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Identifying priority watershed management areas for groundwater recharge protection on Hawai‘i Island

Identifying priority watershed management areas for groundwater recharge protection on Hawai‘i Island

Identifying priority watershed management areas for groundwater recharge protection on Hawai‘i Island

Identifying priority watershed management areas for groundwater recharge protection on Hawai‘i Island

Identifying priority watershed management areas for groundwater recharge protection on Hawai‘i Island

Identifying priority watershed management areas for groundwater recharge protection on Hawai‘i Island

Charting a New Fiscal Course for Hawaii: A Fiscal Architecture Approach

Charting a New Fiscal Course for Hawaii: A Fiscal Architecture Approach

Charting a New Fiscal Course for Hawaii: A Fiscal Architecture Approach

Annual Hawaii Forecast with Global Outlook: After a Cloudy 2019, New Year Looks a Bit Brighter


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Do natural disasters make sustainable growth impossible?

We consider the prospects for sustainable growth using expected utility models of optimal investment under threat from natural disasters. Adoption of a continuous time, stochastic Ramsey growth model over an infinite time horizon permits the analysis of sustainability under uncertainty regarding adverse events, including both one-time and recurrent disasters. As appropriate to small economies, we consider adaptation to the risk of disaster. Natural disasters reduce capital stocks and disrupt the optimal consumption and felicity paths. While the time path of inter-temporal welfare might consequently shift downward, the path may still be non-decreasing over time, even without adding strong or weak sustainability constraints. Prudent disaster preparedness includes precautionary investment in productive capital, programs of adaptation to disaster risk, and avoiding distortionary policies undermining the prospects of optimality and sustainability.

Published: https://link.springer.com/article/10.1007/s41885-019-00054-y

Working Paper


Do Natural Disasters Make Sustainable Growth Impossible?

We consider the prospects for sustainable growth using expected utility models of optimal investment under threat from a natural disaster. Extension of a discrete, two-period model, to continuous time over an infinite time horizon permits the analysis of sustainability under uncertainty regarding adverse events, including both one-time and recurrent disasters. Natural disasters, with destruction of productive capital, disrupt the optimal consumption and utility paths, but the Arrow et al. (2004) sustainability criterion is still satisfied even without adding strong or weak sustainability constraints. We also consider a separate natural resource sector and show that, except for extreme cases, the optimal steady state level of the renewable resource is not affected by the possibility of natural disasters. In the case of catastrophic events, however, damage to the resource system may be severe enough to push the system below a critical value tipping point, undermining the prospects of long-run sustainability.

WORKING PAPER