The environmental drag on long- term economic performance: Evidence from Norway

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The environmental drag on long- term economic performance: Evidence from Norway

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Annegrete Bruvoll, Solveig Glomsrød and Haakon Vennemo () (Statistics Norway)

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Annegrete Bruvoll

Abstract

The environmental drag is the cost to society of environmental constraints. This paper estimates the long-run environmental drag on the Norwegian economy. We employ a model called DREAM (dynamic resource / environmental applied model). This is an applied general equilibrium model extended to include important environmental linkages.

After having explained the structure of our model, the paper presents macroeconomic effects, and impacts on growth and welfare of environmental constraints. To check robustness we perform a number of sensitivity analyses. Most of our results are remarkably robust to alternative assumptions. Contrary to widespread opinion, a low discount rate increases the environmental drag on welfare. Reducing the rate of technological progress will have similar effects.

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Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 143.

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Date of creation: May 1995
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Handle: RePEc:ssb:dispap:143

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Find related papers by JEL classification:
D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
Q29 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Other
Q39 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Other

Cited by:
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David Pearce & Charles Palmer, 2001. "Public and private spending for environmental protection: a cross-country policy analysis," Fiscal Studies, Institute for Fiscal Studies, vol. 22(4), pages 403-456, December. [Downloadable!]
Sverre Grepperud, 1997. "Soil Depletion Choices under Production and Price Uncertainty," Discussion Papers 186, Research Department of Statistics Norway. [Downloadable!]

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