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Voluntary Contributions with Uncertainty: the Environmental Quality

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  • Jouvet, P.-A.

Abstract

This paper presents an overlapping generations model of environmental externalities with a depollution technology. each agent concerned by the environmental degradation can volutary contribute in order to reduce it. Contributing to the environmental quality means financing depollution activities and uncertainty concerns its efficiency since it's not always clear or certain what effects will result from a reduction of pollution. We show that if an agent is sufficiently risk averse, voluntary contribution is a decreasing function of average efficiency of depollution technology. If on the contrary, the sustitution effect is weaker than the pollution effect, the opposite holds. We show that precaution about environmental quality has two possible consequencies with depend on agent risk aversion. Therefore, understanding the implication of precautionnary attitude, leads us to the consideration of the agent's risk aversion characterization and studying the effect of an increase in risk aversion implies a knowledge on prudent attitude. so, we have to conclude that precaution and risk aversion are two complementary and indissociable concepts.

Suggested Citation

  • Jouvet, P.-A., 1995. "Voluntary Contributions with Uncertainty: the Environmental Quality," G.R.E.Q.A.M. 97a30, Universite Aix-Marseille III.
    • Handle: RePEc:fth:aixmeq:97a30
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    Cited by:

    1. Vladimir Udalov, 2014. "Political-Economic Aspects of Renewable Energy: Voting on the Level of Renewable Energy Support," EIIW Discussion paper disbei202, Universitätsbibliothek Wuppertal, University Library.
    2. Carlotta Balestra & Davide Dottori, 2012. "Aging society, health and the environment," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(3), pages 1045-1076, July.
    3. Johanna Etner & Meglena Jeleva & Pierre‐Andre Jouvet, 2009. "Pessimism Or Optimism: A Justification To Voluntary Contributions Toward Environmental Quality," Australian Economic Papers, Wiley Blackwell, vol. 48(4), pages 308-319, December.

    More about this item

    Keywords

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    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q29 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Other

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