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Is the Discount Rate Relevant in Explaining the Environmental Kuznets Curve?

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  • Giuseppe Di Vita

    (Faculty of Law, University of Catania, Italy)

Abstract

In this paper we use Pindyck’s model (2002) to show that the discount rate may play an important role in explaining for the income-pollution pattern observed in the real world. Low levels of income involve high values of discount rate, that are obstacles to the adoption of a pollution abatement policy. Only when the discount rate falls, as a consequence of growth, will it be possible to implement measures for emissions reduction. Thus we are able to derive an inverse U-shaped income-pollution pattern, making use of an argument that has never yet been introduced in the economic debate on this issue.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2003.83.

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Date of creation: Sep 2003
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Handle: RePEc:fem:femwpa:2003.83

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Keywords: Discount rate; Environmental Kuznets Curve; Income; Stock pollutants;

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Cited by:
  1. Kijima, Masaaki & Nishide, Katsumasa & Ohyama, Atsuyuki, 2010. "Economic models for the environmental Kuznets curve: A survey," Journal of Economic Dynamics and Control, Elsevier, vol. 34(7), pages 1187-1201, July.
  2. Halkos, George E., 2011. "Nonparametric modelling of biodiversity: Determinants of threatened species," Journal of Policy Modeling, Elsevier, vol. 33(4), pages 618-635, July.
  3. Di Vita, Giuseppe, 2008. "Differences in pollution levels among civil law countries: A possible interpretation," Energy Policy, Elsevier, vol. 36(10), pages 3774-3786, October.
  4. Giuseppe Di Vita, 2007. "Legal Families and Environmental Protection: Is there a Causal Relationship?," Working Papers 2007.78, Fondazione Eni Enrico Mattei.

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