Comparing augmented sustainability measures for Scotland: Is there a mismatch?

Abstract

We estimate and compare two empirical measures of the weak sustainability of an economy for the first time: the change in augmented Green Net National Product (GNNP), and the interest on augmented Genuine Savings (GS). Yearly calculations are given for each measure for Scotland during 1992-1999. Augmentation means including, using projections to 2020, changed production possibilities enabled by exogenous technical progress or changing oil prices. The change in augmented GNNP and the interest on augmented GS are both always positive, showing no sustainability problem for Scotland then, according to the assumptions underlying our weak sustainability calculations. However, the former greatly exceeds the latter, even when macroeconomic fluctuations are taken into account. This is a mismatch which poses an unresolved problem with the theory. Resolving it may require respecifying the utility functions used in mainstream growth theory.