Constraints on dematerialisation and allocation of natural capital along a sustainable growth path

To study societal and biophysical constraints on sustainability, we present an extension of the neoclassical growth model with two new concepts: allocation of natural capital and dematerialisation. We consider that anthropogenic environmental impact is correlated with the material throughput of the economy (materialisation) and that, due to composition change and innovation, this throughput can be reduced—the process of dematerialisation. We also consider that the allocation of natural capital to production negatively affects the endogenous dynamics of ecosystems, reducing the total amount of environmental services ecosystems provide. According to our model, it is possible to achieve unbounded economic growth by keeping the natural system in steady state. Balanced growth, however, is only possible for special parameter values.