Environmental capital and sustainable income: Basic concepts and empirical tests

Building on the basic tenet of environmental accounting, a simple Keynesian framework is adapted for the determination of sustainable income. The adaptation involves the formulation of linear as well as nonlinear frameworks of income determination. These frameworks are empirically demonstrated for the US economy by integrating standard macroeconomic data with macro-environmental data. The analysis includes the derivation of sustainable income paths and the evaluation of wages and technology/management policies for jointly achieving full employment and sustainable income. The results indicate efficiency improvements in the utilisation of environmental capital and possible convergence between the sustainable and actual income paths.