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| Pommeret, Aude; Prieur, Fabien. |
| The design of environmental policy typically takes place within a framework in which uncertainty over the future impact of pollution and two different kinds of irreversibilities interact. The first kind of irreversibility concerns the sunk cost of environmental degradation; the second is related to the sunk cost of environmental policy. Clearly, the two irreversibilities pull in opposite directions: policy irreversibility leads to more pollution and a less/later policy while environmental irreversibility generates less pollution and a more/sooner policy. Using a real option approach and an infinite time horizon model, this paper considers both irreversibilities simultaneously. The model first is developed by paying particular attention to the option values... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Environmental Policy; Environmental Irreversibility; Policy Irreversibility; Environmental Economics and Policy; Q58; D81. |
| Ano: 2009 |
URL: http://purl.umn.edu/50359 |
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| Prieur, Fabien. |
| We develop an overlapping generations model where consumption is the source of polluting emissions. Pollution stock accumulates with emissions but is partially assimilated by nature at each period. The assimilation capacity of nature is limited and vanishes beyond a critical level of pollution. We first show that multiple equilibria exist. More importantly, some exhibit irreversible pollution levels although an abatement activity is operative. Thus, the simple engagement of maintenance does not necessarily suffice to protect an economy against convergence toward a steady state having the properties of an ecological and economic poverty trap. In contrast with earlier related studies, the emergence of the environmental Kuznets curve is no longer the rule.... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Overlapping Generations; Irreversible Pollution; Poverty Trap; Environmental Kuznets Curve; Environmental Economics and Policy; Q56; D62; D91. |
| Ano: 2007 |
URL: http://purl.umn.edu/9546 |
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