A Dynamic Model of the Environmental Kuznets Curve: Turning Point and Public Policy

We set up a simple dynamic macroeconomic model with (i) polluting consumption and a preference for a clean environment, (ii) increasing returns in abatement giving rise to an EKC and (iii) sustained growth resulting from a linear final-output technology. There are two sorts of market failures caused by external effects associated with consumption and environmental effort. The model is employed to investigate the determinants of the turning point and the cost effectiveness of different public policies aimed at a reduction of the environmental burden. Moreover, the model offers a potential explanation of an N-shaped pollution–income relation. It is shown that the model is compatible with most empirical regularities on economic growth and the environment. Copyright Springer Science+Business Media, Inc. 2007abatement, economic growth, environmental Kuznets curve, external effects, pollution, public policy, Q5, O4,

Who Cares about Biodiversity? Optimal Conservation and Transboundary Biodiversity Externalities

The Convention on Biological Diversity's (2010) target to reduce the rate of biodiversity loss was achieved by very few countries. Why? We use the theory of conservation implicit in the Hotelling model of non-renewable resource pricing to analyze the problem, distinguishing between the benefits to countries where conservation takes place, and to other countries. We estimate models for three taxonomic groups, and find that while individual countries value conservation within their borders, in poor countries this effect is dominated by the negative impact of income growth. International concessional financial contributions to conservation in poor countries are found to be statistically insignificant. We conclude that countries care about the biodiversity within their national borders, but only when development priorities permit, and only when it becomes scarce enough that its value grows more rapidly than the return on alternative assets. There is little evidence that high income countries yet care sufficiently about biodiversity in the places where it is most threatened to affect conservation outcomes there