IDEAS home Printed from https://ideas.repec.org/p/anu/eenwps/0104.html
   My bibliography  Save this paper

Sustainability Policy and Environmental Policy

Author

Listed:
  • John C. V. Pezzey

    (Australian National University, Centre for Resource and Environmental Studies
    University of Bath, Department of Economics)

Abstract

A representative agent economy with a resource stock, polluting emissions, productive, abatement and foreign capital, trade, and technical progress, is used to contrast environmental policy, which internalises amenity and productivity values, with sustainability policy, which achieves some form of intergenerational equity. Environmental policy comprises a tax on emissions and a subsidy on the resource stock equal to the respective externalised costs or benefits. Sustainability policy comprises a capital and/or consumption tax to change the effective utility discount rate. Environmental policy can reduce the strength of sustainability policy needed. More specialised results are derived in a closed economy with a non-renewable resource and no technical progress, and in a small open economy with few environmental effects.

Suggested Citation

  • John C. V. Pezzey, 2001. "Sustainability Policy and Environmental Policy," Economics and Environment Network Working Papers 0104, Australian National University, Economics and Environment Network.
  • Handle: RePEc:anu:eenwps:0104
    as

    Download full text from publisher

    File URL: http://een.anu.edu.au/download_files/een0104.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Stephen A. Marglin, 1963. "The Social Rate of Discount and The Optimal Rate of Investment," The Quarterly Journal of Economics, Oxford University Press, vol. 77(1), pages 95-111.
    2. Thomas Aronsson & Per-Olav Johansson, 1997. "Welfare Measurement, Sustainability and Green National Accounting," Books, Edward Elgar Publishing, number 1240.
    3. Hamilton, Kirk & Clemens, Michael, 1999. "Genuine Savings Rates in Developing Countries," The World Bank Economic Review, World Bank Group, vol. 13(2), pages 333-356, May.
    4. Malcolm Pemberton & David Ulph, 2001. "MeasuringIncome and Measuring Sustainability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(1), pages 25-40, March.
    5. World Commission on Environment and Development,, 1987. "Our Common Future," OUP Catalogue, Oxford University Press, number 9780192820808.
    6. Asheim, Geir B. & Buchholz, Wolfgang & Tungodden, Bertil, 2001. "Justifying Sustainability," Journal of Environmental Economics and Management, Elsevier, vol. 41(3), pages 252-268, May.
    7. John, A & Pecchenino, R, 1994. "An Overlapping Generations Model of Growth and the Environment," Economic Journal, Royal Economic Society, vol. 104(427), pages 1393-1410, November.
    8. Riley, John G., 1980. "The just rate of depletion of a natural resource," Journal of Environmental Economics and Management, Elsevier, vol. 7(4), pages 291-307, December.
    9. John, A. & Pecchenino, R. & Schimmelpfennig, D. & Schreft, S., 1995. "Short-lived agents and the long-lived environment," Journal of Public Economics, Elsevier, vol. 58(1), pages 127-141, September.
    10. Howarth, Richard B & Norgaard, Richard B, 1992. "Environmental Valuation under Sustainable Development," American Economic Review, American Economic Association, vol. 82(2), pages 473-477, May.
    11. Takayama,Akira, 1985. "Mathematical Economics," Cambridge Books, Cambridge University Press, number 9780521314985, October.
    12. Pierre‐Andre Jouvet & Philippe Michel & Jean‐Pierre Vidal, 2000. "Intergenerational Altruism and the Environment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 135-150, March.
    13. Robert M. Solow, 1974. "The Economics of Resources or the Resources of Economics," Palgrave Macmillan Books, in: Chennat Gopalakrishnan (ed.), Classic Papers in Natural Resource Economics, chapter 12, pages 257-276, Palgrave Macmillan.
    14. 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.
    15. Vellinga, Nico & Withagen, Cees, 1996. "On the Concept of Green National Income," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 499-514, October.
    16. Sefton, J. A. & Weale, M. R., 1996. "The net national product and exhaustible resources: The effects of foreign trade," Journal of Public Economics, Elsevier, vol. 61(1), pages 21-47, July.
    17. Gerlagh, Reyer & Keyzer, Michiel A., 2001. "Sustainability and the intergenerational distribution of natural resource entitlements," Journal of Public Economics, Elsevier, vol. 79(2), pages 315-341, February.
    18. Becker, Robert A., 1982. "Intergenerational equity: The capital-environment trade-off," Journal of Environmental Economics and Management, Elsevier, vol. 9(2), pages 165-185, June.
