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Sustainable growth and modernization under environmental hazard and adaptation

Author

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  • HRITONENKO, Natali

    (Prairie View A&M University, Texas, USA)

  • YATSENKO, Yuri

    (Houston Baptist University, Texas, USA)

Abstract

We develop an aggregated model to study rational environmental adaptation policies that compensate negative consequences of certain environmental hazards and changes. The model distinguishes three categories of adaptation measures that (a) compensate the decrease of the environmental amenity value, (b) compensate the decrease of total productivity, (c) develop and introduce new hazard-protected capital and technology. We analyze the optimal balance among investment, consumption, and different categories of adaptation investments. It appears that the environmental hazard and subsequent adaptation do not lead in the long run to a higher level of capital modernization compared to the benchmark case with no hazard. A synergism between productivity-related and amenity-related adaptation activities arises because the productivity- related adaptation positively impacts the economy and creates better possibilities for the amenity adaptation.

Suggested Citation

  • HRITONENKO, Natali & YATSENKO, Yuri, 2011. "Sustainable growth and modernization under environmental hazard and adaptation," LIDAM Discussion Papers CORE 2011025, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2011025
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    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp2011.html
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    References listed on IDEAS

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    Cited by:

    1. GABSZEWICZ, Jean & TAROLA, Ornella, 2011. "Migration, wage differentials and fiscal competition," LIDAM Discussion Papers CORE 2011065, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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    More about this item

    Keywords

    environmental hazard; environmental adaptation; capital modernization; optimization;
    All these keywords.

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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