Impact of fossil fuel transition and population expansion on economic growth

Faraz Farhidi ()
Additional contact information
Faraz Farhidi: Georgia State University

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2023, vol. 25, issue 3, No 23, 2609 pages

Abstract: Abstract The existing works in endogenous growth have focused on technology and rarely on population impacts. In contrast, the research on environmental degradation caused by fossil fuel utilization has relied mostly on exogenous technology and population growth. Building upon the previous literature, I propose a dynamic growth model that allows the interaction between an economy and energy consumption of renewable and nonrenewable and the transitional path from one to another. I also allow endogenous population growth, where the population is affected by living standards and industrialization and indirectly natural resources through production, considering the trade-off between nonrenewable energy reserves and renewable resources. By creating a feedback loop from the population to the level of industrialization and GDP in this setup, GDP per capita’s growth rate is lower under endogenous population scenario relative to exogenous population growth. This particular outcome conveys that many projections for future energy use might overestimate our energy use, hence the economic and environmental costs. Firms utilize nonrenewable energy more intensively in a decentralized model since they do not fully internalize the negative externalities that arise from using nonrenewable energy, unlike the social planner approach. Imposing carbon-tax elements on the energy producers’ profit would accelerate clean energy adaptation and sustain the fossil fuel resources for a more extended period while increasing the total welfare by 3%. It would also increase the individuals’ long-term total consumption.

Keywords: Endogenous growth; Environmental degradation; Fossil-fuel energy; Population growth; Renewable energy (search for similar items in EconPapers)
JEL-codes: C61 O44 Q43 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10668-022-02122-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:endesu:v:25:y:2023:i:3:d:10.1007_s10668-022-02122-y

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/10668

DOI: 10.1007/s10668-022-02122-y

Access Statistics for this article

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development is currently edited by Luc Hens

More articles in Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().