A Normative Justification of Roefie Hueting's Sustainable National Income

The Dutch economist Roefie Hueting has published since 1969 a long record of books and articles about the Sustainable National Income (SNI). He was one of the first economists who developed the idea of a SNI. The SNI is the present national income minus the abatement costs, which are necessary to preserve the status quo of the environment. Hueting defines the term environmental "sustainability" as strong sustainability, in the sense that vital environmental functions must be retained forever. In this paper, we want to show that his claim for strong environmental sustainability is justifiable from a normative theoretical point of view. To do that we develop a simple endogenous overlapping generations (OLG) growth model, which is based on a modified Harrod-Domar model. In this model, it is taken into account, that the environment plays an important role for economic growth. In the model it will be shown that a country, which ignores Hueting's claim for strong sustainability, will end up in a disaster, especially negative growth rates, rising unemployment and a never-ending depression. Additionally, we show that it is better to protect the environment today than tomorrow, because the relative costs to protect the environment are much lower today than in the future. Of course, these results imply that for e.g. the Kyoto-protocol is not efficient from an economic ecological point of view. In addition, the results imply that we must rethink radically about our way of life, if we take into account for e.g. that around 50% of the Dutch national income is not produced in a sustainable way.