Frameworks for Formulating Environmental and Climate Change Policies: Perspectives from Environmental-Macroeconomics

30 Pages Posted: 4 Oct 2013

See all articles by Seck Tan

Seck Tan

National University of Singapore (NUS) - Lee Kuan Yew School of Public Policy

Dodo Jesuthason Thampapillai

Crawford School of Public Policy

Date Written: August 24, 2013

Abstract

The aim of this paper is to demonstrate the significant differences that would emerge in policy formulation, when environmental capital (KN) is explicitly accounted for in macroeconomic analyses. These differences are illustrated with reference to two selected Organisation for Economic Co-operation and Development (OECD) economies namely, Australia and Canada. The main analytic framework considered is a factor utilization function – which traditionally deals with Labour (L) and manufactured Capital (KM). The development of a three-factor function in terms of L, KM and KN enables the display of mistaken notions of economic performance. That is in the absence of KN, policy makers overstate the performance of L and KM. The recognition of mistaken levels of performance with reference to KM and L in standard macroeconomic analyses enables the identification of policy avenues to protect and enhance KN. As illustrated in the paper, the implication of developing and applying environmental-macroeconomic frameworks for formulating environmental and climate change policies is significant.

Keywords: Macroeconomics, Environmental Valuation, Sustainability, and Policy Analysis

JEL Classification: E00, Q51, Q54, Q56, Z18

Suggested Citation

Tan, Seck and Thampapillai, Dodo Jesuthason, Frameworks for Formulating Environmental and Climate Change Policies: Perspectives from Environmental-Macroeconomics (August 24, 2013). Lee Kuan Yew School of Public Policy Research Paper No. 13-08. Available at SSRN: https://ssrn.com/abstract=2335864 or http://dx.doi.org/10.2139/ssrn.2335864

Seck Tan (Contact Author)

National University of Singapore (NUS) - Lee Kuan Yew School of Public Policy ( email )

469C Bukit Timah Road
Oei Tiong Ham Building
Singapore, Singapore 259772
Singapore

HOME PAGE: http://lkyspp.nus.edu.sg/faculty/seck-tan/

Dodo Jesuthason Thampapillai

Crawford School of Public Policy ( email )

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

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