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Potential Irreversible Catastrophic Shifts of the Assimilative Capacity of the Environment

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  • Amigues, Jean-Pierre
  • Moreaux, Michel

Abstract

Pollution accumulation may result in more or less severe losses of natural self-cleaning capacities. We study a polluting resource management problem submitted to a potential shift from a high to a low pollution self-regeneration regime be crossed some critical pollution stock threshold. We first describe the optimal resource exploitation policy absent the threshold. When at the threshold, the society has two options: either stabilizing the pollution level to avoid the loss of natural self-cleaning capacity or deliberately cross the threshold and switch to the low regeneration regime. We show under fairly general assumptions that there exists a unique critical pollution stock level such that thresholds located below this level will induce a switch from the high to the low regeneration regime while thresholds located above it will imply maintaining the high regime forever. We characterize the optimal policies in these two scenarios and show that triggering the low regeneration regime requires an upward jump of the resource consumption rate at the optimal switching time.
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Suggested Citation

  • Amigues, Jean-Pierre & Moreaux, Michel, 2012. "Potential Irreversible Catastrophic Shifts of the Assimilative Capacity of the Environment," LERNA Working Papers 12.01.358, LERNA, University of Toulouse.
  • Handle: RePEc:ler:wpaper:25520
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    File URL: http://www2.toulouse.inra.fr/lerna/travaux/cahiers2012/12.01.358.pdf
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    References listed on IDEAS

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    1. Polasky, Stephen & de Zeeuw, Aart & Wagener, Florian, 2011. "Optimal management with potential regime shifts," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 229-240, September.
    2. Farzin, Y H & Tahvonen, O, 1996. "Global Carbon Cycle and the Optimal Time Path of a Carbon Tax," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 515-536, October.
    3. Tahvonen, Olli & Salo, Seppo, 1996. "Nonconvexities in Optimal Pollution Accumulation," Journal of Environmental Economics and Management, Elsevier, vol. 31(2), pages 160-177, September.
    4. Forster, Bruce A., 1975. "Optimal pollution control with a nonconstant exponential rate of decay," Journal of Environmental Economics and Management, Elsevier, vol. 2(1), pages 1-6, September.
    5. W.A. Brock & D. Starrett, 2003. "Managing Systems with Non-convex Positive Feedback," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(4), pages 575-602, December.
    6. Forster, B A, 1973. "Optimal Consumption Planning in a Polluted Environment," The Economic Record, The Economic Society of Australia, vol. 49(128), pages 534-545, December.
    7. Tahvonen, Olli & Withagen, Cees, 1996. "Optimality of irreversible pollution accumulation," Journal of Economic Dynamics and Control, Elsevier, vol. 20(9-10), pages 1775-1795.
    8. Prieur, Fabien & Tidball, Mabel & Withagen, Cees, 2013. "Optimal emission-extraction policy in a world of scarcity and irreversibility," Resource and Energy Economics, Elsevier, vol. 35(4), pages 637-658.
    9. C. G. Plourde, 1972. "A Model of Waste Accumulation and Disposal," Canadian Journal of Economics, Canadian Economics Association, vol. 5(1), pages 119-125, February.
    10. Olli Tahvonen, 1997. "Fossil Fuels, Stock Externalities, and Backstop Technology," Canadian Journal of Economics, Canadian Economics Association, vol. 30(4), pages 855-874, November.
    11. Cropper, M. L., 1976. "Regulating activities with catastrophic environmental effects," Journal of Environmental Economics and Management, Elsevier, vol. 3(1), pages 1-15, June.
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    Cited by:

    1. Prieur, Fabien & Tidball, Mabel & Withagen, Cees, 2013. "Optimal emission-extraction policy in a world of scarcity and irreversibility," Resource and Energy Economics, Elsevier, vol. 35(4), pages 637-658.
    2. van der Ploeg, Frederick, 2014. "Abrupt positive feedback and the social cost of carbon," European Economic Review, Elsevier, vol. 67(C), pages 28-41.
    3. repec:kap:enreec:v:68:y:2017:i:4:d:10.1007_s10640-016-0050-2 is not listed on IDEAS
    4. van der Ploeg, Frederick, 2014. "Abrupt positive feedback and the social cost of carbon," European Economic Review, Elsevier, vol. 67(C), pages 28-41.

    More about this item

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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