Accumulative pollution, "clean technology," and policy design
AbstractEnvironmental policymakers must address the adverse effects of a number of pollutants that accumulate in the environment. Goals for the regulation of these damages often involve holding long-term emissions below a level deemed to be "dangerous,'' or outright banning of offending products or processes along with subsidization of more "green" alternatives. This paper builds upon previous studies by Keeler, Spence, and Zeckhauser (1971) and Tahvonen and Withagen (1996) in addressing the optimal long-term management of an accumulative but assimilatable pollutant through policies that restrict more damaging production processes and thereby induce more benign alternatives. Using a simple general equilibrium approach, we consider the possibility that the assimilative capacity of the environment is diminished and eventually exhausted by pollution accumulation. In this case there is a nonconvexity in the problem that gives rise to multiple potential optima, complicating the characterization of the optimal path and the determination of decentralized policies that can support an optimal outcome. In particular, environmental quality may be preserved or completely degraded in the long term. This makes the question of whether polluting processes or products should be banned more complicated and more interesting. We characterize the circumstances under which a banning policy is consistent with an intertemporally optimizing path, we investigate the sensitivity of optimal solutions to the cost of a clean backstop technology, and we discuss more generally the design of price-based and quantity-based policies for supporting an optimal solution.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Resource and Energy Economics.
Volume (Year): 22 (2000)
Issue (Month): 4 (October)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505569
Other versions of this item:
- Toman, Michael & Withagen, Cees, 1998. "Accumulative Pollution, "Clean Technology," and Policy Design," Discussion Papers dp-98-43, Resources For the Future.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Tahvonen, Olli & Salo, Seppo, 1996. "Nonconvexities in Optimal Pollution Accumulation," Journal of Environmental Economics and Management, Elsevier, vol. 31(2), pages 160-177, September.
- Tahvonen, Olli, 1996. "Trade with Polluting Nonrenewable Resources," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 1-17, January.
- Hoel, Michael, 1993. "Intertemporal properties of an international carbon tax," Resource and Energy Economics, Elsevier, vol. 15(1), pages 51-70, March.
- Conrad, Jon M. & Olson, Lars J., 1990.
"The Economics Of A Stock Pollutant: Aldicarb On Long Island,"
6328, Cornell University, Department of Applied Economics and Management.
- Jon Conrad & Lars Olson, 1992. "The economics of a stock pollutant: Aldicarb on Long Island," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 2(3), pages 245-258, May.
- Rüdiger Pethig, 1989. "Problems of Irreversibility in the Control of Persistent Pollutants," Volkswirtschaftliche DiskussionsbeitrÃ¤ge 04-89, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
- Asako, Kazumi, 1980. "Economic growth and environmental pollution under the max-min principle," Journal of Environmental Economics and Management, Elsevier, vol. 7(3), pages 157-183, September.
- d'Arge, R C & Kogiku, K C, 1973. "Economic Growth and the Environment," Review of Economic Studies, Wiley Blackwell, vol. 40(1), pages 61-77, January.
- David Levhari & Cees Withagen, 1992.
"Optimal management of the growth potential of renewable resources,"
Journal of Economics,
Springer, vol. 56(3), pages 297-309, October.
- Levhari, D. & Withagen, C.A.A.M., 1992. "Optimal management of the growth potential of renewable resources," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3107036, Tilburg University.
- Keeler, Emmett & Spence, Michael & Zeckhauser, Richard, 1972. "The optimal control of pollution," Journal of Economic Theory, Elsevier, vol. 4(1), pages 19-34, February.
- Cropper, M. L. & Lee, Dwight R. & Pannu, Sukhraj Singh, 1979. "The optimal extinction of a renewable natural resource," Journal of Environmental Economics and Management, Elsevier, vol. 6(4), pages 341-349, December.
- Frederick Ploeg & Cees Withagen, 1991.
"Pollution control and the Ramsey problem,"
Environmental & Resource Economics,
European Association of Environmental and Resource Economists, vol. 1(2), pages 215-236, June.
- Tahvonen, Olli & Withagen, Cees, 1996.
"Optimality of irreversible pollution accumulation,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 20(9-10), pages 1775-1795.
- Forster, B A, 1973. "Optimal Consumption Planning in a Polluted Environment," The Economic Record, The Economic Society of Australia, vol. 49(128), pages 534-45, December.
- Becker, Robert A., 1982. "Intergenerational equity: The capital-environment trade-off," Journal of Environmental Economics and Management, Elsevier, vol. 9(2), pages 165-185, June.
- C. G. Plourde, 1972. "A Model of Waste Accumulation and Disposal," Canadian Journal of Economics, Canadian Economics Association, vol. 5(1), pages 119-25, February.
- Fischer, Carolyn & Parry, Ian W. H. & Pizer, William A., 2003.
"Instrument choice for environmental protection when technological innovation is endogenous,"
Journal of Environmental Economics and Management,
Elsevier, vol. 45(3), pages 523-545, May.
- Parry, Ian & Pizer, William & Fischer, Carolyn, 1998. "Instrument Choice for Environmental Protection When Technological Innovation is Endogenous," Discussion Papers dp-99-04, Resources For the Future.
- M. L. Weitzman, 1973.
"Prices vs. Quantities,"
106, Massachusetts Institute of Technology (MIT), Department of Economics.
- Hoel, Michael & Karp, Larry, 2001.
"Taxes versus Quotas for a Stock Pollutant,"
Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series
qt5fx9p7kf, Department of Agricultural & Resource Economics, UC Berkeley.
- Falk Ita & Mendelsohn Robert, 1993. "The Economics of Controlling Stock Pollutants: An Efficient Strategy for Greenhouse Gases," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages 76-88, July.
- Pizer, William, 1997. "Prices vs. Quantities Revisited: The Case of Climate Change," Discussion Papers dp-98-02, Resources For the Future.
- Starrett, David A., 1972. "Fundamental nonconvexities in the theory of externalities," Journal of Economic Theory, Elsevier, vol. 4(2), pages 180-199, April.
- Cropper, M. L., 1976. "Regulating activities with catastrophic environmental effects," Journal of Environmental Economics and Management, Elsevier, vol. 3(1), pages 1-15, June.
- Krautkraemer, Jeffrey A, 1985. "Optimal Growth, Resource Amenities, and the Preservation of Natural Environments," Review of Economic Studies, Wiley Blackwell, vol. 52(1), pages 153-70, January.
- Pizer, William & Newell, Richard, 1998.
"Regulating Stock Externalities Under Uncertainty,"
dp-99-10-rev, Resources For the Future.
- Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
- Pizer, William A., 1999. "The optimal choice of climate change policy in the presence of uncertainty," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 255-287, August.
- Richard F. Kosobud & Thomas A. Daly David W. South & Kevin G. Quinn, 1994. "Tradable Cumulative CO2 Permits and Global Warming Control," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 213-232.
- Olli Tahvonen, 1995. "Dynamics of pollution control when damage is sensitive to the rate of pollution accumulation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 5(1), pages 9-27, January.
- Toman, Michael A., 1985. "Optimal control with an unbounded horizon," Journal of Economic Dynamics and Control, Elsevier, vol. 9(3), pages 291-316, November.
- Michael Toman & Karen Palmer, 1997. "How should an accumulative toxic substance be banned?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 9(1), pages 83-102, January.
- Tahvonen Olli & Kuuluvainen Jari, 1993. "Economic Growth, Pollution, and Renewable Resources," Journal of Environmental Economics and Management, Elsevier, vol. 24(2), pages 101-118, March.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If references are entirely missing, you can add them using this form.