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This paper presents estimates of short-run sectoral and economy-wide effects of the introduction of a carbon tax in Australia. The results are derived using an enhanced version of the ORANI multi-sectoral model of the Australian economy. We simulate the introduction of a carbon tax at a rate of 1991-92 $25 per tonne, designed to achieve the Toronto target of a 20 per cent reduction in carbon dioxide emissions below the 1988 level by 2005. We find that the macroeconomic impact would depend critically on the extent to which price rises flowed through into wage rates. Assuming fixed money wages, real GDP would be decreased by an estimated 0.9 per cent, and employment by 1.2 per cent. To maintain a given employment level in the face of the carbon tax would require a reduction in the foreign-currency-equivalent wage rate estimated at 2.8 per cent. This would also entail a decrease in the real wage rate (defined with respect to the consumption price deflator) of 2.8 per cent. Government could promote lower wage outcomes by returning the carbon tax revenue to the community through reductions in other taxes. Enhancements to ORANI used in this simulation include disaggregation of the fossil fuel sector and provision for carbon taxation.

This paper articulates and applies frameworks for examining whether consumption is excessive. We consider two criteria for the possible excessiveness (or insufficiency) of current consumption. One is an intertemporal utility-maximization criterion: actual current consumption is deemed excessive if it is higher than the level of current consumption on the consumption path that maximizes the present discounted value of utility. The other is a sustainability criterion, which requires that current consumption be consistent with non-declining living standards over time. We extend previous theoretical approaches by offering a formula for the sustainability criterion that accounts for population growth and technological change. In applying this formula, we find that some poor regions of the world are failing to meet the sustainability criterion: in these regions, genuine wealth per capita is falling as investments in human and manufactured capital are not sufficient to offset the depletion of natural capital.

AbstractThis study examines the nature and consequences of China's rise to the center of world economic affairs through manufacturing‐led development. Our historical analysis shows that China is still well short of the point in its developmental process where its growth might be reasonably expected to slow, or the energy, resource and carbon intensity of growth to recede. The study argues that the current trajectory of industrialization will have to be altered when China becomes more actively engaged in dealing with structural issues at home and abroad against the background of the unwinding of global imbalances. One profitable strategy that China might employ would be to approximate the incredibly fruitful mass‐market integration efforts of the USA that eventually elevated it to its position of global primacy. The cyclical re‐emergence of excess capacity in Chinese heavy industry, serious questions about the medium term ability of other major regions to accommodate further large gains in Chinese market share, and the stark conflict between the contemporary style of industrial development and the health of the biosphere indicate strongly that now is the time to catalyze the required adjustment and reform processes that will underpin sustainable long‐run prosperity.

The saving and investment nexus as postulated by Feldstein and Horioka (FH) (1980) is revisited. The saving investment correlation for China is estimated over the periods 1952-1998 and 1952-1994, the latter culminating in a period of fixed exchange rate regime. Amongst the key results, it is found that saving and investment are correlated for China for both the period of the fixed exchange rate and the entire sample period. With high saving-investment correlation, the results suggest that the Chinese economy is in conformity with the FH hypothesis. This is a valid outcome, for in China capital mobility was fairly restricted over the 1952-1994 period as indicated by the relatively low foreign direct investment.

Metal use and modern society are intrinsically linked and it is no surprise that global processes of industrialization and urbanization have led to ever increasing amounts of metal use. In recent decades, global supply and demand networks for metals have become increasingly complex. Industrial Ecology research is well placed to unpack this complexity and to explore potential resource efficiencies for metals. This is especially important during the current period of rising ore prices. We examine patterns of supply and demand for iron ore and bauxite, and recent trends in resource productivity of these two important metal ores. We introduce a consumption perspective and compare the material footprint of metal ores to the GDP of countries to look at how much economic benefit countries achieve per unit of metal footprint. We find that for the past two decades global amounts of iron ore and bauxite extractions have risen faster than global GDP, that both supply and demand of iron ore and bauxite have been concentrated in a handful of countries and that resource productivity from a consumption perspective has fallen in developed nations, as well as globally. The research shows no saturation of metal ore consumption at any level of income. Policies will be required to enhance both the productivity of metal production and the economic productivity of consumption (GDP per metal footprint) through more efficient mining, product design, reuse and recycling.

The mainland of China’s rapid pace of industrialization and trade expansion have led many to ask whether its ever-increasing demand for resources can be met without disruption to economic stability and growth in the country and the world as a whole. The article examines the experience of growth in resource demand and the associated pressure on global markets from Japan, Taiwan Province of China and Korea during their periods of sustained, rapid economic growth for periods in the second half of the twentieth century. It seeks to draw lessons for the twenty-first century. The article points out that because of its size the mainland of China may cause the resources boom, associated with the later decades of its period of sustained rapid growth, to raise the prices of resource-intensive products by a large amount, not for a few years, but for several decades. This will have important implications for economic development and the distribution of incomes within and between all countries, and on power relations between states in the Asia-Pacific and throughout the global community.

