Health-enhancing Activities and the Environment: How Competition for Resources Makes the Environmental Policy Beneficial

Xavier Pautrel ()

No 2009.111, Working Papers from Fondazione Eni Enrico Mattei

Abstract: In a two-period overlapping generations model, this paper demonstrates that the relationship between the environmental taxation and the economic activity (level- and growth-output) becomes inverted-U shaped, when the detrimental impact of pollution on health and the private decision of each working-age agent to improve her health are taken into account. Especially, a tighter environmental tax is more likely to promote (rather than to harm) output-level and –growth when health is very sensitive to pollution, the weight of health in preferences is high, the polluting capacity of the production technology is high and the rate of natural purification of pollutants is low. The inverted-U shaped relationship between the environmental tax and the economic activity is due to a positive effect arising from the competition for resources between the final output sector and the health-enhancing activities that offsets the conventional detrimental “drag-down effect” for low values of the environmental tax. We also demonstrate that the link between the environmental tax and the lifetime welfare is inverted-U shaped as well. Finally, we investigate the social optimum and the determinants of the optimal environmental tax.

Keywords: Growth; Environment; Health; Overlapping Generations (search for similar items in EconPapers)
JEL-codes: Q5 (search for similar items in EconPapers)
Date: 2009-12
New Economics Papers: this item is included in nep-dge, nep-ene, nep-env and nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://feem-media.s3.eu-central-1.amazonaws.com/w ... oads/ndl2009-111.pdf (application/pdf)

Related works:
Working Paper: Health-enhancing activities and the environment:How competition for resources make the environmental policy beneficial (2009)
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:fem:femwpa:2009.111

Access Statistics for this paper

More papers in Working Papers from Fondazione Eni Enrico Mattei Contact information at EDIRC.
Bibliographic data for series maintained by Alberto Prina Cerai ( this e-mail address is bad, please contact ).