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Nobel Laureate in Economic Science Massachusetts Institute of Technology Cambridge, Massachusetts
You may be relieved to know that this talk will not be a harangue about the intrinsic incompatibility of economic growth and concern for the natural environment. Nor will it be a plea for the strict conservation of nonrenewable resources, even if that were to mean dramatic reductions in production and consumption. On the other hand, neither will you hear mindless wish fulfillment about how ingenuity and enterprise can be counted on to save us from the consequences of consuming too much and preserving too little, as they have always done in the past.
Actually, the argument I want to make seems to be particularly appropriate on the occasion of the fortieth anniversary of Resources for the Future; it is precisely about resources for the future. And it is even more appropriate for a research organization: I hope to show how some fairly interesting pure economic theory can offer a hint—though only a hint—about a possible improvement in the way we talk about and think about our economy in relation to its endowment of natural resources. The theoretical insight that I will present suggests a potentially important line of empirical research and a possible guideline for long-term economic policy. Then I will make a naive leap and suggest that, if we talked about the economy in a more sensible and accurate way, we might actually be better able to conduct a rational policy in practice with respect to natural and environmental resources. That is probably foolishness, but I hope you will find it a disarming sort of foolishness.
PREVIEWING THE ARGUMENTS
It will be useful if I tell you in advance where the argument is leading. It is a commonplace thought that the national income and product accounts, as currently laid out, give a mis
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Reprinted, with permission, from Resources for the Future, 1992. First presented at the Resource and Conservation Center in Washington, D.C., on October 8, 1992, on the occasion of the fortieth anniversary of Resources for the Future.
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