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The debate on growth versus the environment is usually summarized as optimists believing in limitless growth versus pessimists seeing environmental and resource limits to growth. This opposition defines the main strategies: namely, striving for green growth versus some anti-growth approach. In this paper I argue that we should not feel obliged to choose between these polarized opinions, as there is in fact a third option. I call this the "agrowth" strategy, and it offers a way out of the impasse that characterizes the growth-versus-environment debate. I will define this agrowth strategy, motivate its rationality, and examine its premises, implications, advantages, political feasibility and practical steps. I suggest that an agrowth strategy follows logically from accepting the shortcomings of GDP (per capita) as an indicator of social welfare. It will be graphically shown that both anti-growth and pro-growth goals represent avoidable, unnecessary constraints on our search for human betterment, which lead to lower realizations of social welfare than are in fact feasible. I will further discuss the idea of green agrowth, notably in the context of avoiding dangerous climate change. Finally, a pragmatic approach to selecting alternative macro indicators is proposed.

Energy conservation is widely accepted as an important strategy to combat climate change. It can, nevertheless, stimulate new energy uses that partly offset the original savings. This is known as rebound. One particular rebound mechanism is re-spending of money savings associated with energy savings on energy intensive goods or services. We calculate the average magnitude of this "re-spending rebound" for different fuels and countries. We find that emerging economies, neglected in past studies, typically have substantially larger rebounds than OECD countries. The effect is generally stronger for gasoline than for natural gas and electricity. Paradoxically, strengthening financial incentives to conserve energy tends to increase rebound. This is expected to gain importance with climate regulation and peak oil. We discuss the policy implications of our findings.

We raise fundamental questions about macroeconomics relevant to escaping the financial-economic crisis and shifting to a sustainable economy. First, the feasibility of decoupling environmental pressure from aggregate income is considered. Decoupling as a single environmental strategy is found to be very risky. Next, three main arguments for economic growth are examined: growth as progress, growth to avoid economic instability, and growth to offset unemployment due to labor productivity improvements. For each, we offer orthodox, heterodox and new responses. Attention is paid to progress indicators, feedback mechanisms affecting business cycles, and strategies to limit unemployment without the need for growth. Besides offering an economy-wide angle, we discuss the role of housing and mortgage markets in economic cyclicality. Finally, interactions between real economic and financial-monetary spheres are studied. This includes money creation, capital allocation and trade-offs between efficiency and operating costs of financial systems. Throughout, environmental and transition implications are outlined.

We raise fundamental questions about macroeconomics relevant to escaping the financial and economic crisis and shifting to a sustainable economy. First, the feasibility of decoupling environmental pressure from aggregate income is considered. Decoupling as a single environmental strategy is found to be very risky. Next, three main arguments for economic growth are examined: growth as progress, growth to avoid economic instability, and growth to offset unemployment due to labour productivity improvements. For each, we offer orthodox, heterodox and new responses. Attention is paid to progress indicators, feedback mechanisms affecting business cycles, and strategies to limit unemployment without the need for growth. Besides offering an economy-wide angle, we discuss the role of housing and mortgage markets in economic cyclicality. Finally, interactions between real economic and financial-monetary spheres are studied. This includes money creation, capital allocation and trade-offs between efficiency and operating costs of financial systems. Throughout, environmental and transition implications are outlined.

This article presents a model of sequential decisions about investments in environmentally dirty and clean technologies, which extends the path-dependence framework of Arthur (1989). This allows us to evaluate if and how an economy locked into a dirty technology can be unlocked and move towards the clean technology. The main extension involves the inclusion of the effect of recombinant innovation of the two technologies. A mechanism of endogenous competition is described involving a positive externality of increasing returns to investment which are counterbalanced by recombinant innovation. We determine conditions under which lock-in can be avoided or escaped. A second extension is symmetry breaking of the the system due to the introduction of an environmental policy that charges a price for polluting. A final extension adds a cost of environmental policy in the form of lower returns on investment implemented through a growth-depressing factor. We compare cumulative pollution under different scenarios, so that we can evaluate the combination of environmental regulation and recombinant innovation.

