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Environment and Growth

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  • Horii, Ryo
  • Ikefuji, Masako

Abstract

This paper examines the implications of the mutual causality between environmental quality and economic growth. While economic growth deteriorates the environment through increasing amounts of pollution, the deteriorated environment in turn limits the possibility of further economic growth. In a less developed country, this link, which we call "limits to growth," emerges as the "poverty-environment trap," which explains the persistent international inequality both in terms of income and environment. This link also threatens the sustainability of the world's economic growth, particularly when the emission of greenhouse gases raises the risk of natural disasters. Stronger environmental policies are required to overcome this link. While there is a trade-off between the environment and growth in the short run, we show that an appropriate policy can improve both in the long run.

Suggested Citation

  • Horii, Ryo & Ikefuji, Masako, 2014. "Environment and Growth," MPRA Paper 53624, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:53624
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    Cited by:

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    2. Maciej Malaczewski, 2018. "Natural Resources As An Energy Source In A Simple Economic Growth Model," Bulletin of Economic Research, Wiley Blackwell, vol. 70(4), pages 362-380, October.

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    More about this item

    Keywords

    Environmental Kuznets Curve; Limits to Growth; Poverty-Environment Trap; Sustainability; Natural Disasters;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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