WELFARE MEASUREMENT UNDER THREATS OF ENVIRONMENTAL CATASTROPHES

Yacov Tsur and Amos Zemel

No 14987, Discussion Papers from Hebrew University of Jerusalem, Department of Agricultural Economics and Management

Abstract: Welfare measures under threats of environmental catastrophes are studied using the "parable" apparatus of Weitzman and Lofgren [22]. The occurrence probability of the catastrophic event is driven (at least partly) by anthropogenic activities such as natural resource exploitation. Without external effects, the green NNP is a genuine welfare measure vis-à-vis a particular parable economy. Often, however, the occurrence hazard constitutes a public bad, treated as an externality by agents who ignore their own contribution to its accumulation. In such cases the green NNP, although accounting for the event hazard rate per se, fails to properly internalize future effects on the hazard rate of current economic activities and as a result overestimates welfare. The bias term associated with the green NNP is derived and expressed in a simply and interpretable form.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 18
Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://ageconsearch.umn.edu/record/14987/files/dp050004.pdf (application/pdf)

Related works:
Journal Article: Welfare measurement under threats of environmental catastrophes (2006)
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:ags:huaedp:14987

DOI: 10.22004/ag.econ.14987

Access Statistics for this paper

More papers in Discussion Papers from Hebrew University of Jerusalem, Department of Agricultural Economics and Management Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().