Andrei Kalk
University of Vienna

Protecting the environment: On the interplay between voluntary contributions and public policy

Abstract:
We study the interaction between individuals' voluntary contributions to
environmental protection and public environmental policy in a simple
dynamic general-equilibrium model. In this model, public environmental
policy is endogenous and reflects both the private benefits of
individuals and their public concerns about environmental quality. We
show that in the long run, environmental quality can be diminished in
the presence of private contributions, despite their positive direct
impact on environmental improvement and negative indirect effect on
environmental degradation. Furthermore, our findings suggest that as
environmental quality becomes more important to individuals, their
long-term private contributions to environmental protection will
decrease.