Environmental and Resource Economics

, Volume 38, Issue 1, pp 135–153

Spatial welfare economics versus ecological footprint: modeling agglomeration, externalities and trade

  • Fabio Grazi
  • Jeroen C. J. M. van den Bergh
  • Piet Rietveld
Original Paper

Abstract

A welfare framework for the analysis of the spatial dimensions of sustainability is developed. It covers agglomeration effects, interregional trade, negative environmental externalities, and various land use categories. The model is used to compare rankings of spatial configurations according to evaluations based on social welfare and ecological footprint indicators. Five spatial configurations are considered for this purpose. The exercise is operationalized with the help of a two-region model of the economy, that is, in line with the ‘new economic geography.’ By generating a number of numerical ‘counter-examples,’ it is shown that the footprint method is inconsistent with an approach aimed at maximum social welfare. Unless environmental externalities are such a large problem that they overwhelm all other components of economic well-being, a ‘spatial welfare economic’ approach delivers totally different rankings of alternative land use configurations than the ecological footprint.

Keywords

Agglomeration effects Negative externalities Population density Spatial configurations Trade advantages Transport 

JEL Classification

F12 F18 Q56 Q57 R12 

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Copyright information

© Springer Science+Business Media, Inc. 2007

Authors and Affiliations

  • Fabio Grazi
    • 1
    • 2
  • Jeroen C. J. M. van den Bergh
    • 2
    • 3
  • Piet Rietveld
    • 2
  1. 1.School for Advanced Studies in Venice (SSAV)University Ca’ Foscari of VeniceVeniceItaly
  2. 2.Faculty of Economics and Business AdministrationFree UniversityAmsterdamThe Netherlands
  3. 3.Institute for Environmental Studies (IVM)Free UniversityAmsterdamThe Netherlands

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