    19. Asheim, Geir B. & Weitzman, Martin L., 2001. "Does NNP growth indicate welfare improvement?," Economics Letters, Elsevier, vol. 73(2), pages 233-239, November.
    20. Daly, Herman E., 1990. "Toward some operational principles of sustainable development," Ecological Economics, Elsevier, vol. 2(1), pages 1-6, April.
    21. Mohtadi, Hamid, 1996. "Environment, growth, and optimal policy design," Journal of Public Economics, Elsevier, vol. 63(1), pages 119-140, December.
    22. Howarth, Richard B, 1998. " An Overlapping Generations Model of Climate-Economy Interactions," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(3), pages 575-591, September.
    23. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, vol. 67(5), pages 972-974, December.
    24. Karl-Göran Mäler, 1991. "National accounts and environmental resources," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 1(1), pages 1-15, March.
    25. John C. V. Pezzey, 2004. "Sustainability Policy and Environmental Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(2), pages 339-359, June.
    26. Chichilnisky, G., 1994. "Sustainable Development and Social Choice," Papers 94-02, Columbia - Graduate School of Business.
    27. Bovenberg, A. Lans & Heijdra, Ben J., 1998. "Environmental tax policy and intergenerational distribution," Journal of Public Economics, Elsevier, vol. 67(1), pages 1-24, January.
    28. Graciela Chichilnisky, 1996. "An axiomatic approach to sustainable development," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 13(2), pages 231-257, April.
    29. Richard B. Howarth & Richard B. Norgaard, 1990. "Intergenerational Resource Rights, Efficiency, and Social Optimality," Land Economics, University of Wisconsin Press, vol. 66(1), pages 1-11.
    30. R. M. Solow, 1974. "Intergenerational Equity and Exhaustible Resources," Review of Economic Studies, Oxford University Press, vol. 41(5), pages 29-45.
    31. Marini Giancarlo & Scaramozzino Pasquale, 1995. "Overlapping Generations and Environmental Control," Journal of Environmental Economics and Management, Elsevier, vol. 29(1), pages 64-77, July.
    32. Pezzey, J., 1992. "Sustainable Development Concepts; An Economic Analysis," Papers 2, World Bank - The World Bank Environment Paper.
    33. Geir B. Asheim, 1997. "Adjusting Green NNP to Measure Sustainability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(3), pages 355-370, September.
    34. David Pearce, 1988. "Optimal Prices for Sustainable Development," Palgrave Macmillan Books, in: David Collard & David Pearce & David Ulph (ed.), Economics, Growth and Sustainable Environments, chapter 5, pages 57-66, Palgrave Macmillan.
    35. Hartwick, John M., 1990. "Natural resources, national accounting and economic depreciation," Journal of Public Economics, Elsevier, vol. 43(3), pages 291-304, December.
    36. Pezzey, John C V & Withagen, Cees A, 1998. " The Rise, Fall and Sustainability of Capital-Resource Economies," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(2), pages 513-527, June.
    37. Joseph Stiglitz, 1974. "Growth with Exhaustible Natural Resources: Efficient and Optimal Growth Paths," Review of Economic Studies, Oxford University Press, vol. 41(5), pages 123-137.
    38. Martin L. Weitzman, 1997. "Sustainability and Technical Progress," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(1), pages 1-13, March.
    39. Asheim, Geir B, 1997. " Adjusting Green NNP to Measure Sustainability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(3), pages 355-370, September.
    40. Jeffrey A. Krautkraemer & JRaymond G. Batina, 1999. "On Sustainability and Intergenerational Transfers with a Renewable Resource," Land Economics, University of Wisconsin Press, vol. 75(2), pages 167-184.
    41. Hamilton, Kirk, 1994. "Green adjustments to GDP," Resources Policy, Elsevier, vol. 20(3), pages 155-168, September.
    42. Mourmouras, Alex, 1993. "Conservationist government policies and intergenerational equity in an overlapping generations model with renewable resources," Journal of Public Economics, Elsevier, vol. 51(2), pages 249-268, June.
    43. Jouvet, Pierre-Andre & Michel, Philippe & Vidal, Jean-Pierre, 2000. " Intergenerational Altruism and the Environment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 135-150, March.
    44. Pearce, David W. & Atkinson, Giles D., 1993. "Capital theory and the measurement of sustainable development: an indicator of "weak" sustainability," Ecological Economics, Elsevier, vol. 8(2), pages 103-108, October.
    45. Kjell A. Brekke, 1997. "Economic Growth and the Environment," Books, Edward Elgar Publishing, number 807.
