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Environmental and Resource Economics

, Volume 70, Issue 4, pp 757–779 | Cite as

Green Attitude and Economic Growth

  • Ingrid Ott
  • Susanne Soretz
Article

Abstract

We analyze the interdependence between green attitude and equilibrium development of environmental quality in an endogenous growth model. Individuals take only part of their impact on pollution into account, hence there is a negative externality of capital accumulation on environmental quality. Increasing wealth or increasing pollution enhance green attitude and reduce the externality, because individuals care more about the environment if their income is higher or if pollution is more obvious. The time path of pollution as well as the evolution of equilibrium growth are shown to depend crucially on the determinants of green attitude. Ongoing growth may lead to complete internalization of the environmental externality if green attitude improves with increasing wealth, e.g. as a consequence of an increase in environmental education. In contrast, if green attitude is determined exclusively by the level of environmental quality, pollution remains at a suboptimally high level. The interdependence of wealth and pollution in the determination of environmental awareness implies more complex dynamics. Capital growth enhances green attitude and thereby decreases pollution. Improved environmental quality in turn may increase capital growth due to less green attitude and therefore slow down convergence to the sustainable balanced growth path.

Keywords

Pollution Endogenous growth Green attitude 

JEL Classification

O1 O4 Q2 Q5 

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Copyright information

© Springer Science+Business Media Dordrecht 2016

Authors and Affiliations

  1. 1.Karlsruhe Institute of TechnologyKarlsruheGermany
  2. 2.Kiel Institute for the World EconomyKielGermany
  3. 3.University of GreifswaldGreifswaldGermany

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