Sir Partha

In Chapter 13 we show that inclusive wealth increases if and only if aggregate consumption is
less than net domestic product (NDP), that is, GDP less the depreciation of all capital assets. We
will also show that to be the criterion that should be used to check that development has been,
or is expected to be, sustainable. So, one is naturally led to ask: Is GDP growth compatible with
sustainable development?
The question can be answered only within the context of complete macroeconomic models of
the long run, in which natural capital plays an essential role – from source to sink. The model we
construct here contains those features and so can serve as a prototype of the kind governments
and international organisations should now construct. As the model economy is bounded,
unbounded growth in output, consumption and inclusive wealth is not possible. Nevertheless,
one may ask whether, while keeping consumption at politically acceptable levels it is possible for
both GDP and inclusive wealth to grow indefinitely even as they tend to finite limits. The answer
is “yes”, provided the stock of natural capital is large.

Or, as we might put it, infinite growth is possible on a finite planet.