Intergenerational externalities, sustainability and welfare—The ambiguous effect of optimal policies on resource depletion

Valente, Simone (2011) Intergenerational externalities, sustainability and welfare—The ambiguous effect of optimal policies on resource depletion. Resource and Energy Economics, 33 (4). pp. 995-1014. ISSN 0928-7655

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Abstract

This paper studies an endogenous growth model with exhaustible resources, overlapping generations and human capital externalities. In the competitive equilibrium, selfish behavior and inefficient skills accumulation may prevent sustained growth. Implementing the utilitarian optimum likely induces sustainability via increased knowledge formation, but resource depletion may be faster or slower than under laissez-faire depending on the social discount rate. Heavy (modest) social discounting delays (anticipates) the achievement of net welfare gains for newborn agents and successors. The reason is that human capital accumulation magnifies the positive growth effects of policies that lower the rate of resource destruction, preserving the welfare of newborn agents. Resource-depleting policies, instead, hamper growth and reduce lifetime welfare of early-in-time generations—the first loser being the currently young.

Item Type:	Article
Uncontrolled Keywords:	endogenous growth,exhaustible resources,human capital,overlapping generations,intergenerational distribution,sustainability
Faculty \ School:	Faculty of Social Sciences > School of Economics
UEA Research Groups:	Faculty of Social Sciences > Research Groups > Environment, Resources and Conflict Faculty of Social Sciences > Research Groups > Economic Theory
Depositing User:	Pure Connector
Date Deposited:	24 Sep 2016 00:57
Last Modified:	07 Mar 2024 02:04
URI:	https://ueaeprints.uea.ac.uk/id/eprint/60326
DOI:	10.1016/j.reseneeco.2010.09.001

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