Optimal dynamic scale and structure of a multi-pollution economy
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In: Ecological Economics, Vol. 68, No. 4, 15.02.2009, p. 1226-1238.
Research output: Journal contributions › Journal articles › Research › peer-review
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TY - JOUR
T1 - Optimal dynamic scale and structure of a multi-pollution economy
AU - Baumgärtner, Stefan
AU - Jöst, Frank
AU - Winkler, Ralph
N1 - Participation and Evaluation for Sustainable River Basin Governance
PY - 2009/2/15
Y1 - 2009/2/15
N2 - We analyze the optimal dynamic scale and structure of a two-sector-economy, where each sector produces one consumption good and one specific pollutant. Both pollutants accumulate at different rates to stocks which damage the natural environment. This acts as a dynamic driving force for the economy. Our analysis shows that along the optimal time path (i) the time scale of economic dynamics is mainly determined by the lifetime of pollutants, their instantaneous harmfulness and the discount rate; (ii) economic scale and structure, as well as resulting welfare, may be non-monotonic, and (iii) environmental damage may exhibit an inverted U-shape form. These results raise important questions about the optimal design of environmental policies in a multi-pollution economy. We suggest a system of dynamic Pigouvian emission taxes, each of which should be levied specifically on one particular pollutant. We show that the optimal time path of each tax level is determined by the characteristics not only of that particular pollutant but also of all other pollutants. © 2008 Elsevier B.V. All rights reserved.
AB - We analyze the optimal dynamic scale and structure of a two-sector-economy, where each sector produces one consumption good and one specific pollutant. Both pollutants accumulate at different rates to stocks which damage the natural environment. This acts as a dynamic driving force for the economy. Our analysis shows that along the optimal time path (i) the time scale of economic dynamics is mainly determined by the lifetime of pollutants, their instantaneous harmfulness and the discount rate; (ii) economic scale and structure, as well as resulting welfare, may be non-monotonic, and (iii) environmental damage may exhibit an inverted U-shape form. These results raise important questions about the optimal design of environmental policies in a multi-pollution economy. We suggest a system of dynamic Pigouvian emission taxes, each of which should be levied specifically on one particular pollutant. We show that the optimal time path of each tax level is determined by the characteristics not only of that particular pollutant but also of all other pollutants. © 2008 Elsevier B.V. All rights reserved.
KW - Sustainability sciences, Management & Economics
KW - Dynamic economy–environment interaction
KW - Multi-pollutant emissions
KW - Non-monotonic development
KW - Optimal scale
KW - Stock pollution
KW - Structural change
KW - Time scale
KW - Dynamic economy-environment interaction
KW - Multi-pollutant emissions
KW - Non-monotonic development
KW - Optimal scale
KW - Stock pollution
KW - Structural change
KW - Time scale
KW - Economics
KW - Dynamic economy–environment interaction
KW - Multi-pollutant emissions
KW - Non-monotonic development
KW - Optimal scale
KW - Stock pollution
KW - Structural change
KW - Time scale
UR - http://www.scopus.com/inward/record.url?scp=58749116441&partnerID=8YFLogxK
U2 - 10.1016/j.ecolecon.2008.08.016
DO - 10.1016/j.ecolecon.2008.08.016
M3 - Journal articles
VL - 68
SP - 1226
EP - 1238
JO - Ecological Economics
JF - Ecological Economics
SN - 0921-8009
IS - 4
ER -