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Endogenous growth and recycling : a material balance approach

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Abstract

In this paper we analyze the importance of recycling in the strive for sustainable development. In contrast to former approaches we emphasize the role of the waste stock as a source of valuable inputs. We enhance a Romer (1990) type endogenous growth model by a material balance condition that re°ects the circulation of matter in the economy. Di®erentiated intermediate products are produced from recycled waste and virgin resources. These material intermediates are then employed in the production of ¯nal output. They either end up as waste after consumption or are bound in the capital stock { depending on the utilization of the produced output. We show that, even in the absence of environmental policy, long-run development is sustainable in this economy. The intuition is, that, as waste is a valuable resource in our model, not recycling part of it, cannot be optimal in the long-run.

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Bibliographic Info

Paper provided by CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich in its series CER-ETH Economics working paper series with number 05/37.

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Length: 37 pages
Date of creation: Feb 2005
Date of revision:
Handle: RePEc:eth:wpswif:05-37

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Keywords: non-renewable resources; recycling; endogenous growth; sustainable development;

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References

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  1. Smith, Vernon L, 1972. "Dynamics of Waste Accumulation: Disposal Versus Recycling," The Quarterly Journal of Economics, MIT Press, vol. 86(4), pages 600-616, November.
  2. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
  3. Di Vita, Giuseppe, 2001. "Technological change, growth and waste recycling," Energy Economics, Elsevier, vol. 23(5), pages 549-567, September.
  4. Huhtala, Anni, 1999. "Optimizing production technology choices: conventional production vs. recycling," Resource and Energy Economics, Elsevier, vol. 21(1), pages 1-18, January.
  5. Rafael Lusky, 1976. "A Model of Recycling and Pollution Control," Canadian Journal of Economics, Canadian Economics Association, vol. 9(1), pages 91-101, February.
  6. Thomas Kuhn & Karen Pittel & Thomas Schulz, 2003. "Recycling for sustainability - a long run perspective?," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 3(3), pages 339-355.
  7. Mainwaring, Lynn, 1995. "Primary resource use and voluntary recycling schemes: Dynamic issues in a global context," Resource and Energy Economics, Elsevier, vol. 17(4), pages 341-356, December.
  8. Noel, Michael, 1978. "Resource extraction and recycling with environmental costs," Journal of Environmental Economics and Management, Elsevier, vol. 5(3), pages 220-235, September.
  9. Klaus Conrad, 1999. "Resource and Waste Taxation in the Theory of the Firm with Recycling Activities," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 14(2), pages 217-242, September.
  10. Anni Huhtala, 1997. "A Post-Consumer Waste Management Model for Determining Optimal Levels of Recycling and Landfilling," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 10(3), pages 301-314, October.
  11. Kuhn, Thomas & Pittel, Karen & Schulz, Thomas, 2003. "Recycling for sustainability - A long run perspective?," Munich Reprints in Economics 19484, University of Munich, Department of Economics.
  12. Dinan Terry M., 1993. "Economic Efficiency Effects of Alternative Policies for Reducing Waste Disposal," Journal of Environmental Economics and Management, Elsevier, vol. 25(3), pages 242-256, November.
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Cited by:
  1. Valente, Simone, 2008. "Intergenerational transfers, lifetime welfare, and resource preservation," Environment and Development Economics, Cambridge University Press, vol. 13(01), pages 53-78, February.
  2. Simone Valente, 2005. "Genuine Dissaving and Optimal Growth," Others 0505009, EconWPA.
  3. Akao, Ken-Ichi & Managi, Shunsuke, 2007. "Feasibility and optimality of sustainable growth under materials balance," Journal of Economic Dynamics and Control, Elsevier, vol. 31(12), pages 3778-3790, December.
  4. Corrado Di Maria & Simone Valente, 2006. "The Direction of Technical Change in Capital-Resource Economies," CER-ETH Economics working paper series 06/50, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  5. Simone Valente, 2006. "Trade, Envy and Growth: International Status Seeking in a Two-Country World," CER-ETH Economics working paper series 06/53, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  6. Karen Pittel, 2006. "A Kuznets Curve for Recycling," CER-ETH Economics working paper series 06/52, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.

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