Abstract
Using an overlapping generation model à la Blanchard (1985, J Polit Econ 93:223–247) with human capital accumulation, we demonstrate that the influence of the environment on optimal growth in the long-run may be explained by the detrimental effect of pollution on life expectancy. We also show that, in such a case, greener preferences are growth- and welfare-improving in the long-run even if the ability of the agents to learn is independent of pollution and utility is additively separable. Finally, we establish that a minimum environmental policy is required to obtain a sustainable equilibrium in the market economy and that it is possible to implement a win–win environmental policy.
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Pautrel, X. Reconsidering the Impact of the Environment on Long-run Growth when Pollution Influences Health and Agents have a Finite-lifetime. Environ Resource Econ 40, 37–52 (2008). https://doi.org/10.1007/s10640-007-9139-y
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DOI: https://doi.org/10.1007/s10640-007-9139-y