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The short and long run effects of tied foreign aid on pollution abatement, pollution and employment: A pilot model

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  • Schweinberger, A.G.
  • Woodland, A.D.

Abstract

There exists in the literature a presumption that tied foreign aid can be used effectively to reduce cross-border pollution. Focusing, in contrast to the received literature, on the interaction between the public and private provisions of pollution abatement in the recipient country, we question the effectiveness of tied foreign aid in reducing pollution. In this context, we obtain many novel and policy relevant insights. Allowing for changes in labour employment and distinguishing between short and long run effects, tied foreign aid is shown to crowd out the private provision for pollution abatement in the short run. In the long run, tied foreign aid raises employment and therefore may be desirable for the recipient but undesirable for the donor country because it also raises pollution. The results change drastically if only the government provides pollution abatement.

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  • Schweinberger, A.G. & Woodland, A.D., 2008. "The short and long run effects of tied foreign aid on pollution abatement, pollution and employment: A pilot model," Journal of Environmental Economics and Management, Elsevier, vol. 55(3), pages 310-325, May.
    • Handle: RePEc:eee:jeeman:v:55:y:2008:i:3:p:310-325
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    2. Wei-Bin Zhang, 2020. "Growth, Wealth Accumulation and Environmental Change in Portfolio Choice and Trade," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 18(2), pages 197-216.
    3. Ed Wilson, 2009. "Distinguished Fellow of the Economic Society of Australia, 2008: Alan Woodland," The Economic Record, The Economic Society of Australia, vol. 85(270), pages 350-356, September.
    4. Hadjiyiannis, Costas & Hatzipanayotou, Panos & Michael, Michael S., 2013. "Competition for environmental aid and aid fungibility," Journal of Environmental Economics and Management, Elsevier, vol. 65(1), pages 1-11.
    5. Alain-Désiré Nimubona & Horatiu Rus, 2015. "Green Technology Transfers and Border Tax Adjustments," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(1), pages 189-206, September.

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