Resolving Intergenerational Conflict over the Environment under the Pareto Criterion

Torben M. Andersen, Joydeep Bhattacharya and Pan Liu

No 6053, CESifo Working Paper Series from CESifo

Abstract: We describe a “business as usual” (BAU) economy in which pollution is a by-product of productive activity by the current generation but “damages” production for future generations. Over time, conditions in the BAU economy become dire: it gets increasingly polluted, consumption falls and generational welfare levels decline. A government introduces costly pollution abatement and finances it via distorting taxes and borrowing on perfect international markets. Pollution levels start to decline, generating downstream welfare gains, some of which the government taxes away, without hurting anyone, to help pay off the debt, that too, in finite time. Along the transition, every generation faces less pollution, consumes more and is happier than if life had continued in the BAU world.

Keywords: pollution; abatement; debt; environmental policy; Pareto criterion (search for similar items in EconPapers)
JEL-codes: H50 O44 Q56 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Resolving intergenerational conflict over the environment under the Pareto criterion (2020)
Working Paper: Resolving intergenerational conflict over the environment under the Pareto criterion (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6053

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