We explore the idea of public policy from the perspective of evolutionary thinking. This involves paying attention to concepts like diversity, population, selection, innovation, coevolution, group selection, path-dependence and lock-in. We critically discuss the notion of evolutionary progress. The relevance of evolutionary dynamics is illustrated for policy and political change, technical change, sustainability transitions and regulation of consumer behaviour. A lack of attention for the development of evolutionary policy criteria and goals is identified and alternative choices are critically evaluated. Finally, evolutionary policy advice is compared with policy advice coming from neoclassical economics, public choice theory and theories of resilience and adaptive management. We argue that evolutionary thinking offers a distinct and useful perspective on public policy design and change.

What is a 'sustainable nation’ and how can we identify and rank ‘sustainable nations’? Are nations producing and consuming in a sustainable way? Aggregate indicators have been proposed to answer these questions. This paper quantitatively compares three aggregate indicators of sustainability: the World Bank’s ‘Genuine Savings’ measure, the ‘Ecological Footprint’ and the ‘Environmental Sustainability Index’. It is concluded that rankings of sustainable nations vary significantly among these indicators. Implications of this disagreement for analysis and policy are suggested.

We address the notion of dynamic, endogenous diversity and its role in theories of investment and technological innovation. We develop a formal model of an innovation arising from the combination of two existing modules with the objective to optimize the net benefits of diversity. The model takes into account increasing returns to scale and the effect of different dimensions of diversity on the probability of emergence of a third option. We obtain analytical solutions describing the dynamic behaviour of the values of the options. Next we optimize diversity by trading off the benefits of diversity (due to recombinant innovation) and the benefits associated with returns to scale. We derive conditions for optimal diversity under different regimes of returns to scale. When the investment time horizon is beyond a threshold value, the best choice becomes diversity. This threshold will be larger the higher the returns to scale.

In this paper we present an overview of methods and components of formal economic models employing evolutionary approaches. This compromises two levels: (1) techniques of evolutionary modelling, including multi-agent modelling, evolutionary algorithms and evolutionary game theory; (2) building blocks or components of formal models classified into core processes and features of evolutionary systems - diversity, innovation and selection - and additional elements, such as bounded rationality, diffusion, path dependency and lock-in, co-evolutionary dynamics, multilevel and group selection, and evolutionary growth. We focus our attention on the characteristics of models and techniques and their underlying assumptions.

Evolutionary and environmental economics have a potentially close relationship. This paper reviews past and identifies potential applications of evolutionary concepts and methods to environmental economics. This covers a number of themes: resource use and ecosystem management; growth and environmental resources; economic and evolutionary progress; and individual behavior and environmental policy. The treatment will address both biological and economic—including institutional, organizational and technological-evolutionary phenomena. Attention will be drawn to the fact that evolutionary economics shows a surprising neglect of environmental and natural resource factors.

Expectations and information about the growth of GDP per capita have a large influence on decisions made by private and public economic agents. It will be argued here that GDP (per capita) is far from a robust indicator of social welfare, and that its use as such must be regarded as a serious form of market and government failure. This article presents an update on the most important criticisms of GDP as an indicator of social welfare and economic progress. It further examines the nature and extent of the impact of GDP information on the economy, revisits the customary arguments in favour of the GDP indicator, and critically evaluates proposed alternatives to GDP. The main conclusion is that it is rational to dismiss GDP as an indicator to monitor economic progress and to guide public policy. As is clarified, this conclusion does not imply a plea against growth, innovation or national accounting.

A spatial welfare framework for the analysis of the spatial dimensions of sustainability is developed. It incorporates agglomeration effects, interregional trade, negative environmental externalities and various land use categories. The model is used to compare rankings of spatial configurations according to evaluations based on social welfare and ecological footprint indicators. Five spatial configurations are considered for this purpose. The exercise is operationalized with the help of a two-region model of the economy that is in line with the ‘new economic geography’. Various (counter) examples show that the footprint method is not consistent with an approach aimed at maximum social welfare.

We study the conditions for the emergence of cooperation in a spatial common-pool resource game. We consider three types of agents: cooperators, defectors and enforcers. The role of enforcers is to punish defectors for overharvesting the resource. Agents are located around a circle and they only observe the actions of their two nearest neighbors. Their payoffs are determined by both local and global interactions and they modify their actions by imitating the strategy in their neighborhood with the highest payoffs on average. Using theoretical and numerical analysis, we find that a large diversity of equilibria exists in this game. In particular, we derive conditions for the occurrence of equilibria in which the three strategies coexist. We also discuss the stability of these equilibria. Finally, we show that introducing resource dynamics favors the occurrence of cooperative equilibria.

