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Spatial welfare economics versus ecological footprint: modeling agglomeration, externalities and trade

Fabio Grazi (), Jeroen van den Bergh and Piet Rietveld

Environmental & Resource Economics, 2007, vol. 38, issue 1, 135-153

Abstract: A welfare framework for the analysis of the spatial dimensions of sustainability is developed. It covers agglomeration effects, interregional trade, negative environmental externalities, and various land use categories. The model is used to compare rankings of spatial configurations according to evaluations based on social welfare and ecological footprint indicators. Five spatial configurations are considered for this purpose. The exercise is operationalized with the help of a two-region model of the economy, that is, in line with the ‘new economic geography.’ By generating a number of numerical ‘counter-examples,’ it is shown that the footprint method is inconsistent with an approach aimed at maximum social welfare. Unless environmental externalities are such a large problem that they overwhelm all other components of economic well-being, a ‘spatial welfare economic’ approach delivers totally different rankings of alternative land use configurations than the ecological footprint. Copyright Springer Science+Business Media, Inc. 2007

Keywords: Agglomeration effects; Negative externalities; Population density; Spatial configurations; Trade advantages; Transport; F12; F18; Q56; Q57; R12 (search for similar items in EconPapers)
Date: 2007
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Handle: RePEc:kap:enreec:v:38:y:2007:i:1:p:135-153