Pollution Control Under Uncertainty and Sustainability Concern

Davide La Torre, Danilo Liuzzi () and Simone Marsiglio

Environmental & Resource Economics, 2017, vol. 67, issue 4, No 11, 885-903

Abstract: Abstract We analyze the implications of environmental policy on pollution in a stochastic framework with finite horizon and sustainability concern. The social planner seeks to minimize the social (environmental and economic) costs associated with pollution. We allow for the planner to attach different relative weights to the discounted and end-of-planning-horizon costs in order to assess how sustainability concern might affect the optimal level of policy intervention. We show that the optimal environmental policy increases with the degree of sustainability concern, reducing thus the amount of pollution the society is forced to bear. A calibration based on world $$\textit{CO}_2$$ CO 2 data supports our conclusions, further highlighting the importance of higher degrees of sustainability concern to achieve greener long run outcomes. It also allows us to show that under a realistic model’s parametrization the optimal environmental policy tends to rise with higher degrees of uncertainty in a precautionary manner.

Keywords: Pollution control; Economic policy; Uncertainty; Sustainability (search for similar items in EconPapers)
JEL-codes: H23 Q28 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://link.springer.com/10.1007/s10640-016-0010-x 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:kap:enreec:v:67:y:2017:i:4:d:10.1007_s10640-016-0010-x

Ordering information: This journal article can be ordered from
http://www.springer. ... al/journal/10640/PS2

DOI: 10.1007/s10640-016-0010-x

Access Statistics for this article

Environmental & Resource Economics is currently edited by Ian J. Bateman

More articles in Environmental & Resource Economics from Springer, European Association of Environmental and Resource Economists Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().