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| Author: | Rowthorn, B. Brown, G. |
| Title: | When a high discount rate encourages biodiversity |
| Journal: | International Economic Review
1999 : MAY, VOL. 40:2, p. 315-332 |
| Index terms: | DISCOUNT RATE GROWTH MODELS |
| Language: | eng |
| Abstract: | Include land in a neoclassical growth model and introduce a standard biogeographic relation between species recliners (biodiversity) and land. Assume that species provide utility. The optimal constant amount of land preserved for species is obtained from steady-state conditions. Contrary to conventional wisdom, a high discount rate preserves more land when the elasticity of substitution between goods and species exceeds unity or when this elasticity is less than unity and technology is such that the output effect of a change in the interest rate exceeds the substitution effect. |
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