Document Type

Thesis - Open Access

Award Date

1974

Degree Name

Master of Science (MS)

Department

Economics

Abstract

Current discussions often link economic growth as a causative factor in the increase of pollution. Growth in the economy has a number of causes. These include technological innovation, resource discovery and population growth along with the most widely discussed, investment. Economic growth in its advanced stages can cause severe depletion of raw materials, environmental pollution from energy use, and overtaxing of the environment's capacity to absorb and recycle waste products. A simple solution to growth related pollution would be to reduce the rate of growth and therefore reduce pollution. Herein lies a dilemma. Edwin L. Dole has written that reducing production would cause massive unemployment. Maintaining full employment then, requires the economy to grow at four percent a year. Reduction in population growth and improvement in pollution reducing technology are possible alternatives he offers to reducing pollution. Use of pollution abatement equipment is another alternative in the attempt to return society to an optimum welfare position. Abatement equipment is used to eliminate or reduce residuals in the environment. Residuals may be recycled, assimilated into the environment, or reduced by means of technologically better production techniques. Formation of a stock of pollution abatement equipment will require either increased saving (and therefore investment) and/or substitution of other (productive) capital to pollution abatement use. Since capital is now required for productive and non-productive purposes, the formation of abatement capital will have a definite influence on the process of capital accumulation. The most obvious result will be smaller increases in productive capital than would be possible with no requirement for investment in abatement equipment. Through this mechanism there will be an impact on the growth of income and consumption. Presently there are few economic growth models which formally take into account residual flows and investment in pollution abatement capital. One such model was developed by Ralph C. d'Arge. This is a Harrod-Damar type model which includes variables for waste flow, abatement capital and changes in pollution. The purpose of this paper is to develop a growth model that incorporates residual flows and pollution abatement capital using a neoclassical growth model which is less restrictive in nature than, that set forth by d'Arge. The following chapters will include a discussion of the d'Arge model, presentation of the neoclassical model, and finally a comparison of the results obtained in the two models.

Library of Congress Subject Headings

Economic development

Environmental policy

Format

application/pdf

Number of Pages

33

Publisher

South Dakota State University

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