The endogenous formation of an environmental culture
AbstractWe develop an overlapping generations model with environmental quality and endogenous environmental culture. Based upon empirical evidence, preferences over culturally-weighted consumption and envi- ronmental quality are assumed to follow a Leontie function. We fi nd that four diff erent regimes may be possible, with interior or corner solutions in investments in environmental culture and maintenance. Depending on the parameter conditions, there exists one of two possible, asymptotically stable steady states, one with and one without investments in environmental culture. For low wealth levels, society is unable to free resources for environmental culture. In this case, society will only invest in environmental maintenance if environmental quality is suffi ciently low. Once society has reached a certain level of economic development, then it may optimally invest a part of its wealth in developing an environmental culture. Environmental culture has not only a positive impact on environmental quality through lower levels of consumption, but it improves the environment through maintenance expenditure for wealth-environment combinations at which, in a restricted model without environmental culture, no maintenance would be undertaken. Environmental culture leads to a society with a higher indirect utility at steady state in comparison to the restricted model. Our model leads us to the conclusion that, by raising the importance of environmental quality for utility, environmental culture leads to lower steady state levels of consumption and wealth, but higher environmental quality. Thus, for societies trapped in a situation with low environmental quality, investments in culture may induce positive feedback loops, where more culture raises environmental quality which in turn raises environmental culture. We also discuss how en- vironmental culture may lead to an Environmental Kuznets Curve.
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Date of creation: 14 Jun 2013
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environmental culture; overlapping generations model; environment; endogenous preferences.;
Other versions of this item:
- Ingmar Schumacher, 2013. "The endogenous formation of an environmental culture," CEEES Paper Series CE3S-04/13, European University at St. Petersburg, Department of Economics.
- Ingmar Schumacher, 2013. "The endogenous formation of an environmental culture," Working Papers 2013-013, Department of Research, Ipag Business School.
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
- D90 - Microeconomics - - Intertemporal Choice - - - General
This paper has been announced in the following NEP Reports:
- NEP-AGR-2013-06-30 (Agricultural Economics)
- NEP-ALL-2013-06-30 (All new papers)
- NEP-ENV-2013-06-30 (Environmental Economics)
- NEP-EVO-2013-06-30 (Evolutionary Economics)
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