ABSTRACT
Overutilisation of renewable resources and impairment of their regenerative capacities as a result of non-renewable resource consumption both undermine the sustainability of renewables. These fundamental biophysical constraints on economic activity have direct consequences not only for policies that seek to foster economic growth and environmental quality but for issues of intergenerational concerns. The concentrated energy in the fuel used to drive a car, for example, ultimately ends up as low-quality energy that is dissipated into the environment in the form of friction and heat, or via tailpipe emissions that diffuse into the atmosphere. The prices of goods and services in conditions of social and environmental exploitation are then not worth much with respect to their ability to guide economic decisions towards optimal outcomes. The application of the standard macroeconomic framework overstates targets and performance. Policy-makers tend to pursue mistaken income targets.
