The Economics of Environmental Preservation: A Theoretical and Empirical Analysis

Concern over the adequacy of nature's endowments has been reflected in economic literature at least from the time of Malthus. For Malthus, the natural environment was essentially a source of increasingly scarce resources to sustain economic activity. Recent theoretical contributions in this framework have sought to develop programs for the optimal intertemporal consumption of fixed and renewable natural resource stocks. ¹ Some evidence, on the other hand, suggests that technological progress has so broadened the resource base that the scarcity foreseen by Malthus and assumed, for example, in the stationary utility function postulated by Plourde, has not in fact been realized. ² Yet, though the statistical evidence is that the direct costs of production from natural resources have fallen (relatively) over time, it seems likely that some of the environmental costs have risen.