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Sustainability Policy and Environmental Policy
Author(s) -
Pezzey John C. V.
Publication year - 2004
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/j.1467-9442.2004.00355.x
Subject(s) - economics , sustainability , subsidy , stock (firearms) , environmental policy , natural resource economics , incentive , tax policy , equity (law) , investment (military) , environmental sustainability index , consumption (sociology) , public economics , tax reform , microeconomics , market economy , mechanical engineering , ecology , social science , sociology , politics , political science , law , engineering , biology
A theoretical, representative‐agent economy with a depletable resource stock, polluting emissions and productive capital is used to contrast environmental policy, which internalises externalised environmental values, with sustainability policy, which achieves some form of intergenerational equity. The obvious environmental policy comprises an emissions tax and a resource stock subsidy, each equal to the respective external cost or benefit. Sustainability policy comprises an incentive affecting the choice between consumption and investment, and can be a consumption tax, capital subsidy or investment subsidy, or a combination thereof. Environmental policy can reduce the strength of the sustainability policy needed. More specialised results are derived in a small open economy with no environmental effects on utility.