Demographic Transition Environmental Concern and the Kuznets Curve

Abstract

In an endogenous growth model with pollution and abatement we characterize the socially optimal solution. We find that the rate of growth depends negatively on the weight of environmental care in utility and positively on the population growth rate. We also find a trade-off between growth and environmental quality beyond which an environmental Kuznets curve is derived in the long term. This one emerges from the implications of the demographic transition for the rate of population growth, and the accompanying variation in the willingness to pay for environmental quality as the economy develops.Optimal Growth; Environment; Population Growth; Preferences