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Polluting Non-Renewable Resources and Growth

  • Poul Schou

In an endogenous growth model with human capital accumulation, we introduce non-renewable resources which cause flow pollution problems. In this set-up the negative external effect of pollution on productivity does not cause any distortions in the economy: The market economy will achieve the optimal extraction and growth rates. Consequently, emission taxes are unnecessary and, when introduced, will have no effect on the economy. The more important is the negative pollution externality, the larger will be the optimal long-run growth rate (which may be either positive or negative). In the case of a positive human capital externality, consumption in the market economy may approach zero in the long run, although positive consumption growth is socially optimal. Growth-enhancing policies do not necessarily cause a larger drain in the resource stock. Copyright Kluwer Academic Publishers 2000

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Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 16 (2000)
Issue (Month): 2 (June)
Pages: 211-227

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Handle: RePEc:kap:enreec:v:16:y:2000:i:2:p:211-227
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100263

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  8. Lans Bovenberg, A. & Smulders, Sjak, 1995. "Environmental quality and pollution-augmenting technological change in a two-sector endogenous growth model," Journal of Public Economics, Elsevier, vol. 57(3), pages 369-391, July.
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