We examine the impact of providing a ‘no-choice’ option in an attribute based valuation experiment. The aim of the experiment was to assess monetary values of cockle fishery management practices in the Dutch Wadden Sea for different stakeholder groups, namely Dutch citizens, local residents, and tourists. The current policy debate about the management of the Wadden Sea stresses the fact that individual preferences with respect to cockle-fishery differ. The aim of this paper is to analyze the individual preferences in an objective way. Special attention is given to the influence of including a ‘no-choice option’, which is analyzed using a nested logit model. We test whether the full set of policy options can be considered as close substitutes. The estimation results show that the influence of including the no choice option differs among the stakeholders considered.

This paper offers an economic value assessment of a nature protection programme in the Veluwe. This programme involves two defragmentation scenarios: the first scenario connects the central part of the Veluwe with the IJssel river forelands in a north-eastern direction, while the second scenario is focused on defragmentation in a south-western direction, where the Rhine river forelands are located. The valuation is based on a questionnaire that was administered during face-to-face interviews in the Veluwe area and through the Internet. We employ a contingent valuation approach to assess the respondents willingness to pay for the realisation of the defragmentation scenarios. It appears that the mean willingness to pay for the two defragmentation scenarios are € 59.7 and € 162.2 per respondent. These two willingness-to-pay estimates, which refer to a lump sum payment (or once-and-for-all payment ), are based on a lognormal and Weibull distribution respectively. In addition to the willingness to pay, we also estimate recreation benefits of the Veluwe. To that end, we use the travel cost technique, the purpose of which is to arrive at an estimate of the site s consumer surplus. According to this technique, the yearly recreational benefits are estimated between € 0.06 and € 0.45 per visitor. Whereas the former estimate is based on the fuel costs only, the latter covers also insurance and maintenance costs, and capital depreciation. Finally, we performed an aggregation of individual WTP estimates over Dutch households. With the resulting aggregate estimates we are able to compare the total costs and benefits of the two scenarios for habitat fragmentation in the Veluwe. The result of such a simple comparison turns out to critically depend on whether the mean or median estimate is used for aggregation. If aggregation of individual WTP estimates is based on mean values, then the benefits far exceed the estimated costs of defragmentation. In other words, based on an integrated economic-ecological analysis it makes sense to execute the defragmentation measures described in the scenarios. However, aggregate estimates obtained by using median values result in higher costs than aggregate estimates that are based on mean values. Even stronger, median-based estimates show that the costs of implementing scenario 2 are higher than the total benefits of this scenario.

Conditions for the emergence of cooperation in a spatial common-pool resource game are studied. This combines in a unique way local and global interactions. A fixed number of harvesters are located on a spatial grid. Harvesters choose among three strategies: defection, cooperation, and enforcement. Individual payoffs are affected by both global factors, namely, aggregate harvest and resource stock level, and local factors, such as the imposition of sanctions on neighbors by enforcers. The evolution of strategies in the population is driven by social learning through imitation. Numerous types of equilibria exist in these settings. An important new finding is that clusters of cooperators and enforcers can survive among large groups of defectors. We discuss how the results contrast with the non-spatial, but otherwise similar, game of Sethi and Somanathan (1996).

The analysis of resource scarcity and environmental pollution in the framework of growth theory during the 1970s has entirely occurred within the domain of standard growth theory. Since the 1980s, growth has been studied from the perspective of evolutionary theories of growth and technical change. This has, however, hardly influenced environmental and resource economics. This paper present a first analysis in this direction. It discusses general characteristics of evolutionary systems and briefly reviews insights of evolutionary economics. Then it evaluates existing applications of evolutionary analysis in environmental and resource economics at large. Subsequently, evolutionary and neoclassical growth theories are compared. In addition to theoretical considerations, an analysis of the relationship between growth and environment from an evolutionary-historical perspective is offered. Next, the question whether growth can be considered as progress from an evolutionary angle is tackled. The paper closes with some policy suggestions.

Up to now a clear theoretical and methodological framework for economic-environmental analysis of environmentally damaging subsidies is lacking. Environmentally damaging subsidies are all kinds of direct and indirect subsidies aimed at achieving a certain (often non-environmental) goal that produce negative external effects to the natural environment. This article develops a transparent method to determine the environmental impact of indirect government subsidies and derive policy lessons. This method has been applied to several major subsidies in the Netherlands, namely in agriculture, energy, and transport. The results reveal large environmental effects, which need to be taken seriously by policy makers. The method enables policy makers to evaluate the environmental impacts of indirect government subsidies.

