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Growth, green capital and public policies

Pierre-André Jouvet and Julien Wolfersberger

Working Papers from Chaire Economie du climat

Abstract: We study sustainable growth in an economy with natural land endowments, specifically forests, and the need for public policies to quantify the financial value of green capital, measured by forests. Exhaustible primary forests are first depleted for agriculture and production, until a switch occurs to the renewable secondary forests. The introduction of REDD+ in the economy reduces agricultural expansion, since the social planner invests in green capital, at the expense of the physical one. We show that the optimal REDD+ national strategy highly depends on the development stage of the recipient economy. In the end, we prove our findings by calibrating our model to Indonesia and illustrate recommendations for public policies.

Keywords: Deforestation; Development; Forest Transition; Green Capital; Growth (search for similar items in EconPapers)
Pages: 30 pages
Date: 2015
New Economics Papers: this item is included in nep-agr, nep-env and nep-sea
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