Natural Capital in Economic Models

The goal of our paper is to make a critical analysis of selected growth models that use the notion of natural capital and to construct the alternative model. In particular we treat the natural capital as a renewable resource and we use CES production function, weakening the assumption of substitutability of natural capital with other forms of capital. We investigate the optimal paths for capital and consumption, giving their characterization in the dependence on the parameters of the model. The paper ends with conclusions derived from the model.