POLLUTION-CONTROL POLICIES AND NATURAL-RESOURCE DYNAMICS - A THEORETICAL-ANALYSIS

Policies for the management of natural resources and the resources the mselves interact to form complex systems. In this paper, we present a highly simplified model that can be used to study the general features of those systems. The model has three state variables, the abundance of the resource, environmental pollution, and the capital devoted to p ollution control. We analyse it graphically using the singular perturb ation approach. Two modes of behavior are possible; stationary and cyc lic. When the abundance of the resources varies cyclically, the length of the period of resource scarcity depends on population size, econom ic activity, pollution per unit of output, and policy constraints. We distinguish between two classes of policies, one in which decision-mak ers base their investments in pollution control capital on the abundan ce of the resource, and another in which those decisions depend on the amount of pollution. We show that policies based on the observation o f pollution are safer than those based on resource abundance, because in the latter case, small changes in policy variables can lead much mo re easily to a collapse of the resource. Increases in population size, even when accompanied by an equiproportional increase in the pollutio n control budget can lead to a change from stationary to cyclic behavi or, especially where policies are based on resource abundance. (C) 199 6 Academic Press Limited