    46. Richard Howarth & Richard Norgaard, 1993. "Intergenerational transfers and the social discount rate," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 3(4), pages 337-358, August.
    47. Solow, Robert, 1993. "An almost practical step toward sustainability," Resources Policy, Elsevier, vol. 19(3), pages 162-172, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cairns, Robert D., 2008. "Value and income," Ecological Economics, Elsevier, vol. 66(2-3), pages 417-424, June.
    2. Bazhanov, Andrei, 2008. "Sustainable growth: The extraction-saving relationship," MPRA Paper 9911, University Library of Munich, Germany.
    3. Vouvaki, Dimitra & Xepapadeas, Anastasios, 2008. "Changes in social welfare and sustainability: Theoretical issues and empirical evidence," Ecological Economics, Elsevier, vol. 67(3), pages 473-484, October.
    4. Bazhanov, Andrei, 2008. "Maximin-optimal sustainable growth in a resource-based imperfect economy," MPRA Paper 16245, University Library of Munich, Germany, revised 13 Jul 2009.
    5. John C. V. Pezzey, 2004. "Sustainability Policy and Environmental Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(2), pages 339-359, June.
    6. Alvarez-Cuadrado, Francisco & Van Long, Ngo, 2009. "A mixed Bentham-Rawls criterion for intergenerational equity: Theory and implications," Journal of Environmental Economics and Management, Elsevier, vol. 58(2), pages 154-168, September.
    7. Hoberg, Nikolai & Baumgärtner, Stefan, 2017. "Irreversibility and uncertainty cause an intergenerational equity-efficiency trade-off," Ecological Economics, Elsevier, vol. 131(C), pages 75-86.
    8. Andrei V. Bazhanov, 2008. "Maximin-optimal sustainable growth with nonrenewable resource and externalities," EERI Research Paper Series EERI_RP_2008_11, Economics and Econometrics Research Institute (EERI), Brussels.
    9. Manel Kamoun & Ines Abdelkafi & Abdelfetah Ghorbel, 2019. "The Impact of Renewable Energy on Sustainable Growth: Evidence from a Panel of OECD Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(1), pages 221-237, March.
    10. BRECHET, Thierry & LAMBRECHT, Stéphane, 2005. "Puzzling over sustainability: an equilibrium analysis," LIDAM Discussion Papers CORE 2005001, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    11. Xuedong Liang & Weiwei Zhang & Lei Chen & Fumin Deng, 2016. "Sustainable Urban Development Capacity Measure—A Case Study in Jiangsu Province, China," Sustainability, MDPI, vol. 8(3), pages 1-13, March.
    12. Van Passel, Steven & Nevens, Frank & Mathijs, Erik & Van Huylenbroeck, Guido, 2007. "Measuring farm sustainability and explaining differences in sustainable efficiency," Ecological Economics, Elsevier, vol. 62(1), pages 149-161, April.
    13. Robert D. Cairns, 2011. "Accounting for Sustainability: A Dissenting Opinion," Sustainability, MDPI, vol. 3(9), pages 1-16, August.
    14. Bazhanov, Andrei, 2008. "Inconsistency between a criterion and the initial conditions," MPRA Paper 6792, University Library of Munich, Germany.
    15. Alessio Emanuele BIONDO, 2010. "A Growth Rate for a Sustainable Economy," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 5(2(12)/Sum), pages 7-20.
    16. Bazhanov, Andrei, 2007. "Switching to a sustainable efficient extraction path," MPRA Paper 2976, University Library of Munich, Germany.
    17. Dimitra Vouvaki & Anastasios Xepapadeas, 2005. "Criteria for Assessing Sustainable Development: Theoretical Issues and Empirical Evidence for the Case of Greece," Working Papers 0511, University of Crete, Department of Economics.
    18. Smulders, J.A., 2005. "Endogenous technological change, natural resources and growth," Other publications TiSEM d6e27500-7604-420f-9961-4, Tilburg University, School of Economics and Management.
    19. Bazhanov, Andrei V., 2010. "Sustainable growth: Compatibility between a plausible growth criterion and the initial state," Resources Policy, Elsevier, vol. 35(2), pages 116-125, June.
    20. Matthew Clarke, 2006. "Measuring Human Well-being in Thailand: A Normative Social Choice Approach," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 11(2), pages 151-167.
    21. Hoberg, Nikolai & Strunz, Sebastian, 2018. "When Individual Preferences Defy Sustainability — Can Merit Good Arguments Close the Gap?," Ecological Economics, Elsevier, vol. 143(C), pages 286-293.
    22. Bazhanov, Andrei, 2008. "Sustainable growth in a resource-based economy: the extraction-saving relationship," MPRA Paper 12350, University Library of Munich, Germany.
    23. Bazhanov, Andrei, 2008. "Sustainable growth: Compatibility between criterion and the initial state," MPRA Paper 9914, University Library of Munich, Germany.