Considerable effort has been put into developing sustainability assessment frameworks for biofuel production in developing countries. Nevertheless, their successful implementation remains problematic in sub-Saharan Africa. To address this challenge in this paper, through a thorough examination of academic and grey literature, repeatedly occurring sustainability aspects/issues were drawn from internationally recognised biofuel assessment frameworks. Theoretical framings that corresponded with the interlinking socio-environmental-economic qualities and issues for achieving sustainability through ethical implementation conformity (political ecology, development economics, social capital and institutional economics) were then used to inform development of a conceptual framework that could guide biofuel project implementation in sub-Saharan Africa to address complex sustainability issues. The supporting theories pursue sustainable development through, amongst others, an emphasis on the more equitable dispersal of costs and benefits through transparent networking in rural settings and the integration of contrasting viewpoints of diverse stakeholders in emerging economies.

In four focus group exercises involving both forecasting and backcasting approaches, we gave approximately 100 Australian citizens the opportunity to discuss likely, desirable and feared futures to 2050. The image they paint is both coherent and consistent. Education, governance, personal attitudes and societal trends, rather than specific events, are drivers of a future which is perceived as being largely shaped by human choices. Innovation is believed to be more necessary in novel social arrangements than in further technology. The most feared futures arise from an amplification of trends already at play in the present: economic growth at the expense of the environment and quality of life, lack of equity, poor government, corporate greed, commercialism and erosion of social values. Economic and material growth does not feature in the most desired futures which are local, inclusive, peaceful, equitable and in some cases frugal. The visions and scenarios developed find a place within established foresight frameworks and global political narratives, but seem to lie at the fringe of current media and short-term political discourse. These results should not be interpreted as representative of the overall Australian population, but suggest that extending the analysis to the broader community could provide significant insights and enrich the discussion of important societal choices.

Abstract Increased global demand for energy and other resources, particularly from the rapidly developing economies of China and India and the opening up of global resource markets to global investors and speculative activity, has resulted in considerable recent turbulence in resource prices. The recent magnitude of change in resource prices, both positive and negative, and their macroeconomic implications is of considerable contemporary importance to both resource importing and exporting economies. For a resource exporting economy, such as that of Australia, the recent resource price boom has resulted in: increased government taxation revenue, increased employment and wages in the resource and resource related sectors, increased spending in the domestic economy that contributed to buoyant economic growth, increased resource exports to the booming economies of China and India and contributed to a stronger domestic currency with beneficial effects upon inflation. On the other hand these developments have had adverse effects on the non-resource sector by: subjecting it to more intense competition for limited resources, contributing to a loss of international competitiveness and reduced exports arising from a stronger exchange rate, reducing employment in the relatively more labour intensive non-resource sector, and contributing to an eventual slow down in the overall economy. These positive and negative effects, and the overall impact of a resource price boom, require a fundamentally closer analysis of the structure of the economy under scrutiny. In this context the policy response by government is likely to be pivotal in determining the overall macroeconomic outcomes from a resource price boom. The aim of this paper is to develop a generic analytical framework to appraise economic outcomes in the wake of a resource price boom for a resource producing and exporting economy. To this end a dynamic long run macroeconomic model is developed, emphasising the important role and contribution of government fiscal policy in influencing subsequent macroeconomic outcomes. The adjustment process in the model arising from a resource price shock emphasises a spending (or wealth) effect, an income effect, a revenue effect, a current account effect and an exchange rate effect, which facilitate a robust analysis of subsequent macroeconomic outcomes from such a shock as well as related policy responses.

Whether China continues its current energy-intensive growth path or adopts a sustainable development prospect has significant implication for energy and climate governance. Building on a Ramsey-Cass-Koopmans growth model incorporating the mechanism of endogenous technological change and its interaction with fossil energy use and economic growth, this paper contributes to an economic exposition of China’s potential transition from an energy-intensive to an innovation-led growth path. We find that in China’s initial growth period the small amount of capital stock creates higher dynamic benefits of capital investment and incentives of capital stock accumulation rather than R&D-related innovation. Accumulation of energy-consuming capital stock along this non-innovation-led growth path thus leads to an intensive use of fossil energy - an energy-intensive growth pattern. To avoid this undesirable outcome, China’s social planner should consider locating a transition point to an innovation-led balanced growth path (BGP). When the growth dynamics reaches that transition point, China’s economy would embark on investment in physical capital and R&D simultaneously, and make a transition into the innovation-led BGP along which consumption, capital investment, and R&D have a balanced share. Also in this innovation-led BGP, consumption, physical capital stock, and knowledge stock all grow, fossil energy uses decline.