Sustainability and spatial spillovers in a multicriteria macroeconomic model
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Sustainability and spatial spillovers in a multicriteria macroeconomic model Herb Kunze1 · Davide La Torre2
· Simone Marsiglio3
Accepted: 24 September 2020 © Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract We analyze a macroeconomic model with intergenerational equity considerations and spatial spillovers, which gives rise to a multicriteria optimization problem. Intergenerational equity requires to add in the definition of social welfare a long run sustainability criterion to the traditional discounted utilitarian criterion. The spatial structure allows for the possibility of heterogeneiity and spatial diffusion implies that all locations within the spatial domain are interconnected via spatial spillovers. We rely on different techniques (scalarization, -constraint method and goal programming) to analyze such a spatial multicriteria problem, relying on numerical approaches to illustrate the nature of the trade-off between the discounted utilitarian and the sustainability criteria. Keywords Multicriteria optimization · Intergenerational equity · Spatial diffusion · Sustainability
1 Introduction After decades of debates a wide consensus on the effects of anthropogenetic activities on the environment has finally emerged, and even policymakers seem finally convinced that it is now time to act in order to ensure the long term sustainability of economic activities. Sustainability is a complicated notion to define but in its most widely accepted terms it requires some respect of natural resources and some efforts to ensure intergenerational equity (World Commission on Environment and Development 1987). While the former aspect can be easily accounted for in macroeconomic analysis by adding an additional constraint to
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Davide La Torre [email protected] Herb Kunze [email protected] Simone Marsiglio [email protected]
1
Department of Mathematics and Statistics, University of Guelph, Guelph, Canada
2
SKEMA Business School, Université Côte d’Azur, Sophia Antipolis Campus, Nice, France
3
Department of Economics and Management, University of Pisa, Pisa, Italy
123
Annals of Operations Research
the standard optimization problem representing the society’s planning device, the latter is more problematic since the criterion generally used in the definition of such a problem, the discounted utilitarianism, attaches less and less weight to future generations and so it cannot accommodate for intergenerational issues (Colapinto et al. 2017a). Different approaches to overcome such an issue have been proposed, but probably the most commonly used consists of extending the objective function to include an additional term representing somehow long term sustainablity considerations (Chinchilnisky 1997). The introduction of such an additional term in the optimization problem makes it a multiple objective problem in which the society needs to balance two conflicting goals, represented by short term and long term objectives, respectively; such an interpretation of a macroeconomic proble
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