Criteria for Assessing Sustainable Development: Theoretical Issues and Empirical Evidence for the Case of Greece

We formulate two kinds of sustainability criteria by using feedback and arbitrary rules for selecting policy variables in non optimizing economies. We show that when policy variables are selected arbitrarily their accounting prices could determine sustainability in addition to the accounting prices of the economy's assets. We use our theoretical framework to obtain estimates of sustainability conditions in real economies. Thus, the paper's contribution consists in developing a systematic theoretical framework for determining value functions, accounting prices and sustainability criteria, under fairly general non-optimizing behavioral rules, and then showing that this framework can be used in applied work to estimate sustainability conditions. Based on our theoretical model, we examined the case of the Greek economy. When there is no binding environmental policy then migration rate, growth of capital per worker and exogenous technical change are strong positive factors for sustainability. When we introduce potential environmental damages due to sulphur dioxide (SO2) emissions, our findings indicate that these damages affect negatively the sustainability criterion.