ISBN: 3-540-65672-3
TITLE: Environmental Kuznets Curves
AUTHOR: Vogel, Michael P.
TOC:

Acknowledgements VII
1 Introduction 1
1.1 Why Does the Environment Matter? 2
1.2 Patterns of Environmental Change 5
1.2.1 Data and Techniques 5
1.2.2 Continued Environmental Deterioration 7
1.2.3 Continued Environmental Improvements 10
1.2.4 Environmental Kuznets Curves 11
1.3 Objectives and Methodology 14
1.4 Overview of this Study 16
2 Economic Determinants of Environmental Quality Changes 21
2.1 Emission Accounting 22
2.2 Unintentional Emission Reductions 26
2.2.1 Structural Change 26
2.2.2 Price Shocks 27
2.3 Intentional Emission Reductions 30
2.3.1 Opportunity Cost 30
2.3.2 Materialism Versus Post-Materialism 31
2.4 Valuing Environmental Quality Improvements 33
2.4.1 Assumptions of the Model 33
2.4.2 Shadow Prices as Opportunity Costs 35
2.4.3 Shadow Prices as Net Present Benefits 36
2.4.4 "Green" Net National Product 38
2.4.5 Environmental Quality as a Flow 41
2.5 The Emergence of Demand for Pollution Reductions 43
2.5.1 Corner Solutions of Abatement 43
2.5.2 Abatement Spending in the Course of Growth 45
2.5.3 Emissions and Pollution in the Course of Growth 47
2.5.4 Explaining the N-Curve of Fecal Coliform 50
2.6 Concluding Remarks 51
Appendix 52
A: The Pollution Stock 52
B: The Implicit Abatement Function (Stock Model) 52
C: The Implicit Abatement Function (Flow Model) 53
D: The Implicit Emission Function 54
3 Environmental Preferences, Socially Optimal Growth, and Pollution 55
3.1 The General Model and its Dynamics 56
3.1.1 Assumptions of the General Model 56
3.1.2 The Social Optimum 58
3.1.3 Environmental Quality and Growth in the Development Phase 59
3.1.4 The Environment Phase 62
3.2 Extension to n Dimensions of Environmental Quality 65
3.3 Functional Forms for Utility and Environmental Quality 68
3.3.1 Assumptions and Optimum Conditions 68
3.3.2 The Development Phase 70
3.3.3 The Environment Phase 71
3.3.4 The Post-Environment Phase 74
3.4 Is Environmental Quality a Luxury? 76
3.4.1 Essential and Necessary Goods 76
3.4.2 Engel Curves 77
3.4.3 Preferences, Prices and Technology 78
3.4.4 Why Environmental Quality Is Not An Ordinary Good 80
3.5 Concluding Remarks 81
Appendix 83
A: Concavity of the Generalised Hamiltonian 83
B: Global Saddle-Point Stability in the Development Phase 84
C: Boundedness of Intertemporal Utility 85
D: Capital Growth in the Environment Phase 85
E: Abatement in the Environment Phase 88
4 Income Distribution, Desired Environmental Policy, and Green Middle-Class Elitism 89
4.1 Environmental Policy and Environmental Quality 90
4.1.1 Public Goods and their Provision by the Government 90
4.1.2 Abatement and the Pollution Tax 91
4.2 Distributional Inequality and Pollution 93
4.2.1 Assumptions about the Consumer Side 93
4.2.2 The Households' Environmental Policy Choice 95
4.2.3 Does Distributional Inequality Matter for Desired Policy? 96
4.3 The Middle Class and Environmental Protection Issues 98
4.3.1 The Middle Class as Environmental Elite 99
4.3.2 Distribution and Public Support of Environmental Policy 100
4.4 Sensitivity of Income to Environmental Policy Changes 101
4.4.1 Assumptions about Income Level and Composition 101
4.4.2 The Households' Environmental Policy Choice 102
4.4.3 The Income Level Effect 103
4.4.4 The Income Composition Effect 104
4.4.5 The Middle Class as Environmental Elite (1) 105
4.4.6 A More General Interpretation of Assumptions and Results 105
4.5 A Private Supplement to Public Environmental Quality 106
4.5.1 Private Defensive Expenditure 108
4.5.2 Policy Choice when Defensive Expenditure is Fixed 110
4.5.3 The Middle Class as Environmental Elite (2) 112
4.6 Concluding Remarks 112
Appendix 113
A: Sufficiency of First-Order Condition 113
B: The Income Level Effect 114
C: The Income Composition Effect 115
D: Defensive Expenditure and Its Opportunity Cost 116
E: Desired Tax Rate and Fixed Defensive Expenditure 116
5 Environmental Concern, Green Campaigning, and Corporate Lobbying 119
5.1 Environmental Concern and Public Environmental Policy 119
5.1.1 Environmental Concern as a Filter of Reality 119
5.1.2 The Concept of Perceived Pollution 120
5.1.3 The Household as Consumer and Voter 122
5.1.4 Government Objective Functions and Endogenous Policy Theory 123
5.1.5 The Government's Environmental Policy 126
5.1.6 A Simple Functional Forms Example 127
5.2 Green Campaigning 129
5.2.1 Green Core and Grey Households 130
5.2.2 Government Policy 130
5.2.3 Optimal Campaigning 131
5.2.4 External Effects of Campaigning 134
5.2.5 A Tax on Campaigning? 136
5.3 Corporate Lobbying 137
5.3.1 Government Policy 138
5.3.2 Optimal Lobbying 140
5.3.3 Lobbying: External Effects and Taxation 141
5.4 Green Campaigning Revisited 142
5.5 Concluding Remarks 143
Appendix 144
A: The Opportunity Loss of Campaigning 144
B: Optimal Campaigning 145
C: Lobbying and the Opportunity Loss of Campaigning 146
D: The Effect of Lobbying on Optimal Campaigning 147
6 Endogenous Environmental Policy and its Effects on a Growing Economy 149
6.1 A Multi-Sector Growth Model with Pollution 150
6.1.1 Assumptions about the Consumer Side 151
6.1.2 Welfare Maximisation 152
6.1.3 Assumptions about Production, Pollution, and the Use of Output 154
6.1.4 Profit Maximisation and Optimal Capital Allocation 158
6.1.5 Two Lemmas 161
6.2 Government Objective and Policy 162
6.3 The Development Phase 164
6.3.1 Optimal Growth and Stability 165
6.3.2 Goods Prices, Demand and Sectoral Structure 165
6.3.3 Factor Intensity 166
6.3.4 Pollution Intensity 167
6.4 The Environment Phase 168
6.5 Concluding Remarks 170
Appendix 171
A: Consumption and Total Wealth 171
B: Proof of Lemma I 172
C: Proof of Lemma 2 173
D: The Pollution Tax Equation in the Development Phase 174
E: Stability in the Development Phase 175
F: Factor Intensity and Factor Price Ratio 177
7 Environmental Kuznets Curves: Limitations and Opportunities 179
7.1 A Simple Concept and its Complex Realisation 179
7.2 Environmental Kuznets Curves: Not a Cure-All 181
7.3 From Cowboy Economy to Spaceman Economy 183
Symbols and Abbreviations 185
Figures 189
References 191
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