Sustainability Policy and Environmental Policy
John Pezzey ()
Economics and Environment Network Working Papers from Australian National University, Economics and Environment Network
A theoretical, representative agent economy with a depletable resource stock, polluting emissions and productive capital is used to contrast environmental policy, which internalises externalised environmental values, with sustainability policy, which achieves some form of intergenerational equity. The obvious environmental policy comprises an emissions tax and a resource stock subsidy, each equal to the respective external cost or benefit. Sustainability policy comprises an incentive affecting the choice between consumption and investment, and can be a consumption tax, capital subsidy or investment subsidy, or combination thereof. Environmental policy can reduce the strength of sustainability policy needed. More specialised results are derived in a closed economy with a non-renewable resource, and in a small open economy with no environmental effects on utility.
Keywords: sustainability; optimality; externalities; tax; policy (search for similar items in EconPapers)
JEL-codes: H30 O23 Q01 Q58 (search for similar items in EconPapers)
Pages: 42 pages
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Journal Article: Sustainability Policy and Environmental Policy (2004)
Working Paper: Sustainability Policy and Environmental Policy (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:anu:eenwps:0211
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