Abstract: This paper introduces a natural resource and pollution in a Ramsey growth model which relies on the postulates of ecological economics. It studies the impact of voluntary degrowth policies on production and welfare. The instrument of these policies is a tax on the natural resource. These public policies are implemented after the downturn of the households’ welfare following from the increased pollution.
Two kinds of policies are considered and rely either on an optimality criterion or on an intergenerational equity criterion. With respect to the laissez-faire case, they decrease both production and pollution but increase welfare. Classes of sustainable degrowth paths characterized by time-constant or time-increasing tax rates are determined.
Ecological Economics; Volume 136, June 2017, Pages 266–281