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Economic and environmental effects under resource scarcity and substitution between renewable and non-renewable resources

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  • Silva, Susana
  • Soares, Isabel
  • Afonso, Oscar

Abstract

We build a general equilibrium model with renewable (non-polluting) and non-renewable (polluting) resources to analyze the interaction and compatibility between economic growth and a cleaner environment. The study is in two phases: (i) resource extraction/production costs are constant; (ii) resource producers invest in knowledge to reduce extraction/production costs, endogenizing technical change. With constant costs, there is a permanent trade-off between economic growth and a cleaner environment. With endogenous technical change, it is possible to harmonize more output and less emissions by replacing non-renewable resources for renewable ones. We also conduct a sensitivity analysis to explore three specific policy actions. With constant costs, the best policy action is the imposition of a higher renewable resources standard, while with endogenous technical change, under certain conditions, all policy interventions may benefit both the economy and the environment.

Suggested Citation

  • Silva, Susana & Soares, Isabel & Afonso, Oscar, 2013. "Economic and environmental effects under resource scarcity and substitution between renewable and non-renewable resources," Energy Policy, Elsevier, vol. 54(C), pages 113-124.
  • Handle: RePEc:eee:enepol:v:54:y:2013:i:c:p:113-124
    DOI: 10.1016/j.enpol.2012.10.069
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    2. Bollino, Carlo Andrea & Micheli, Silvia, 2014. "Regional coordination of European environmental policies," Journal of Policy Modeling, Elsevier, vol. 36(6), pages 1152-1165.
    3. Wei, Wenjie, 2014. "Welfare and Environmental Effects of Subsidies and Tariffs in North-South Trade in Renewable Energy Equipment," 2014 Conference (58th), February 4-7, 2014, Port Macquarie, Australia 165887, Australian Agricultural and Resource Economics Society.
    4. Haiyun Xu, 2016. "Economic policy uncertainty and housing returns in Germany: Evidence from a bootstrap rolling window," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics, vol. 34(2), pages 309-332.
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    9. Pao, Hsiao-Tien & Fu, Hsin-Chia, 2015. "Competition and stability analyses among emissions, energy, and economy: Application for Mexico," Energy, Elsevier, vol. 82(C), pages 98-107.
    10. Lin, Boqiang & Moubarak, Mohamed, 2014. "Renewable energy consumption – Economic growth nexus for China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 111-117.

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