Growth with Endogenous Risk of Biological Invasion

Posted: 11 Nov 2004

See all articles by Edward B. Barbier

Edward B. Barbier

Colorado State University, Fort Collins - Department of Economics

Jason F. Shogren

Department of Economics

Abstract

We model biological invasions as an unintended by-product of capital accumulation. We distinguish three spillover effects: (1) a negative production externality, (2) a negative or positive consumption externality and (3) an increase in the risk of future welfare loss. We also consider the implications when households self-protect by allocating income to reduce the potential damages from a biological invasion. An optimal output tax for production externalities is straightforward and can be augmented in the case of negative or positive spillover effects on consumer welfare. Policies to correct the effect of invasions on endogenous risk are more difficult to design.

JEL Classification: O13, O41, Q2

Suggested Citation

Barbier, Edward B. and Shogren, Jason F., Growth with Endogenous Risk of Biological Invasion. Economic Inquiry, Vol. 42, No. 4, pp. 587-601, October 2004. Available at SSRN: https://ssrn.com/abstract=616682

Edward B. Barbier (Contact Author)

Colorado State University, Fort Collins - Department of Economics ( email )

Fort Collins, CO 80523-1771
United States

Jason F. Shogren

Department of Economics ( email )

BU237
Laramie, WY 82071-3985
United States
307-766-5430 (Phone)
307-766-5090 (Fax)

Register to save articles to
your library

Register

Paper statistics

Abstract Views
513
PlumX Metrics