Pollution control: not an obvious solution for environmental problems

Lay summary by Simone Marsiglio

This study analyzes the impact of environmental regulation on the level of pollution in a society aiming at maximizing net social benefits. Net social benefits depend positively on economic activity and negatively on pollution, which is ultimately generated by economic-related activities. Determining the optimal emission level is crucial in order to balance the associated trade-off between economic performance and environmental preservation, thus planning a smooth process of sustainable development. During the last two centuries air pollution concentrations have substantially increased; nowadays the growth rate of concentration levels is higher than ever, and it is expected to keep rising also in the future. Such a pattern tends to harm our society in several ways by reducing economic performance, life expectancy and its overall welfare, thus environmental regulation is often used to offset such negative impacts. Environmental regulation is a broad term referring to policies aiming to protect the environment, and in particular to reduce pollution levels. Policymakers generally believe that setting specific constraints on pollutant emissions will allow the society to keep pollution under strict control. Even if this approach sounds very simple and, as such, so attractive for policymakers, as the authors show it might have serious shortcomings as well. Differently from previous studies considering an infinite lifespan for environmental policy, the authors study the effects of regulation on a more realistic limited time-frame. Specifically, they analyze how setting a limit on its growth rate might affect the level of pollution experienced in the society. By developing a stylized mathematical model, the authors show that restraining the growth rate of pollution in some circumstances might have the counterintuitive and undesired effect of initially increasing pollution levels. Thus, emission constraints may have a positive or negative impact on pollution accumulation according to the specific economic and ecological conditions prevailing at the time when regulation is firstly introduced. This means that environmental regulation might not necessarily achieve the goal it is designed for, and even if only for short periods of time it might indeed be harmful for the environment. Setting limits on the growth rate of pollution per se does not seem the straightforward solution for environmental problems, which instead might require a more sophisticated policy mix involving also abatement activities and technological progress.

For further information

Read the Energy Economics original research article which this summary is based on ‘Pollution control under emission constraints: Switching between regimes(August 2014).

Visit the profile of the research ambassador, Simone Marsiglio, who wrote this summary.

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