Covid-19 and a Green Recovery?

Aditya Goenka, Lin Liu and Manh Hung Nguyen
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Lin Liu: University of Liverpool

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Abstract: Preliminary evidence indicates that pollution increases the severity and likelihood of COVID-19 infections similar to many other infectious diseases. This paper models the inter-action of pollution and disease preventive actions, either pharmaceutical or non-pharmaceutical interventions, on transmission of infectious diseases in a neoclassical growth framework. There are two externalities – households do not take into account how their actions affect disease transmission, and productive activity results in pollution which increases the likelihood of in-fections. The disease dynamics are modeled to be of SIS type. We study the difference in health and economic outcomes between the decentralized economy, where households do not internalize externalities, and socially optimal outcomes, and characterize the taxes and subsi-dies that decentralize the latter. Thus, we examine the question whether there are sufficient incentives to reduce pollution, at both private and public levels, once its effects on disease transmission is considered. In competitive outcomes, pollution increases with increased pro-ductivity. The socially efficient outcome has higher pollution than a competitive outcome, despite increase in abatement, as the effect of higher productivity and larger labor supply dom-inates. The results question the hopes of a Green Recovery.

Keywords: Covid-19; Pollution: environmental policy; Infectious disease; Green Recovery; Dynamic Pigovian taxes (search for similar items in EconPapers)
Date: 2021-11
New Economics Papers: this item is included in nep-ene, nep-env, nep-hea and nep-res
Note: View the original document on HAL open archive server: https://hal.science/hal-03537969v1
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Citations: View citations in EconPapers (5)

Published in Economic Modelling, 2021, 104, ⟨10.1016/j.econmod.2021.105639⟩

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Related works:
Journal Article: COVID-19 and a Green Recovery? (2021)
Working Paper: Covid-19 and a Green Recovery? (2020)
Working Paper: Covid-19 and a Green Recovery? (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03537969

DOI: 10.1016/j.econmod.2021.105639

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