Adaptation, Internalization and Environmental Damage

Lisandro Abrego and John Whalley
Additional contact information
Lisandro Abrego: University of Warwick

No 20022, University of Western Ontario, Departmental Research Report Series from University of Western Ontario, Department of Economics

Abstract: Existing literature ignores adaptation responses to external effects which, in turn, affect the design of appropriate internalization instruments. We use general equilibrium numerical simulation models based on OECD and UK data to analyze the significance of these responses to congestion externalities, and argue that they need to be taken into account in designing internalization instruments. We consider labor-leisure, regional labor mobility and house price responses to congestion externalities. Results show that not taking adaptation responses to environmental damage into account can seriously mislead analyzes of the consequences of internalizing externalities. If adaptation is present, externalities will be partially internalized, the gains from internalization will be smaller, and a simple internalization tax calculated as if adaptation were not present will typically overcorrect for the externality.

Keywords: Adaptation; Externalities; Congestion; Internalization; Migration (search for similar items in EconPapers)
Date: 2002-05
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://ir.lib.uwo.ca/cgi/viewcontent.cgi?article=1385&context=economicsresrpt (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:uwo:uwowop:20022

Ordering information: This working paper can be ordered from
https://economics.uw ... itting_ordering.html
The price is Paper copy available by mail at a cost of $10.00 Canadian each.

Access Statistics for this paper

More papers in University of Western Ontario, Departmental Research Report Series from University of Western Ontario, Department of Economics Department of Economics, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2.
Bibliographic data for series maintained by ().