Economic development and resource degradation: Conflicts and policies

The paper develops a model that shares common features with computable general equilibrium (CGE) models. It is used to address two questions. First, what are the future prospects of a green gross domestic product (GDP); should we be concerned with resource degradation or not; and, to what extent, and under which conditions? Secondly, which policies are more effective than others? Model closures are simulated using different specifications of exogenous variables. Further, alternative policies are treated: human capital, price incentives, property rights and poverty reduction. In the African context, we show that while the prospects of environment-friendly economic development, i.e. a rising green GDP, are weak in the medium-run, under certain structural conditions there is a range of effective policies that resolves the conflict between economic growth and resource degradation, thus contributing to a rising green GDP.

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