Consumption and Environmental Degradation: A Long-Term View

Abstract

This chapter develops and examines a model of the relationship between consumption and environmental degradation, using per capita gross domestic product (GDP) as the proxy for consumer behavior and per capita carbon dioxide emissions as the indicator of pollution. The time paths of emissions and consumption are modeled within a dynamic framework representative of ever-changing global economic and social conditions, and the result is expressed as an optimization problem from which Hamiltonian conditions are derived. Optimal control theory can be used to solve problems in dynamic economic analysis, and the Hamiltonian approach is one way of solving this class of problems. These conditions are analyzed through the use of a phase diagram, and the empirical section of the chapter reveals the relationship between CO2 emissions and GDP values for the aggregate of 148 nation states studied by the United Nations, as well as for developed, developing, and underdeveloped countries as classified by the United Nations. The results of our analysis are not encouraging unless significant changes are made to the policies of leading nations, and the chapter closes with a discussion of alternative policy paths that may ease the identified trends in environmental degradation.

Citation

Kathy Dhanda, K. and Paul Hill, R. (2007), "Consumption and Environmental Degradation: A Long-Term View", Rosa, J.A. and Viswanathan, M. (Ed.) Product and Market Development for Subsistence Marketplaces (Advances in International Management, Vol. 20), Emerald Group Publishing Limited, Leeds, pp. 297-317. https://doi.org/10.1016/S1571-5027(07)20013-0