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Endogenous growth and recycling : a material balance approach

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Abstract

In this paper we analyze the importance of recycling in the strive for sustainable development. In contrast to former approaches we emphasize the role of the waste stock as a source of valuable inputs. We enhance a Romer (1990) type endogenous growth model by a material balance condition that re°ects the circulation of matter in the economy. Di®erentiated intermediate products are produced from recycled waste and virgin resources. These material intermediates are then employed in the production of ¯nal output. They either end up as waste after consumption or are bound in the capital stock { depending on the utilization of the produced output. We show that, even in the absence of environmental policy, long-run development is sustainable in this economy. The intuition is, that, as waste is a valuable resource in our model, not recycling part of it, cannot be optimal in the long-run.

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  • Karen Pittel & Amigues Jean-Pierre & Thomas Kuhn, 2005. "Endogenous growth and recycling : a material balance approach," CER-ETH Economics working paper series 05/37, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    • Handle: RePEc:eth:wpswif:05-37
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    1. Huhtala, Anni, 1999. "Optimizing production technology choices: conventional production vs. recycling," Resource and Energy Economics, Elsevier, vol. 21(1), pages 1-18, January.
    2. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    3. Rafael Lusky, 1976. "A Model of Recycling and Pollution Control," Canadian Journal of Economics, Canadian Economics Association, vol. 9(1), pages 91-101, February.
    4. Noel, Michael, 1978. "Resource extraction and recycling with environmental costs," Journal of Environmental Economics and Management, Elsevier, vol. 5(3), pages 220-235, September.
    5. Anni Huhtala, 1997. "A Post-Consumer Waste Management Model for Determining Optimal Levels of Recycling and Landfilling," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 10(3), pages 301-314, October.
    6. Vernon L. Smith, 1972. "Dynamics of Waste Accumulation: Disposal versus Recycling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 86(4), pages 600-616.
    7. Kuhn, Thomas & Pittel, Karen & Schulz, Thomas, 2003. "Recycling for sustainability - A long run perspective?," Munich Reprints in Economics 19484, University of Munich, Department of Economics.
    8. Dinan Terry M., 1993. "Economic Efficiency Effects of Alternative Policies for Reducing Waste Disposal," Journal of Environmental Economics and Management, Elsevier, vol. 25(3), pages 242-256, November.
    9. Don Fullerton & Thomas C. Kinnaman (ed.), 2002. "The Economics of Household Garbage and Recycling Behavior," Books, Edward Elgar Publishing, number 2445.
    10. Mainwaring, Lynn, 1995. "Primary resource use and voluntary recycling schemes: Dynamic issues in a global context," Resource and Energy Economics, Elsevier, vol. 17(4), pages 341-356, December.
    11. Thomas Kuhn & Karen Pittel & Thomas Schulz, 2003. "Recycling for sustainability - a long run perspective?," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 3(3), pages 339-355.
    12. Di Vita, Giuseppe, 2001. "Technological change, growth and waste recycling," Energy Economics, Elsevier, vol. 23(5), pages 549-567, September.
    13. Karen Pittel, 2002. "Sustainability and Endogenous Growth," Books, Edward Elgar Publishing, number 2776.
    14. Klaus Conrad, 1999. "Resource and Waste Taxation in the Theory of the Firm with Recycling Activities," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 14(2), pages 217-242, September.
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    Cited by:

    1. Simone Valente, 2005. "Genuine dissaving and optimal growth," CER-ETH Economics working paper series 05/38, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    2. Matthew Gunter, 2007. "Do Economists Reach a Conclusion on Household and Municipal Recycling?," Econ Journal Watch, Econ Journal Watch, vol. 4(1), pages 83-111, January.
    3. Akao, Ken-Ichi & Managi, Shunsuke, 2007. "Feasibility and optimality of sustainable growth under materials balance," Journal of Economic Dynamics and Control, Elsevier, vol. 31(12), pages 3778-3790, December.
    4. Di Maria, Corrado & Valente, Simone, 2006. "The Direction of Technical Change in Capital-Resource Economies," MPRA Paper 1040, University Library of Munich, Germany.
    5. Valente, Simone, 2008. "Intergenerational transfers, lifetime welfare, and resource preservation," Environment and Development Economics, Cambridge University Press, vol. 13(1), pages 53-78, February.
    6. Valente, Simone, 2006. "Trade, Envy and Growth: International Status Seeking in a Two-Country World," MPRA Paper 1095, University Library of Munich, Germany.
    7. Karen Pittel, 2006. "A Kuznets Curve for Recycling," CER-ETH Economics working paper series 06/52, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.

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    More about this item

    Keywords

    non-renewable resources; recycling; endogenous growth; sustainable development;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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