Harmful algal bIoom species are the cause of important damages to marine living resources and human beings. These marine species are primarily introduced in North-European waters through ballast water, i.e. water trans-ported across the oceans so as to keep a vessel in balance. Port authorities can impose standards on ballast water treatment, which are associated with costs. This, in turn, leads to the question which benefits are associated with the commitment of such standards. Monetary valu-ation can provide information on this. This article reports a monetary valuation study of a marine protection pro-gram. The program focuses on the prevention of harmful algal bIoom species along the coastline of the Nether-lands. It entails the construction of a ballast water dis-posal treatment in the Rotterdam harbor, and the imple-mentation of a monitoring program of the water quality in the open sea along the North-Holland beaches. The valuation survey is based on a questionnaire undertaken at Zandvoort, a famous Dutch beach resort. Since the economic value of the marine protection program included non-market benefits associated with beach recreation, human health and marine ecosystem impacts, both contingent valuation and travel cost methods are used.

Optimal harvesting of prey in a predator-prey ecosystem is studiedunder the condition that the existence of the predator has value. Predators (birds) and humans (fishers) compete for prey (shellfish). The behavior of the system is studied and conditions for optimal control are deduced. Various optimal harvesting rates are identified for particular ecosystem characteristics, harvesting costs, the discount rate value, and value functions for birds. These optimal harvest rates are constant harvesting, at levels possibly leading to the extinction of birds, or oscillating harvesting, giving rise to oscillating stocks of birds and shellfish. The approach path towards an optimal regime is shown qualitatively and consists of alternating between harvesting maximally and not harvesting at all.

This paper introduces and surveys ecological-economic analysis and valuation of biodiversity. Furthermore, the notion and application of economic, monetary valuation of biodiversity is critically evaluated. A classification of biodiversity values is offered, based on a system of logical relationships among biodiversity, ecosystems, species and human welfare. Suggestions are made about which economic valuation methods can address which type of biodiversity value. The resulting framework is the starting point for a survey and evaluation of empirical studies at each of the four levels of diversity. The resulting monetary value estimates seem to give unequivocal support to the belief that biodiversity has a significant, positive social value. The contingent valuation method is by far the most used method. An important reason is that the other valuation methods are unable to identify and measure passive or nonuse values of biodiversity. Nevertheless, most studies lack a uniform, integrated perspective on biodiversity. Therefore, available economic valuation estimates should generally be regarded as providing a partial perspective on, and at best lower bounds, to the unknown value of biodiversity changes.

The advantages and disadvantages of genetic modification of organisms in agriculture are reviewed. These relate to the environment, human health, socio-economic effects, population growth, and differential consequences for developed and developing countries. An overall evaluation requires that attention is given to the perception and endogeneity of uncertainty, irreversibility, the availability of alternatives, and a comparison with other complex issues. Some implications for an effective public strategy are outlined.

The relationship between trade and material flows is examined by viewing theglobal economy from the perspective of international material-product chains(MPC). The international MPC covers the complete lifecycle of a material or aproduct in two or more regions, including extraction, production, consumption,waste management and transport. Products, waste, and associated material flowsin the international MPC can run vertically or horizontally between segments.It is demonstrated how differences in factor requirements across segments ofthe international MPC in combination with factor productivity differencesacross developed and developing countries can cause specific trade patterns ofinter-industry and intra-industry flows of materials and products. Theimplications of considering various trade theories in the context of the ideaof an international MPC are examined. This interpretation of internationaltrade sheds a new light especially on the physical dimension of internationalspecialisation.

We consider the microfoundations controversy from the perspective ofeconomic evolution and show that the debate can benefit from lessons learned in evolutionary biology. Although the analogy between biology and economics has been noted before, it has rarely focused on clarifying the micro-macro distinction in economic theory and modelling. The macroevolution controversy in biology has generated testable theories such as the existence of punctuated equilibria in evolutionary history, the distinction between selection and sorting, and group selection. The micro-macro debate is further developed in biology than in economics due to a greater degree of specialisation and interaction of various sub-disciplines. The task for economists is to distinguish between insights directly relevant for economic theory and ones that hinge on unique features of biological systems. We argue that both micro and macro processes drive economic change and that macroeconomic change cannot be explained by micro level optimising alone. We show that debates in biology about group selection and punctuated equilibria are directly relevant to understanding economic evolution. The distinction between reductionism and holism is of little use and in its place a hierarchical approach is proposed. This allows for both upward and downward causation and interaction between levels. Specific topics incorporating ideas from evolutionary theory into economics are: economic exaptations, macroeconomic consequences of institutions, and group selection. Two insights are: selection (sorting) can occur at levels above the individual firm; and, macroeconomic theories can be formulated without reference to firm level descriptions. Micro and macro approaches to economic change are complementary.

