Environment and Growth

41 Pages Posted: 24 Apr 2014

See all articles by Ryo Horii

Ryo Horii

Osaka University - Institute of Social and Economic Research

Masako Ikefuji

University of Tsukuba

Date Written: April 23, 2014

Abstract

This paper examines the implications of the mutual causality between environmental quality and economic growth. While economic growth deteriorates the environment through increasing amounts of pollution, the deteriorated environment in turn limits the possibility of further economic growth. In a less developed country, this link, which we call “limits to growth,” emerges as the “poverty-environment trap,” which explains the persistent international inequality both in terms of income and environment. This link also threatens the sustainability of the world’s economic growth, particularly when the emission of greenhouse gases raises the risk of natural disasters. Stronger environmental policies are required to overcome this link. While there is a trade-off between the environment and growth in the short run, we show that an appropriate policy can improve both in the long run.

Keywords: Environmental Kuznets Curve, Limits to Growth, Poverty-Environment Trap, Sustainability, Natural Disasters

JEL Classification: Q5

Suggested Citation

Horii, Ryo and Ikefuji, Masako, Environment and Growth (April 23, 2014). FEEM Working Paper No. 37.2014. Available at SSRN: https://ssrn.com/abstract=2428193 or http://dx.doi.org/10.2139/ssrn.2428193

Ryo Horii (Contact Author)

Osaka University - Institute of Social and Economic Research ( email )

1-1 Yamadaoka
Suita, Osaka 565-0871
Japan
+81 6 6879 8552 (Phone)
+81 6 6879 8583 (Fax)

HOME PAGE: http://econ.jpn.org/horii/

Masako Ikefuji

University of Tsukuba ( email )

Tsukuba University , Ibaraki Ken
Tsukuba, Ibaraki 305-8573, Ibaraki 3050006
Japan

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