An input-output analysis of environmental preservation

A well-established criterion for determining the growth potential of an economy, the technology of which can be represented by a nonnegative indecomposable square matrix, is examined critically. The concept of growth upon which this criterion is established is shown to be ambiguous since the environmental repercussions of economic activity are completely ignored. Assuming that this economy possesses an antipollution technology which has hitherto been ignored, an alternative criterion to gauge growth potential in the presence of complete environmental preservation is proposed. The magnitude of the uniform rate of profit which must obtain when the economy ignores the environment if a policy of environmental preservation is to be deemed technically feasible is calculated. Finally, a number of factors which would facilitate the implementation of a policy of environmental preservation are discussed.