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A model of waste control and abatement capital: Permanent versus temporary environmental policies

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  • Travaglini, Giuseppe
  • Saltari, Enrico

Abstract

In this paper we investigate the effects of introducing explicitly abatement capital in a welfare function which depends on waste stock and consumption. Consumption is assumed to produce an undesiderable residue. Society can control waste accumulation using abatement capital. We focus on two issues: the intertemporal relationship between abatement investment and waste emission, and the effects of permanent and temporary environmental policies on the long-run equilibrium of the economic-ecological system. We get three main results. First, for a society the problems of waste control and abatement investment are very interrelated. Any change in investment affects waste emission and consumption, but not always in a predictable manner. Second, we show that the adoption of either temporary subsidies or taxes do not change the long-run properties of the economy. It is not just current subsidies or taxes, but their entire path over time that affects accumulation of waste and capital. Third, we get that environmental policies may have ambiguous effects: in response to subsidies or taxes a society might accumulate less abatement capital than desidered, allowing the stock of waste to rise in the long run.

Suggested Citation

  • Travaglini, Giuseppe & Saltari, Enrico, 2012. "A model of waste control and abatement capital: Permanent versus temporary environmental policies," MPRA Paper 36522, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:36522
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    References listed on IDEAS

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    More about this item

    Keywords

    Abatement investment; waste accumulation; dynamic optimization; environmental policy;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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