Complex Dynamics Induced by Nonlinear Pollution Absorption, Pollution Emission Rate and Effectiveness of Abatement Technology in an OLG Model

Dong Cao,Shouyang Wang,Lin Wang

doi:10.3390/su9050746

Dong Cao, Shouyang Wang + Show 1 more

Open Access

https://doi.org/10.3390/su9050746

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Abstract

In this work, nonlinear pollution absorption, emission rate, and effectiveness of abatement technology are incorporated into the classic overlapping generation model. Within this framework, we analyze the macroeconomic effects of pollution emission and abatement technology on the economy. Our findings reveal that different levels of pollution emission rates from per capita income and the effectiveness of abatement technology could induce complex dynamical behavior, including the occurrence of a stable equilibrium, cycles, and chaos. Our analysis shows that either the pollution emission rate per capita income should be controlled to be small enough or the effectiveness of abatement technology should be large enough to maintain a stable system yielding high level of per capita income. A high level of pollution emission rate per capita income and a low level of effectiveness of abatement technology can lead to a stable economy, but with a low level of per capita income. In the case that the pollution emission rate and the effectiveness of abatement technology vary in a certain range, the economy would become unstable, and cycles and chaos would emerge.

Highlights

Environmental pollution has become a serious societal issue [1,2,3,4]
The basic overlapping generation (OLG) model is an excellent tool for studying phenomena depending on inter-generational transfers if one can assume that each retired generation consumes all of its savings or, equivalently, each new generation replaces the entire capital stock employed by the previous generation
We have proposed a new version of OLG model that incorporates nonlinear pollution absorption, pollution emission, and abatement technology

Summary

Introduction

Environmental pollution has become a serious societal issue [1,2,3,4]. Pollution stock accumulation problems due to pesticide resistance, soil erosion, water pollution, and climate change have attracted more and more attention in studies of economic growth [5]. High pollution concentration causes enormous human health problems and environmental deterioration It remains uncertain for the growth of output over the century and beyond, for what energy systems will be developed in the decades ahead, for the pace of technological changes in substitutes for pollution materials used or in pollution-removal technologies, for the reaction to rising pollution in the environment, and perhaps most of all about the economic and ecological responses to a changing environment [6]. The basic OLG model is an excellent tool for studying phenomena depending on inter-generational transfers if one can assume that each retired generation consumes all of its savings or, equivalently, each new generation replaces the entire capital stock employed by the previous generation For this purpose, nonlinear pollution absorption, emission rate, and effectiveness of abatement technology will be incorporated into the classic OLG model in this work.

The Basic Pollution Stock Model

Equilibrium

Complex Dynamics

Economy and Policy Implications

Summary and Discussion