Seminarios

How does income risk affect social attitudes towards the environment? Despite the important role that they play in environmental policy, no models of economic growth and the environment consider risk and uncertainty as part of their formulation. This is surprising because models of economic growth and the environment share a great deal with models of saving and models of labor, both of which have made an impressive amount of progress on the study of risk and uncertainty in recent years. The main difference between these models is that saving and labor theories are based on partial equilibrium models while approaches to the connection between economic growth and the environment are based on general equilibrium models. The main contribution of this paper is to include risk in a standard general equilibrium model of economic growth and the environment such as the model that explains the emergence of an environmental Kuznets curve.