Essays in environmental and natural resource economics as a contribution to sustainable development.

Abstract

This research focuses on the use of dynamic optimisation modelling techniques to describe the interactions between the economy and the environment. The environment not only provides us with economical1y valuable resources but also provides us ,with many essential services that support human welfare. Overexploitation of these resources and the destruction of the natural environment not only affects human welfare but may severely limit future production possibilities. For natural resources to continue to be inputs to production and to ensure equal access to environmental services by future generations, all ecological systems must remain in operation. The issue is how we treat our natural resources so that we have a sustainable economy. In this thesis, models are formulated that combine the economic and environmental processes. Current environmental concerns are incorporated into the framework of economic optimisation problems. The issues addressed are: 1. The competition for land of preservation and development. What is the optimal balance between the two? 2. Pollution from production can have negative effects on the environme~t. This in turn can affect the economy through diminished resource supply. What is viii the optimal use of these environmental resources so that we can sustain our productive capabilities? 3. Carbon emissions need to be controlled. A tax on emissions would encourage switching away from carbon intensive fuels. How should this tax behave over time - should it rise or fall? 4. With increasing populations, resources are being used up dramatically. Can we get to a point where the economy can be sustained while maximising human welfare? 5. What happens to a private firm's output decisions when it has to conform to environmental regulations? The models are useful for studying sustainable development in that they provide us with the steady state relations of a sustainable economy and, in some cases, the short run dynamics