Whereas theoretical analyses of trade and environment indicate thatrelatively strict environmental policies can have a strong impact on foreign trade, empirical studies present mixed results. This study presents new empirical results that tie together two previous empirical studies employing a multicountry econometric framework, notably Tobey (1990, 1993) and van Beers and van den Bergh (1997). Such a link is useful since most empirical studies on trade and environment use unique assumptions and models, thus making a comparison of findings very difficult if not impossible. Since Tobeys study has been particularly influential on writings in this area a statistical analysis has been performed using a data set that shares many characteristics with his study. The main improvement of the approach adopted here is the use of more disaggregate data. In addition, as the effect of environmental policy on international trade is likely to differ between sectors analyses are performed for a variety of sectors. The results provide partly support for Tobey, namely no significant effects for dirty trade. Results for total trade flows, however, show a positive effect of relatively strict environmental policy on exports. This suggests that either Tobey's policy indicator is inaccurate, or essential variables are missing in the regression model, or countries employed complementary measures such as export subsidies in combination with relatively strict environmental regulations. Sector specific regressions results allow for further comparison with Tobey and provide additional support for the previous conclusions.

This provides a short overview of the main themes of ecological economics (EE). It isargued that EE provides a platform that fosters multidisciplinary environmental research bybringing together the core contributing disciplines economics and ecology. In addition, EE isregarded as a pluralistic approach to environmental research that can be set opposite to, and hasindeed developed as a response to, traditional environmental and resource economics. Acomparison of the two fields is presented to clarify the essential differences between them. Inaddition, specific themes are examined in more detail. These include: sustainable development;the growth debate; international trade; dynamic processes; and behaviour and policy.

Regional economic activities require materials that can be extracteddomestically or imported from other regions. Analysis of optimalpatterns ofcombined economic development and materials use should be discussedinrelation to trade and the environment. A model is presented thatoptimiseslong-term welfare of a 2-region economic system with trade in virginandrecycled materials as well as consumer goods. The only differencebetween theregions concerns the size of their domestic materials resources.Numericaloptimisation experiments show that trade of resources and goodsincreases thecarrying capacity of the regions and their levels of welfare.Furthermore,regions are shown to specialise in certain economic sectors.

The nature of energy and material resources in an endogenous growththeory framework isclarified. This involves three modifications of the conventionaltheory. Firstly, multiple feedbackmechanisms or “growth engines” are identified. Secondly, a productionfunction distinguishesbetween resource use, technical efficiency and value creation.Thirdly, the impact of the cost ofproduction through demand on growth is accounted for. A formal modelis analytically solvedunder a condition of a constant growth rate. Given model complexity,numerical experiments areperformed as well, providing relevant insights to the academic andpolitical debates on‘environmental Kuznets curves’ and ‘dematerialization’.

Theoretical and empirical aspects of policy failures due to subsidies are discussed in the context of international trade. A general classification of subsidies that cause environmental externalities is presented. The economic and environmental impacts of producer subsidies on international trade are examined with partial equilibrium analysis. The magnitude and economic and environmental relevance of subsidies in various sectors is assessed on the basis of empirical indicators. Finally, suggestions are provided on how subsidy-related policy failures can be eliminated at national and international levels.

The application of aggregate indicators in environmental-economic research has received littleattention so far. An important reason is the incompleteness of environmental data. This articlepresents a systematic approach to construct indicators of environment and economy on a macrolevel. It includes a distinction into the following categories: the volume of economic activities as anindicator of potential environmental pressure; actual environmental pressure; environmentalquality; and environmental policy. In each category aggregate indicators are calculated for 12OECD countries. Subsequently, the correlation between these indicators is examined. Significantcorrelation is found between the economic activity indicators (or 'potential' environmentalpressure), actual environmental pressure and environmental quality, whereas a very weakcorrelation exists with these indicators and two types of aggregate indicators of environmentalpolicy. Due to some arbitrary choices, which are inevitable, the results are to be judged withcaution. Several suggestions are offered to improve the calculation and comparison of aggregateindicators.

