Rintaro Yamaguchi

Measuring sustainable development for the future with climate change mitigation; a case study of applying an integrated assessment model under IPCC SRES scenarios

The Intergovernmental Panel on Climate Change (IPCC) described mainstreaming climate change mitigation into development choices in its Fourth Assessment Report, chapter 12 of Working Group III. It also pointed out that “few macro-indicators include measures of progress with respect to climate change” despite the needs for the inclusion. This paper tackled this point in the following ways by applying an integrated assessment model. First, this study applied shadow prices and production, endogenously obtained from the model, instead of using market prices and statistical data used in preceding studies in the economics literature. Second, this study measured forecasts of genuine saving (GS) and wealth globally up to the year 2100, while preceding studies were constrained to past and current savings and wealth. Third, this study examined changes in GS and wealth in different future scenarios on IPCC SRES (Special Report on Emissions Scenarios) with CO2 emissions constraints. Finally, the authors adopted a GS estimation methodology of shadow prices in imperfect economies by Kenneth Arrow and Partha Dasgupta, instead of that of perfect economies by Kirk Hamilton et al., on which the authors had based previous studies. This makes the indicator consistent with changes of wealth.

New Financing for Sustainable Development: The Case for NNP- or Inclusive Wealth–Linked Bonds

We propose that national governments could issue bonds whose interest payments are linked to green net national product (gNNP) or, almost equivalently, to inclusive wealth. The main intention of this new financial instrument is to entice investors and the national government to invest in human and natural capital for which the corresponding financial assets currently do not exist. As the concept of wealth expands to include human and natural capital, so should the corresponding assets side in the balance sheet of nations. While the argument for gross national product (GNP)–linked bonds focuses on trimming public debt toward fiscal sustainability, the proposed bonds aim to ensure long-term sustainability. The theoretical link associated with welfare economics is also more plausible. Moreover, it could lead to the virtuous cycle of increased government expenditure directed toward inclusive wealth, expanding tax revenue, increased coupon payment to investors, and increased social well-being.

Discounting, Distribution and Disaggregation: Discount Rates for the Rich and the Poor with Climate as a Source of Utility

To consider the implications of disaggregated consumption and discounting in the context of climate change, we study discounting in a world composed of the rich and the poor; a standard setting in the literature of cost–benefit analysis with distributional considerations. We derive several discount rates for different numeraires, which allow us to discuss intergenerational and intragenerational equity in common terms. In the example of CES‐CRRA utility, we also show that disaggregated discount rates may vary owing to several factors. One important parameter, inequality aversion, can be determined in the weighting of intergenerational and intragenerational concerns.

Measuring future paths of alternative sustainability indicators: an assessment of IPCC SRES scenarios

This study measures various indicators for sustainability in this century for four scenarios of SRES (Special Report on Emissions Scenarios) published by the Intergovernmental Panel on Climate Change (IPCC) to provide a comparable assessment of the scenarios. We assessed the scenarios using a model of Ramsey-type mainframe with cost models for fuel and non-fuel mineral resources, biomass and foods, and an environmental externality. The existing studies have not assessed these SRES scenarios for sustainability, but only for climate change and its policy under the scenarios using CO2 emissions and shadow prices as indicators. The significant contributions of this paper are an assessment of the scenarios using the measured future paths of various sustainability indicators and revealing that the SRES-B1 scenario is the most favorable from a sustainability perspective. The findings of this study contribute to further empirical analysis of the economics of sustainability and climate policy assessments.

Valuing natural capital and ecosystem services: a literature review

Literatures on sustainability have developed dramatically over recent decades. These literatures have not only added an enormous number of dimensions, but also have challenged researchers to be able to conduct a comprehensive analysis of sustainability. The excessive use of natural capital (NC) might cause a decrease in sustainability. Depleting a type of NC and substituting it with another form of NC or with produced capital is not sustainable in the strong sense. In this review, we have focused on the importance of NC and ecosystem preservations for sustainable development. We value the NC of 140 nations by adopting the inclusive wealth approach. We also notice the impact of climate change and natural disaster on different geographic regions in the assessment of NC.