Travaglini, Giuseppe and Saltari, Enrico (2012): A model of waste control and abatement capital: Permanent versus temporary environmental policies.
Download (280Kb) | Preview
In this paper we investigate the effects of introducing explicitly abatement capital in a welfare function which depends on waste stock and consumption. Consumption is assumed to produce an undesiderable residue. Society can control waste accumulation using abatement capital. We focus on two issues: the intertemporal relationship between abatement investment and waste emission, and the effects of permanent and temporary environmental policies on the long-run equilibrium of the economic-ecological system. We get three main results. First, for a society the problems of waste control and abatement investment are very interrelated. Any change in investment affects waste emission and consumption, but not always in a predictable manner. Second, we show that the adoption of either temporary subsidies or taxes do not change the long-run properties of the economy. It is not just current subsidies or taxes, but their entire path over time that affects accumulation of waste and capital. Third, we get that environmental policies may have ambiguous effects: in response to subsidies or taxes a society might accumulate less abatement capital than desidered, allowing the stock of waste to rise in the long run.
|Item Type:||MPRA Paper|
|Original Title:||A model of waste control and abatement capital: Permanent versus temporary environmental policies|
|Keywords:||Abatement investment; waste accumulation; dynamic optimization; environmental policy|
|Subjects:||L - Industrial Organization > L5 - Regulation and Industrial Policy > L51 - Economics of Regulation
E - Macroeconomics and Monetary Economics > E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment > E22 - Capital; Investment; Capacity
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
|Depositing User:||Giuseppe Travaglini|
|Date Deposited:||11. Apr 2012 13:44|
|Last Modified:||16. Feb 2013 08:51|
Ansar, J. and R. Spark (2009). The experience curve, option value and the energy paradox. Energy Policy, 37, 1012-1020.
Bovenberg A.L. and S. Smulders (1995). Environmental quality and pollution-augmenting technological change in a two-sector endogenous growth model. Journal of Public Economics, 57, 369-391.
Brock W.A. (1977). A polluted Golden Age. In V. Smith Economics of Natural and Environmental Resources, 441-4661, ed. Gordon and Breach, New York.
Brock W.A. and D. Starrett (2003). Nonconvexities in ecological management problems". Environmental and Resource Economics, 26, 575-602.
Clarke H. and W. Reed (1994). "Consumption/pollution tradeoffs in an environment vulnerable to pollution-related catastrophic collapse", Journal of Economic Dynamics and Control, 18, 991-1010.
Dasgupta P. (1982). The control of Resources. Basil Blackwell, Oxford.
Dasgupta, P.S. and K. G. Mäler (2000). Net national product, wealth and social well-being. Environment and Development Economics 5, 69-93.
Dinda, S. (2004). Environmental Kuznets Curve Hypothesis: A Survey. Ecological Economics, 49, 4, 431-455.
Färe R., S. Grosskopf, and C. A. Pasurka Jr. (2007). Pollution abatement activities and traditional productivity. Ecological Economics, 62, 3--4, 1673-682.
Forster, B. A. (1973). Optimal capital accumulation in polluted environment. Southern Economic Journal, 39, 544-557.
Forster, B. A. (1975). Optimal pollution control with non.constant exponential decay rate. Journal of environmental Economics and Management, 2, 1-6.
Hanley, N. and C. Spash (1993). Cost-Benefit analysis and the environment. Edward Elgar, Aldershot.
Hartwick, J.M. (1990). Natural resources, national accounting and economic depreciation. Journal of Public Economics, 43, 291-304.
Lin, T. T., C. Ko and H. Yeh (2007). Applying real options in investment decisions relating to environmental pollution. Energy Policy, 35, 2426-2432.
Lin, T. T. and S. Huang (2010). An entry and exit model on the energy-saving investment strategy with real options. Energy Policy, 38, 794-802.
Lin, T. T. and S. Huang (2011). Application of the modified Tobin's q to an uncertain energy-saving project with the real options concept. Energy Policy, 39, 408-420.
Pearce D.W., and C.A. Nash (1981). The social appraisal of projects: A text in cost benefit analisys. Harvester Wheatsheaf, Hemel Hempstead.
Perman R., Ma Y., McGilvray J. and Common M. (2003). Natural Resources and Environmental Economics, ed. Perman Education Limited, Essex, thrird edition.
Pindyck, R. S. (2000). Irreversibilities and the timing of environmental policy. Resource and Energy Economics, 22, 233-259.
Pindyck, R. S. (2002). Optimal timing problems in environmental economics. Journal of Economic Dynamics & Control, 26, 1677-1697.
Plourde C.G. (1972). A model of waste accumulation and disposal. Canadian Journal of Economics, 5, 119-125.
Ramsey F. (1928). A mathematical theory of saving. Economic Journal, 38.
Saltari E. and G. Travaglini (2011a). The effects of environmental policies on the abatement investment decisions of a green firm. Resource and Energy Economics, Elsevier, vol. 33, 3, 666-685.
Saltari E. and G. Travaglini (2011b). Optimal abatement investment and environmental policies under pollution, Chap. 20 in Frontiers of Economic Growth and Development, ed. O. de La Grandville, Emerald.
Schulze, P.C. (1994). Cost-benefit analyses and environmental policy. Ecological Economics, 9, 3, 197-199.
Smith V.L. (1972). Dynamics of waste accumulation: Disposal versus recycling. Quarterly Journal of Economics, 86, 600-616.
Smulders, S. and R. Gradus (1996). Pollution abatement and long-term growth. European Journal of Political Economy, 12, 505-532.
Solow R. (1956). A contribution to the theory of economic growth. Quarterly Journal of Economics, 70, 65-94.
Solow, R. (1986). On the intergenerational allocation of natural resources. Scandinavian Journal of Economics, 88, 141-149.
Travaglini G. (2012 a). Pollution control: targets and dynamics. Working Papers 1201, University of Urbino Carlo Bo, Department of Economics, Society & Politics.
Travaglini G. (2012 b). Trade-off between labor productivity and capital accumulation in Italian energy sector. Journal of Policy Modeling, 34, 1, 35-48.
Van der Ploeg, F. and C. Withagen (1991). Pollution control and the Ramsey problem. Environmental and Resource Economics, 1, 215-236.
Withagen, C. (1995). Pollution, abatement and balanced growth. Environmental and Resource Economics, 5, 1-8.
Weitzman M.L. (1976). On the welfare significance of the national product in a dynamic context. Quarterly Journal of Economics, 90, 156-162.
Xepapadeas, A. (2005). Economic growth and the environment. in Handbook of Environmental Economics, edited by K.G. Maler and J. Vincent, ed. North-Holland, Amsterdam.