The search for a framework to study globalisation, economics and ecology for nature conservation andbiodiversity protection requires the integration of concepts, theories and models from economics andecology. This allows for the study of interactions between economic and ecological processes, includingprotection of species and biodiversity, sustainable and optimal use of renewable resources, land use andphysical planning, maintenance of nature areas, acquisition of nature areas, and development of outdoorrecreation areas. Economic theories relating to nature and ecosystems have focused on notions of capitaltheory and intertemporal trade-offs, decision making under uncertainty and irreversibility, and marginalvaluation and cost-benefit analysis. Recently, the conservation and valuation of biodiversity, and theresilience of ecological and combined ecological-economic systems, have attracted a great deal of attentionin the environmental and resource economics literature. In addition, the distinction between local and globalcosts and benefits of environmental and biodiversity policies is regarded to have significant impacts oninternational co-operation.Ecology can be incorporated in economic analyses in various ways, notably by offering informationabout the hierarchy of dynamic ecological processes, including population dynamics, ecosystem successionand cycles, and long run trends of selection and evolution. Biodiversity has been linked to resilience in theanalysis of complex ecological-economic systems. Understanding of ecosystem irreversibility anduncertainty can improve economic analysis of decisions with impacts on ecosystem. Ecosystemperformance indicators, such as those proposed around the concept of ecosystem health, can be useful formultidisciplinary modelling and evaluation studies. Finally, monetary valuation studies of goods and servicesprovided by ecosystems can be complemented by detailed information about ecosystem scenarios andfunctions.The paper discusses existing approaches to integrate economics and ecology, reviews the mostimportant studies found in the literature, and suggests a number of general frameworks and models toaddress pressing policy questions relating to globalisation, conservation of biodiversity, sustainable use ofnatural resources, and sustainable land use.

The meaning of sustainability is the subject of intense debate among environmental and resourceeconomists. Perhaps no other issue separates more the traditional economic view of the naturalworld from the views of most natural scientists. The debate currently focuses on the substitutabilitybetween the economy and the environment or between "natural capital" and "manufacturedcapital"-- a debate captured in terms of "weak" vs. "strong" sustainability. In this paper the variousinterpretations of these concepts are examined. In addition, the goal of weak sustainability iscritically evaluated. Attention is devoted to, among other things, utility and lexicographicpreferences, economic valuation, natural science perspectives on sustainability, and the notion of"consilience" as recently suggested by E.O. Wilson.

Most insights of environmental economics are in line with the standard neoclassicaleconomic model of rational behaviour, formulated in terms of maximization of utility ingeneral, or profits in particular. The standard theory of environmental policy is a casein point. However, the maximization hypothesis and its methodological foundation havebeen criticized on many grounds, related to a lack of either logical or empirical content.Moreover, over the years a great many alternative models of behaviour have been proposed.Both criticism and alternatives are surveyed here. In the context of environmentaleconomics behavioural assumptions have been most significant for the development ofeconomic valuation theory and environmental policy theory. The focus here will be onenvironmental policy theory.

Recent advances in evolutionary theory have important implications for environmental economics. A short overview is offered of evolutionarythinking in economics. Subsequently, major concepts and approaches inevolutionary biology and evolutionary economics are presented andcompared. Attention is devoted, among others, to Darwinian selection,punctuated equilibrium, sorting mechanisms, Lamarckian evolution,coevolution and self-organization. Basic features of evolution, such assustained change, irreversible change, unpredictability, qualitativechange and disequilibrium, are examined. It is argued that there are anumber of fundamental differences as well as similarities betweenbiological and economic evolution. Next, some general implications ofevolutionary thinking for environmental economics are outlined. This isfollowed by a more detailed examination of potential uses ofevolutionary theories in specific areas of environmental economics,including sustainability and long run development theories, technologyand environment, ecosystem management and resilience, spatial evolutionand environmental processes, and design of environmental policy.

A foundation is provided for a correct and accurate analysis of the relationship between monetary values and physical dimensions in economic production. A distinction is proposed between direct and indirect substitution. Linked to this, a classification is offered of various types of substitutability and complementarity relationships between production factors. It is argued that the neoclassical production function may be consistent with mass balance, but is unsuitable for a detailed and accurate understanding of changes in production that influence materials use. For this purpose, general production functions satisfying mass balance are formulated, drawing upon the proposed classifications.

