Inequality and the Environment: The Economics of a Two-Headed Hydra

46 Pages Posted: 8 Dec 2021

See all articles by Moritz A. Drupp

Moritz A. Drupp

University of Hamburg - Faculty of Business, Economics, and Social Sciences

Ulrike Kornek

University of Kiel; Potsdam Institute for Climate Impact Research (PIK)

Jasper Meya

German Centre for Integrative Biodiversity Research (iDiv) Halle-Jena-Leipzig; Department of Economics, University of Leipzig

Lutz Sager

Georgetown University

Date Written: 2021

Abstract

Preserving environmental quality and addressing economic inequality both feature prominently in public discourse. Neither of these two issues can be fully understood in isolation, and policies aiming at one issue will increasingly have to consider interactions with the other. We synthesize theoretical mechanisms that underpin inequality-environment interlinkages, and take stock of the empirical evidence. Our review is structured into four main blocks, describing, first, how the distribution of environmental amenities and dis-amenities is associated with income and wealth, second, how economic inequality affects environmental outcomes, third, how the cost of environmental policy is often borne unequally, and, fourth, how both the distribution of environmental quality and economic inequality shape welfare considerations underlying public policy appraisal. We argue that it is crucial to consider inequality-environment interlinkages even if one’s primarily concern is one or other of these issues, and close by highlighting a number of areas for future research.

Keywords: environment, inequality

JEL Classification: D310, D330, E250, Q520, Q560

Suggested Citation

Drupp, Moritz A. and Kornek, Ulrike and Meya, Jasper and Sager, Lutz, Inequality and the Environment: The Economics of a Two-Headed Hydra (2021). CESifo Working Paper No. 9447, Available at SSRN: https://ssrn.com/abstract=3979352 or http://dx.doi.org/10.2139/ssrn.3979352

Moritz A. Drupp (Contact Author)

University of Hamburg - Faculty of Business, Economics, and Social Sciences ( email )

Von-Melle-Park 9
Hamburg, 20146
Germany

Ulrike Kornek

University of Kiel ( email )

Olshausenstr. 40
D-24118 Kiel, Schleswig-Holstein 24118
Germany

Potsdam Institute for Climate Impact Research (PIK) ( email )

Telegrafenberg 31
Potsdam, Brandenburg 14473
Germany

Jasper Meya

German Centre for Integrative Biodiversity Research (iDiv) Halle-Jena-Leipzig ( email )

Deutscher Platz 5e
Leipzig, 04103
Germany

Department of Economics, University of Leipzig ( email )

Leipzig, 04109
Germany

Lutz Sager

Georgetown University ( email )

Washington, DC 20057
United States

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