    24. Valente, Simone, 2011. "Intergenerational externalities, sustainability and welfare—The ambiguous effect of optimal policies on resource depletion," Resource and Energy Economics, Elsevier, vol. 33(4), pages 995-1014.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Toman, Michael & Pezzey, John C., 2002. "The Economics of Sustainability: A Review of Journal Articles," RFF Working Paper Series dp-02-03, Resources for the Future.
    2. John C. V. Pezzey, 2002. "A One-sided Sustainability Test With Multiple Consumption Goods," Working Papers in Ecological Economics 0201, Australian National University, Centre for Resource and Environmental Studies, Ecological Economics Program.
    3. John C. V. Pezzey, 2002. "One-sided Unsustainability Tests and NNP Measurement with Multiple Consumption Goods," Economics and Environment Network Working Papers 0208, Australian National University, Economics and Environment Network.
    4. Pezzey, J.C.V.John C. V., 2004. "One-sided sustainability tests with amenities, and changes in technology, trade and population," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 613-631, July.
    5. Hoberg, Nikolai & Baumgärtner, Stefan, 2017. "Irreversibility and uncertainty cause an intergenerational equity-efficiency trade-off," Ecological Economics, Elsevier, vol. 131(C), pages 75-86.
    6. Pezzey, John C.V., 2001. "Optimality, Hartwick’s Rule, and Instruments of Sustainability Policy and Environmental Policy," 2001 Conference (45th), January 23-25, 2001, Adelaide, Australia 125833, Australian Agricultural and Resource Economics Society.
    7. Asheim, Geir B., 2000. "Green national accounting: why and how?," Environment and Development Economics, Cambridge University Press, vol. 5(1), pages 25-48, February.
    8. Laurence Kotlikoff & Felix Kubler & Andrey Polbin & Jeffrey Sachs & Simon Scheidegger, 2021. "Making Carbon Taxation A Generational Win Win," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(1), pages 3-46, February.
    9. Laurence J. Kotlikoff & Andrey V. ZUBAREV & Andrey POLBIN, 2021. "Will the Paris accord accelerate climate change [Ускоряет Ли Парижское Соглашение Изменение Климата?]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 8-37, February.
    10. Nick Hanley & Louis Dupuy & Eoin McLaughlin, 2015. "Genuine Savings And Sustainability," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 779-806, September.
    11. Verchère, Alban, 2011. "Le développement durable en question : analyses économiques autour d’un improbable compromis entre acceptions optimiste et pessimiste du rapport de l’Homme à la Nature," L'Actualité Economique, Société Canadienne de Science Economique, vol. 87(3), pages 337-403, septembre.
    12. Adrian Boos, 2015. "Genuine Savings as an Indicator for “Weak” Sustainability: Critical Survey and Possible Ways forward in Practical Measuring," Sustainability, MDPI, vol. 7(4), pages 1-37, April.
    13. Alessio Emanuele BIONDO, 2010. "A Growth Rate for a Sustainable Economy," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 5(2(12)/Sum), pages 7-20.
    14. Valente, Simone, 2011. "Intergenerational externalities, sustainability and welfare—The ambiguous effect of optimal policies on resource depletion," Resource and Energy Economics, Elsevier, vol. 33(4), pages 995-1014.
    15. Omri, Emna & Chtourou, Nouri & Bazin, Damien, 2015. "Solar thermal energy for sustainable development in Tunisia: The case of the PROSOL project," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 1312-1323.
    16. Pezzey, John C.V., 2001. "Exact Measures of Income in Two Capital-Resource Economies," 2001 Conference (45th), January 23-25, 2001, Adelaide, Australia 125834, Australian Agricultural and Resource Economics Society.
    17. Damien Bazin & Emna Omri & Nouri Chtourou, 2015. "Solar Thermal Energy for Sustainable Development in Tunisia," Post-Print halshs-01070616, HAL.
    18. Heijdra, Ben J. & Kooiman, Jan Peter & Ligthart, Jenny E., 2006. "Environmental quality, the macroeconomy, and intergenerational distribution," Resource and Energy Economics, Elsevier, vol. 28(1), pages 74-104, January.
    19. Gerlagh, Reyer & Keyzer, Michiel A., 2003. "Efficiency of conservationist measures: an optimist viewpoint," Journal of Environmental Economics and Management, Elsevier, vol. 46(2), pages 310-333, September.

    More about this item

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:anu:eenwps:0104. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jack Pezzey (email available below). General contact details of provider: http://een.anu.edu.au/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.