Potential Irreversible Catastrophic Shifts of the Assimilative Capacity of the Environment

Jean-Pierre Amigues and Michel Moreaux

No 12-276, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: Pollution accumulation may result in more or less severe losses of natural self-cleaning capacities. We study a polluting resource management problem submitted to a potential shift from a high to a low pollution self-regeneration regime be crossed some critical pollution stock threshold. We first describe the optimal resource exploitation policy absent the threshold. When at the threshold, the society has two options: either stabilizing the pollution level to avoid the loss of natural self-cleaning capacity or deliberately cross the threshold and switch to the low regeneration regime. We show under fairly general assumptions that there exists a unique critical pollution stock level such that thresholds located below this level will induce a switch from the high to the low regeneration regime while thresholds located above it will imply maintaining the high regime forever. We characterize the optimal policies in these two scenarios and show that triggering the low regeneration regime requires an upward jump of the resource consumption rate at the optimal switching time.

JEL-codes: Q15 Q17 (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Potential Irreversible Catastrophic Shifts of the Assimilative Capacity of the Environment (2012)
Working Paper: Potential Irreversible Catastrophic Shifts of the Assimilative Capacity of the Environment (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:25514

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