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The shadow price of assimilative capacity in optimal flow pollution control

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  • Marc Leandri

    (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris)

Abstract

We present a model of optimal flow pollution control considering explicitly the dynamics of the corresponding assimilative capacity. We focus first on the degradation of this assimilative capacity triggered by pollution excesses and determine the intertemporal efficient pollution path, taking into account this ecological feedback. Our analysis shows that a minimum level of initial assimilative capacity is necessary to prevent its optimal extinction. We then allow for the restoration of assimilative capacity and characterize the conditions under which this option frees the optimal policy from the dependency on the initial conditions. In both cases our results call for environmental standards based on the shadow price of assimilative capacity that are stricter than the static optimum commonly used in flow pollution control.

Suggested Citation

  • Marc Leandri, 2009. "The shadow price of assimilative capacity in optimal flow pollution control," Post-Print hal-00394092, HAL.
    • Handle: RePEc:hal:journl:hal-00394092
    DOI: 10.1016/j.ecolecon.2008.11.019
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    2. Comello, Stephen D. & Maltais-Landry, Gabriel & Schwegler, Benedict R. & Lepech, Michael D., 2014. "Firm-level ecosystem service valuation using mechanistic biogeochemical modeling and functional substitutability," Ecological Economics, Elsevier, vol. 100(C), pages 63-73.
    3. Savchenko, Olesya & Ando, Amy W., 2015. "Optimal Stormwater Runoff Management Policy in a Dynamic Setting," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205894, Agricultural and Applied Economics Association.
    4. Marc Leandri & Mabel Tidball, 2017. "Assessing the sustainability of optimal pollution paths in a world with inertia," Working Papers 2017.10, FAERE - French Association of Environmental and Resource Economists.
    5. Kenichi Shimamoto, 2019. "Accumulative Pollution, Environmental Regulation and Environmental Costs: Dynamic Approach," Interdisciplinary Description of Complex Systems - scientific journal, Croatian Interdisciplinary Society Provider Homepage: http://indecs.eu, vol. 17(1-B), pages 114-131.
    6. Fouad Ouardighi & Hassan Benchekroun & Dieter Grass, 2014. "Controlling pollution and environmental absorption capacity," Annals of Operations Research, Springer, vol. 220(1), pages 111-133, September.
    7. Onyimadu, Chukwuemeka, 2015. "Managing an Accumulative Inorganic Pollutant: An Optimal Tax Prescription for the Social Planner," MPRA Paper 77196, University Library of Munich, Germany.
    8. Fouad El Ouardighi & Eugene Khmelnitsky & Marc Leandri, 2020. "Production-based pollution versus deforestation: optimal policy with state-independent and-dependent environmental absorption efficiency restoration process," Annals of Operations Research, Springer, vol. 292(1), pages 1-26, September.

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