Sustainable Emission Control Policies: Viability Theory Approach

Seoul Journal of Economics 2017, Vol. 30, No. 3

28 Pages Posted: 31 Aug 2017

See all articles by Kunhong Kim

Kunhong Kim

Victoria University of Wellington - Te Herenga Waka; affiliation not provided to SSRN

Jacek B. Krawczyk

Victoria University of Wellington

Date Written: August 30, 2017

Abstract

Our interest is in the relationship between the environment and economic growth. Because various interest groups see this issue differently, the typical optimization approach based on representative agent is not suitable. This is mainly because assessing the relative weight between consumption and environment in the utility function in a democracy is a sensitive political process. On the other hand, constraints on capital, consumption, and pollution levels should be agreed considerably easier than the aforementioned weight because the constraints refer to quantifiable measures. We propose that a regulator can look for a feasible strategy for emission control that will maintain capital, consumption, and pollution in a closed set of constraints. Such a strategy is called viable in viability theory. Viability theory is the study of dynamic systems that asks what set of initial conditions will generate evolutions that obey the laws of motion of a system and remain in a certain state constraints set for the duration of the evolution. We apply viability theory to a neoclassical model to identify which current economic states are sustainable under smooth adjustments of abatement-rate in the future. Among many observations, we note that countries that embark on an ambitious abatement program may fail to maintain their economies within the state constraints if their present levels of capital and consumption are low.

Keywords: Sustainability, Viability Theory, Emission Control, Environment, Growth

JEL Classification: O44, Q53, Q52, C61

Suggested Citation

Kim, Kunhong and Krawczyk, Jacek B., Sustainable Emission Control Policies: Viability Theory Approach (August 30, 2017). Seoul Journal of Economics 2017, Vol. 30, No. 3 , Available at SSRN: https://ssrn.com/abstract=3029070

Kunhong Kim (Contact Author)

Victoria University of Wellington - Te Herenga Waka ( email )

P.O. Box 600
Wellington, 6140
New Zealand

affiliation not provided to SSRN ( email )

No Address Available

Jacek B. Krawczyk

Victoria University of Wellington ( email )

P.O. Box 600
Wellington 6001
New Zealand
+64-4-4721000 x 8553 (Phone)
+64-4-4955014 (Fax)

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