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Inequality and the Value of Public Natural Capital

Jasper N. Meya, Stefan Baumgärtner, Moritz Drupp () and Martin Quaas

No 8752, CESifo Working Paper Series from CESifo

Abstract: We study how income inequality affects the social value of a dynamic public good, such as natural capital. Our theory shows that both intra- and intertemporal inequality affect the social value of public natural capital. The direction and size of the effects are driven by the degree of substitutability between the public and private consumption goods. While the value of the public good increases (decreases) with intratemporal income inequality in the case of complements (substitutes), it increases (may decrease) with intertemporal income inequality for complements and Cobb-Douglas (substitutes). A problem of major relevance for the accounting of public natural capital as required by international treaties is to transfer values between study and policy contexts, or to up-scale values from study sites to the national scale. Our theory provides closed-form adjustment factors that allow controlling for differences in study and policy contexts.

Keywords: dynamic public good; inequality; accounting; natural capital; environmental good; non-market valuation; WTP; benefit transfer; biodiversity (search for similar items in EconPapers)
JEL-codes: D63 H43 Q51 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-env
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