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Maladaptation and global indeterminacy

Published online by Cambridge University Press:  14 August 2019

Angelo Antoci ,
Luca Gori Open the ORCID record for Luca Gori [Opens in a new window] ,
Mauro Sodini  and
Elisa Ticci
Angelo Antoci
Affiliation:
Department of Economics and Business, University of Sassari, Sassari, Italy
Luca Gori*
Affiliation:
Department of Law, University of Pisa, Pisa, Italy
Mauro Sodini
Affiliation:
Department of Economics and Management, University of Pisa, Pisa, Italy
Elisa Ticci
Affiliation:
Department of Political and International Sciences, University of Siena, Siena, Italy
*
*Corresponding author. E-mail: [email protected]; [email protected]
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Abstract

This article analyzes a general equilibrium growth model with overlapping generations and (production-induced) environmental degradation. Individuals react to environmental damages through mitigation or adaptation. In the former case, they reduce production and its environmental impact. In the latter, they do not tackle the causes of the problem but rather its consequences (i.e., the wellbeing loss due to environmental degradation) by increasing defensive expenditures. Despite its simplicity, the model can generate different long-term outcomes: convergence to a stationary state following a unique trajectory or local/global indeterminacy. In the last scenario, initial conditions (history) and individual expectations matter and the model can generate coordination failures and endogenous fluctuations. Results cast doubt on solutions to environmental problems relying on the role of individual behavior change or adaptation.

Keywords

adaptationdefensive expendituresenvironmental damageindeterminacymitigation

JEL classification

O13: Agriculture • Natural Resources • Energy • Environment • Other Primary Products Q22: Fishery • Aquaculture O41: One, Two, and Multisector Growth Models C62: Existence and Stability Conditions of Equilibrium
Type
Research Article
Information
Environment and Development Economics , Volume 24 , Special Issue 6: The Economics of Climate Change and Sustainability (Part A) , December 2019 , pp. 643 - 659
Copyright
Copyright © Cambridge University Press 2019 

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Footnotes

When originally published, this article contained an error in the labels for figure 5 a. A correction notice has been published and the error rectified in the PDF and HTML.

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