Elements of an integrated analysis of a land/water use and nature conservation in De Vechtstreek area are presented. This is a river plane composed of patches of lakes and polders, in the centre of The Netherlands. The attention is focused on the economic dimensions of the research. To this end, an overview is given of available information for a set of main wetland function and use categories. This includes estimates of costs and benefits associated with particular activities. These are used in an illustrative cost-benefit analysis of a change to more nature conservation in De Vechtstreek. The method makes use of the assumption that there are fixed relationships between land/water use area size and values. It is concluded that the nature conservation is a rational economic strategy for discount rates below 13% for a time horizon of 10 years, up to 18% for an infinite time horizon. The approach is aimed to be applied to other scenarios than nature conservation as well, in which case integration with nature science information and models will be pursued, as well as estimation of benefits transfer functions.

The search for frameworks and indicators of sustainable development has taken a prominent place in this journal. However, some specific aspects have received little or no attention, notably the spatial dimension and the role of international trade in indicator development. Moreover, many sustainable development indicators comprise implicit valuations, weighting schemes and policy objectives, which are insufficiently recognised as such. This contribution tries to highlight these issues by means of a review of a recently proposed indicator for ecological–economic analysis, namely the ecological footprint, that has been developed by Wackernagel and Rees. Its concept and calculation procedure are criticised on a number of points, and it is concluded that the Ecological Footprint is not the comprehensive and transparent planning tool as is often assumed. In explaining our position we will argue that spatial sustainability and regional sustainable development have not been precisely discussed so far, neither in the literature on trade and environment, nor in that on sustainable development. We will defend the view that trade can contribute positively and negatively to environmental unsustainability. Consequently, indicators and models are needed that allow for analysing interactions and trade-offs between such opposite effects.

This paper gives a concise overview of environmental-economicanalysis. Important issues and modern developments in the field aresurveyed in a systematic way. Next, the concept of sustainabledevelopment is discussed, as it has dominated environmental economicsfor almost a decade now. In addition, the issue of modelling theinterface of the economy and the natural environment making use ofmaterial balance conditions is examined. The paper concludes with aconsideration of issues of uncertainty in policy analysis andforecasting with particular reference to scenario analysis.

Until recently, the interaction between environmental quality, economic activity and growth is predominantly considered in an a-spatial context. Traditional neoclassical growth theory following Solow/Swan has mainly addressed questions about environmental and resource limits to growth. Recently, much attention is also devoted to the environment-growth interface from an endogenous growth perspective. However, an important element that is missing in both the neoclassical and endogenous growth approaches is a multiregional perspective. The present theoretical study tries to present one of the first attempts to fill this gap. The analysis is based on a model of two interactive regions, with possible interaction between the regional environments via the global environment. The implications of this type of analysis are manifold. One is that endogeneity of growth is not only due to technology and knowledge formation but also to the effects of trade, resource scarcity and environmental degradation. Another implication is that a coordinated environmental policy of regions should address long-term sustainability, and take account of the positive technological and negative environmental dynamic externalities.

An overview is offered of different approaches to economic modelling of sustainable development. First, conceptual-theoretical perspectives on sustainable development are shortly reviewed from the angle of model implications. Next, different model types are discussed. These include neoclassical growth models, sectorally disaggregated models, and integrated and co-evolutionary models. Special attention is also devoted to discounting in the context of concern for future generations, and to empirical issues involved inmodelling for sustainable development.

The debate on growth versus environment, including the more recent literature on sustainabledevelopment, is systematically evaluated in a stylized framework. Diffent perspectives on the conflictand relation between the economy, growth and the natural environment, have created a situationwhere people do not talk the same language. A conceptual framework is developed which allows toexplain main diffences between alternative perspectives. Five categories are distinguished, labelledas: the immaterialist, the pessimist, the technocrat, carpe diem and the optimist. Boththe conceptual framework and a set of characteristics (time horizon, ideology, prediction and policyimplication) are used to compare these perspectives. Primarily the choice of a time horizon and thesubjective evaluation of technical potential, the flexibility of social preferences and institutions, andthe stability and resilience of natural systems, explain differences between the perspectives. Sucha systematic confrontation is hoped to contribute to more consensus and understanding betweensupporters of alternative perspectives.