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A Consistent Formulation of the Leontief Pollution Model

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  • Mikulas Luptacik
  • Bernhard Bohm

Abstract

We consider the environmental Leontief model, which is an input-output model augmented by pollution-generation and pollution-abatement sectors. Two formulations of this model, dating back to Leontief's work in 1970, can be found in the literature. One formulation treats an exogenously given vector of the tolerated level of pollutants (environmental standards) as a negative variable on the right-hand side of the model. The other formulation supposes that each industry eliminates a given proportion of the pollution that it creates, so that the proportions of gross pollutants which are subject to treatment by each sector enter as given parameters. Even in the case when the levels of production and abatement in the two different model formulations are equal, the solutions of the dual or price model are different for cases where some net pollution is left untreated. First, the analytical relationship between the two price models is established. Secondly, both models formulated in a linear programming framework are extended by imposing emission charges (effluent taxes) for untreated pollution. Finally, it will be shown how to estimate the level of emission charges for both model formulations such that they provide the same levels of production and abatement, as well as the same shadow prices. This is illustrated by a numerical example.

Suggested Citation

  • Mikulas Luptacik & Bernhard Bohm, 1999. "A Consistent Formulation of the Leontief Pollution Model," Economic Systems Research, Taylor & Francis Journals, vol. 11(3), pages 263-276.
    • Handle: RePEc:taf:ecsysr:v:11:y:1999:i:3:p:263-276
    DOI: 10.1080/09535319900000018
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    Citations

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    Cited by:

    1. Court, Christa D., 2012. "Enhancing U.S. hazardous waste accounting through economic modeling," Ecological Economics, Elsevier, vol. 83(C), pages 79-89.
    2. Liashenko Olena & Khrushch Lesya, 2018. "Determination of the environmental tax on the basis of modified input-output Leontief-Ford model," Technology audit and production reserves, 3(41) 2018, Socionet;Technology audit and production reserves, vol. 3(4(41)), pages 41-46.
    3. Davidescu, Adriana AnaMaria & Popovici, Oana Cristina & Strat, Vasile Alecsandru, 2022. "Estimating the impact of green ESIF in Romania using input-output model," International Review of Financial Analysis, Elsevier, vol. 84(C).
    4. Mahlberg, Bernhard & Luptacik, Mikulas, 2014. "Eco-efficiency and eco-productivity change over time in a multisectoral economic system," European Journal of Operational Research, Elsevier, vol. 234(3), pages 885-897.
    5. Chen, Quanrun & Dietzenbacher, Erik & Los, Bart & Yang, Cuihong, 2016. "Modeling the short-run effect of fiscal stimuli on GDP: A new semi-closed input–output model," Economic Modelling, Elsevier, vol. 58(C), pages 52-63.
    6. repec:rri:wpaper:201016 is not listed on IDEAS
    7. Mikulas Luptacik & Bernhard Mahlberg, 2018. "Revisiting the Efficiency-Equity Trade-off: A Muli-objective Linear Problem combined with an extended Leontief Input Output Model," Department of Economic Policy Working Paper Series 016, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.
    8. Christa Court, 2010. "Who Generates Hazardous Wastes? Attribution of Producer and Consumer Responsibility Within the US," Working Papers Working Paper 2010-16, Regional Research Institute, West Virginia University.

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