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Wealth Heterogeneity and Escape from the Poverty-Environment Trap

Author Info

Listed author(s):
  • Masako Ikefuji

    (Osaka University)

  • Ryo Horii

    (Osaka University)

Abstract

A mutual link between poverty and environmental degradation is examined in an overlapping generations model with environmental externality, human capital, and credit constraints. Environmental quality affects labor productivity and thus wealth dynamics, whereas wealth distribution determines the degree to which agents rely upon natural resources and therefore the evolution of environmental quality. This interaction creates a `poverty-environment trap,' where a deteriorated environment lowers income, which in turn accelerates environmental degradation. We show that greater wealth heterogeneity is the key to escaping the poverty-environment trap, although it has negative effects both on the environment and output when not in the trap.

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File URL: http://econwpa.repec.org/eps/dev/papers/0505/0505001.pdf
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Paper provided by EconWPA in its series Development and Comp Systems with number 0505001.

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Length: 28 pages
Date of creation: 02 May 2005
Handle: RePEc:wpa:wuwpdc:0505001
Note: Type of Document - pdf; pages: 28
Contact details of provider: Web page: http://econwpa.repec.org

Keywords: Poverty trap; Environmental degradation; Wealth distribution; Human capital.;

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Find related papers by JEL classification:
  • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
  • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
  • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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Cited by:

  1. Mariani, Fabio & Pérez-Barahona, Agustín & Raffin, Natacha, 2010. "Life expectancy and the environment," Journal of Economic Dynamics and Control, Elsevier, vol. 34(4), pages 798-815, April.
  2. Constant, Karine & Nourry, Carine & Seegmuller, Thomas, 2014. "Population growth in polluting industrialization," Resource and Energy Economics, Elsevier, vol. 36(1), pages 229-247.
  3. Ryo Horii & Masako Ikefuji, 2014. "Environment and Growth," DSSR Discussion Papers 21, Graduate School of Economics and Management, Tohoku University.
  4. Vella, Eugenia & Dioikitopoulos, Evangelos V. & Kalyvitis, Sarantis, 2015. "Green Spending Reforms, Growth, And Welfare With Endogenous Subjective Discounting," Macroeconomic Dynamics, Cambridge University Press, vol. 19(06), pages 1240-1260, September.
  5. Hamdani, Nisar Hussain & Shah, Syed Akhter Hussain, 2005. "Earthquake 2005: Some Implications for Environment and Human Capital," MPRA Paper 9519, University Library of Munich, Germany.
  6. Bhattacharya, Haimanti & Innes, Robert, 2006. "Is There a Nexus between Poverty and Environment in Rural India?," 2006 Annual meeting, July 23-26, Long Beach, CA 21201, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  7. Thomas Bassetti & Nikos Benos & Stelios Karagiannis, 2013. "CO 2 Emissions and Income Dynamics: What Does the Global Evidence Tell Us?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(1), pages 101-125, January.
  8. repec:hal:journl:halshs-00492178 is not listed on IDEAS
  9. Emeline Bezin, 2013. "The dynamics of environmental concern and the evolution of pollution," Working Papers SMART - LERECO 13-09, INRA UMR SMART-LERECO.

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