Title: Environmental shocks and sustainability in a basic economy-environment model

Authors: Fabio Privileggi; Simone Marsiglio

Addresses: Institute POLIS – DiGSPES, Università del Piemonte Orientale Amedeo Avogadro, Via Cavour 84, 15121 – Alessandria, Italy ' School of Business, James Cook University, P.O. Box 6811, Cairns QLD 4870, Australia

Abstract: We study a stochastic, discrete-time, economy-environment integrated model, where human activity affects the evolution of pollution over time. We assume that exogenous i.i.d. environmental shocks determine the rate of pollution transfer. We show that the pollution to capital ratio dynamics can be read as an iterated function system converging to an invariant distribution supported on a (asymmetric) Cantor set, and that human intervention aiming at offsetting the environmental impact of economic activities is needed to ensure sustainability.

Keywords: iterated function systems; IFS; Cantor set; environmental shocks; economy-environment model; sustainability; environmental pollution; pollution to capital ratio dynamics; invariant distribution; environmental impact; economic activities; sustainable development.

DOI: 10.1504/IJANS.2013.052755

International Journal of Applied Nonlinear Science, 2013 Vol.1 No.1, pp.67 - 75

Received: 10 Sep 2012
Accepted: 11 Sep 2012
Published online: 30 Jul 2014 *

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