Optimal Sustainable Policies Under Pollution Ceiling: the Demographic Side

¹ Aix-Marseille University (Aix-Marseille School of Economics), CNRS and EHESS, France
² Department of Quantitative Economics, Universidad Complutense de Madrid, Spain
³ Department of Economic Analysis, Universitat de València, Spain, and IRES Department of Economics, Université Catholique de Louvain, Belgium

^⋆ Corresponding author. E-mail: raouf.boucekkine@univ-amu.fr

Abstract

We study optimal sustainable policies in a benchmark logistic world (where both population and technological progress follow logistic laws of motion) subject to a pollution ceiling. The main policy in the hands of the benevolent planner is pollution abatement, ultimately leading to the control of a dirtiness index as in the early literature of the limits to growth literature. Besides inclusion of demographic dynamics, we also hypothesize that population size affects negatively the natural regeneration or assimilation rate, as a side product of human activities (like increasing pollution, deforestation,...). We first characterize optimal sustainable policies. Under certain conditions, the planner goes to the pollution ceiling value and stays on, involving a more stringent environmental policy and a sacrifice in terms of consumption per capita. Second, we study how the sustainable problem is altered when we depart from the logistic world by considering exponential technical progress (keeping population growth logistic). It’s shown that, as expected, introducing such an asymmetry widens the margins of optimal policies as sustainable environmental policies are clearly less stringent under exponential technical progress. Third, we connect our model to the data, using in particular UN population projections.