economic subjects. The aim of policy makers is to maximise a broadly defined concept of social welfare, which may include some measure of environmental quality. In this view government intervention is needed when, due to externalities or other reasons for market failure, individual optimising behaviour does not lead to a socially optimal outcome. Therefore, neo-classical economics provides useful insights about the reasons behind technology lock-ins, and whether technological transitions are needed to escape from such lock-ins in order to enhance social welfare in the long run. This paper gives, from the neo-classical perspective, a survey of the state of the art of economic thinking on lock-ins, technological change and the possible role of the government to correct market failures by promoting technological transitions.

Escaping Lock-in: The Scope for a Transition Towards Sustainable Growth?

In this paper we develop a simple endogenous growth model with two competing production technologies and learning spillover effects between firms that use the same technology. Investments are directed to the technology with highest current and expected returns. Since current investments increase future returns through learning, the economy will usually lock in, that is specialise in one of the two technologies. In case the economy has selected a relative polluting technology, sustainable growth requires a transition towards the clean technology. We analyse the scope for (environmental) policies that induce such a transition. expectations