I’ll be presenting a paper at the bi-annual conference of the United States Society for Ecological Economics is this coming May in Washington, D.C.  Below is an abstract of the paper, and for more info on the conference visit http://www.ussee.org/conference09/.

Title

The Hartwick Rule: An Ecological Economic Perspective

Subject / Theme

2.1 Ecological economic theory – advances and applications

Abstract

The usefulness of a discourse about a paper thirty-two years past is as relevant as its idea’s continuing influence; by this measure, a discussion of the theory and application of the Hartwick rule is more than justifiable. Building on works by Dasgupta and Heal (1974) and Solow (1974), Hartwick (1977) proposed a simple criterion for intergenerational equity: reinvest rents from nonrenewable resources in manufactured capital. Hartwick’s assumptions, calculations, and results have been analyzed, critiqued, redeveloped, reanalyzed, and recritiqued in subsequent years. The first section of the paper tracks this historical development, both the rule’s maturation and its subsequent backlash. Particularly, however, this paper continues this backlash by drawing a bridge from the genuine savings literature to recent discussions on the role of uncertainty in economic global warming models and long-term cost-benefit analysis (see Dasgupta, 2007; Tol, 2003; or Weitzman, 2007).

Yet in spite of these critiques, the second section shows that the theory proposed by Hartwick can still have a beneficial effect on policy decisions to this day. The theory and critiques from the first section are used to discuss how ecological economists can still utilize the Hartwick rule while also emphasizing the areas of continuing research that are fruitful and the areas of continuing research that are red herrings, particularly by pointing to the distinction between energy producing capital and energy consuming capital. This final section also presents empirical case studies to help illustrate this point.

Dasgupta, P. S. and G. M. Heal. 1974. “The optimal depletion of exhaustible resources.” Review of Economic Studies 41 (Symposium issue). 3–28.

Dasgupta, P. 2008. “Discounting Climate Change.” Journal of Risk and Uncertainty. In Press, 10.1007/s11166-008-9049-6.

Hartwick, J. 1977. “Intergenerational Equity and the Investing of Rents from Exhaustible Resources.” The American Economic Review. Vol. 67, No.5, 972-974.

Solow, R. M. 1974. “Intergenerational Equity and Exhaustible Resources.” Review of Economic Studies (Symposium). 29-46.

Tol, R. S. J. 2003. “Is the Uncertainty About Climate Change Too Large for Expected Cost-Benefit Analysis?” Climatic Change. 56: 265-289.

Weitzman, M. 2007. “The Role of Uncertainty in the Economics of Catastrophic Climate Change.” papers.ssrn.com, January. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=992873.