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Welfare Measurement Under Threats Of Environmental Catastrophes

Author

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  • Tsur, Yacov
  • Zemel, Amos
Abstract
Welfare measures under threats of environmental catastrophes are studied using the "parable" apparatus of Weitzman and Lofgren [22]. The occurrence probability of the catastrophic event is driven (at least partly) by anthropogenic activities such as natural resource exploitation. Without external effects, the green NNP is a genuine welfare measure vis-à-vis a particular parable economy. Often, however, the occurrence hazard constitutes a public bad, treated as an externality by agents who ignore their own contribution to its accumulation. In such cases the green NNP, although accounting for the event hazard rate per se, fails to properly internalize future effects on the hazard rate of current economic activities and as a result overestimates welfare. The bias term associated with the green NNP is derived and expressed in a simply and interpretable form.

Suggested Citation

  • Tsur, Yacov & Zemel, Amos, 2005. "Welfare Measurement Under Threats Of Environmental Catastrophes," Discussion Papers 14987, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    • Handle: RePEc:ags:huaedp:14987
    DOI: 10.22004/ag.econ.14987
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    1. Tsur, Yacov & Zemel, Amos, 1994. "Endangered Species and Natural Resource Exploitation: Extinction vs. Coexistence," Bulletins 7498, University of Minnesota, Economic Development Center.
    2. Thomas Aronsson & Karl-Gustaf Löfgren & Kenneth Backlund, 2004. "Welfare Measurement in Imperfect Markets," Books, Edward Elgar Publishing, number 2494.
    3. Tsur, Yacov & Zemel, Amos, 1998. "Pollution control in an uncertain environment," Journal of Economic Dynamics and Control, Elsevier, vol. 22(6), pages 967-975, June.
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    Cited by:

    1. Lee H. Endress & James A. Roumasset & Christopher A. Wada, 2020. "Do Natural Disasters Make Sustainable Growth Impossible?," Economics of Disasters and Climate Change, Springer, vol. 4(2), pages 319-345, July.
    2. Kimberly Burnett & Sittidaj Pongkijvorasin & James Roumasset, 2012. "Species Invasion as Catastrophe: The Case of the Brown Tree Snake," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(2), pages 241-254, February.
    3. Zhang, Xiao-Bing & Zhu, Lei, 2017. "Strategic carbon taxation and energy pricing under the threat of climate tipping events," Economic Modelling, Elsevier, vol. 60(C), pages 352-363.
    4. Can Askan Mavi, 2016. "Uncertain Catastrophic Events : Another Source of Environmental Traps ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01275174, HAL.
    5. Chuan-Zhong Li & Sebastian Villasante & Xueqin Zhu, 2016. "Regime Shifts and Resilience in Fisheries Management: A Case Study of the Argentinean Hake fishery," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(3), pages 623-637, November.
    6. Omar Chisari, 2010. "Notes on Optimal Growth, Climate Change Calamities, Adaptation and Mitigation," Research Department Publications 4685, Inter-American Development Bank, Research Department.
    7. Ben J. Heijdra & Pim Heijnen, 2021. "Reversible Environmental Catastrophes with Disconnected Generations," De Economist, Springer, vol. 169(2), pages 211-252, May.
    8. Polasky, Stephen & de Zeeuw, Aart & Wagener, Florian, 2011. "Optimal management with potential regime shifts," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 229-240, September.
    9. Aart Zeeuw & Chuan-Zhong Li, 2016. "The Economics of Tipping Points," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(3), pages 513-517, November.
    10. Tsur, Yacov & Zemel, Amos, 2012. "Dynamic and stochastic analysis of environmental and natural resources," Discussion Papers 120017, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    11. Can Askan Mavi, 2016. "Uncertain Catastrophic Events : Another Source of Environmental Traps ?," Working Papers halshs-01275174, HAL.
    12. Yacov Tsur & Amos Zemel, 2008. "Regulating environmental threats," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 39(3), pages 297-310, March.

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