Empirica 29: 131–144, 2002. © 2002 Kluwer Academic Publishers. Printed in the Netherlands. 131 Modelling Sustainable Consumption. From Theoretical Concepts to Policy Guidelines DANIELA KLETZAN 1 , ANGELA KÖPPL 1 , KURT KRATENA 1 , STEFAN SCHLEICHER 1,2 and MICHAEL WÜGER 1 1 Austrian Institute of Economic Research (WIFO), P.O. Box 91, 1103 Vienna, Austria, E-mail: daniela.kletzan@wifo.ac.at; 2 University of Graz, Austria Abstract. Changes in consumption processes have been recognised as important steps towards sustainable development. The aim of this paper is to give an overview of research on sustainable consumption and to sketch new approaches in economic modelling of sustainable consumption. A special focus is given to the relationship between stocks and flows as well as consumer services as being welfare relevant. From that three different steps of modelling are proposed, where the links between material goods demand and consumer services demand as well as the stock-flow relationship can be made explicit. Key words: Sustainable consumption, economic modelling, household behaviour. JEL codes: Q01, D10, O33 I. Introduction The past decades of environmental concern have been mainly associated with the negative impact of production on the environment. The issue of sustainable consumption emerged as political and research topic after the Rio Earth Summit in 1992. Consumption processes are increasingly recognised as a prerequisite for sustainable development. Consumption processes influence production processes and imply the use of resources. Rising consumer demand on the one hand puts a strain on the environment as rising material and energy input is needed to satisfy demand. On the other hand rising material intensive consumption is accompanied by increasing amounts of waste. The paper stems from an ongoing research project 1 regarding modelling and quantification of changes in consumer behaviour in the areas of room heating and mobility. The paper starts out with an overview of the research on sustainable consumption and gives some examples of national and international initiatives to enhance changes in consumer behaviour. It then discusses starting points for the integration of sustainability and consumer demand modelling. The remaining of the paper describes in a three-step procedure how traditional models could be extended to integrate sustainability.