The Global Environment, Natural Resources,

Recently, the public attention has turned toward the intricate interrelation between economic growth and global warming. This book focuses on this nexus but broadens the framework to study the issue. Growth is seen as global growth, which affects the global environment and climate change.Global growth, in particular high economic growth rates, imply a fast depletion of renewable and non-renewable resources. Thus this book deals with the impact of the environment and the effect of the exhaustive use of natural resources on economic growth and welfare of market economies as well as the reverse linkage. It is arranged in three parts: Part I of the book discusses the environment and growth. There, Greinerand Semmler incorporate the role of environmental pollution into modern endogenous growth models and use recently developed dynamic methods and techniques to derive appropriate abatement activities that policymakers can institute. Part II looks at global climate change using these same growthmodels. Here, too, the authors provide direct and transparent policy implications. More specifically, the authors favour tax measures, such as a carbon tax, over emission trading as instruments of mitigation policies. Part III evaluates the use and overuse of renewable and non-renewable resources inthe context of a variety of dynamic models. They, in particular, consider the cases when resources interact as an ecological system and analyze issues of ownership of resources as well as policy measures to avoid the overuse of resources. In addition, not only intertemporal resource allocation butalso the eminent issues relating to intertemporal inequities, as well as policy measures to overcome them, are discussed in each part of the book.

Alfred Greiner is professor of Economics at Bielefeld University. His research interests are in dynamic macroeconomics with special emphasis on topics in economic growth and fiscal policy. He has published numerous articles and was invited to author the survey article "Models of Economic Growth" for the UNESCO Encyclopedia of Life Support Systems.
Willi Semmler is Chair and Professor of Economics at New School University, co-director of the Center for Empirical Macroeconomics, Bielefeld University and Research Fellow at the Bernard Schwartz Center for Economic Policy Analysis. He is the author of numerous articles and several books including Stochastic Dynamic Macroeconomics (OUP, 2006).

Introduction	p. 3
The Environment and Economic Growth
Introduction and Overview	p. 7
The Basic Economic Model	p. 10
The Household Sector	p. 10
The Productive Sector	p. 11
The Government	p. 12
Equilibrium Conditions and the Balanced Growth Path	p. 13
Growth and Welfare Effects of Fiscal Policy	p. 17
Growth Effects of Fiscal Policy on the BGP	p. 17
Growth Effects on the Transition Path	p. 22
Welfare Effects of Fiscal Policy on the BGP and the Social Optimum	p. 26
Welfare Effects	p. 26
The Social Optimum	p. 28
The Dynamics of the Model with Standard Preferences	p. 31
Pollution as a Stock	p. 39
The Household Sector	p. 39
The Productive Sector and the Stock of Pollution	p. 40
The Government	p. 41
Equilibrium Conditions and the Balanced Growth Path	p. 41
The Dynamics of the Model	p. 43
Effects of the Different Scenarios on the Balanced Growth Rate	p. 47
Concluding Remarks	p. 51
Global Warming and Economic Growth
Introduction and Overview	p. 55
Facts on GHG Emissions and the Change in Average Global Surface Temperature	p. 60
A Descriptive Model of Endogenous Growth	p. 63
Structure of the Model	p. 63
The Balanced Growth Path	p. 65
Numerical Examples	p. 68
The AK Endogenous Growth Model	p. 71
The Second-Best Solution	p. 72
The Social Optimum	p. 75
A Multiregion World	p. 77
The Noncooperative World	p. 79
The Cooperative World	p. 84
Equal Marginal Damages in All Regions	p. 87
A Model with Optimizing Agents	p. 89
The Competitive Economy	p. 89
The Structure of the Economy	p. 89
Analytical Results	p. 92
The Social Optimum	p. 100
Modeling Nonlinear Feedback Effects of the Rise in Temperature	p. 107
The Competitive Economy	p. 109
The Social Planner's Problem	p. 116
Concluding Remarks	p. 120
Depletion of Resources and Economic Growth	p. 123
Introduction and Overview	p. 125
Nonrenewable Resources	p. 127
Introduction	p. 127
Economic Growth with Resource Constraints	p. 128
A Basic Model	p. 128
Technological Change	p. 130
The Role of Backstop Technology	p. 132
The Importance of Intergenerational Equity	p. 133
The Amenity Value of Natural Resources	p. 133
Resources and Intergenerational Equity	p. 135
Assessment of the Finiteness of Resources	p. 137
Assessment of Petroleum Reserves	p. 140
Estimation of a Basic Model	p. 142
Sketch of Solutions and Data Sources	p. 145
Renewable Resources	p. 157
Introduction	p. 157
Renewable Resources and Optimal Growth	p. 159
Open Access: Zero Horizon Optimization	p. 166
Elasticity of Demand and Optimal Effort	p. 166
Predator-Prey System	p. 166
System of Competing Species	p. 167
The Monopoly: Infinite Horizon Optimization	p. 171
Concluding Remarks	p. 175
Appendix	p. 177
Regulation of Resources	p. 180
Introduction	p. 180
The Model	p. 182
Numerical Results for the Partial and Complete Model	p. 184
Concluding Remarks	p. 186
Appendix	p. 188
Conclusion	p. 190
Three Useful Theorems from Dynamic Optimization	p. 194
Bibliography	p. 197
Index	p. 205
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The Global Environment, Natural Resources, and Economic Growth

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