Environmental policy and the properties of Environmental damages
This thesis focus on three properties of environmental damages: variation across individuals, across sectors and geographical variation. The thesis consists of five articles, two are on long term growth and the environment, two are on international environmental problems and one is on growth and international environmental problems. In Article I it is shown that under the assumption that pollution is a public bad, productivity of pollution has no effect on steady state growth rate. However, if the reach of pollution is limited then pollution is not purely public in character and the productivity of pollution has a positive impact on growth. In Article V population growth's positive and negative effects on pollution are examined. In Article II the strategic aspect of self-protective activities to moderate environmental damages is analyzed. Self-protection is defined as decreasing own environmental damages without changing the level of pollution. Agents can through self-protection make strategic gains by decreasing their cost of abatement and still enjoy high level environmental quality as other agents are induced to increase their abetment. These gains are greatest when agents cooperate on abatement because cooperation leaves more room for strategic behavior to self-protection. In Article III environmental policy of open countries trading polluting goods and polluted eco-services is investigated. Large economies choose strict or lax environmental policies depending on the relative value of eco-services and how this value changes due to changes in environmental policy. For small regional environmental problems where prices are exogenous, it is shown that a country's response to changes of the world price depend on the relative productivity of emissions within the region and the response of other countries. In Article IV we look at a problem when countries concerned with the environment unilaterally abate in foreign countries because of low technological productivity levels in the latter countries and asymmetries in environmental damages. Sweden, financing sewage treatment plants in the baltic region to moderate eutrophication of the Baltic Sea, may be such an example.
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