Economic Growth and Environmental Policy Dynamics
Summary
Economic growth and environmental policy dynamics describe the reciprocal relationship between expanding economic activity and regulatory measures aimed at protecting natural capital. As economies develop, the pressure on ecosystems intensifies, giving rise to pollution, resource depletion and climate change. Policymakers deploy a range of instruments—taxation, permits, subsidies and standards—to internalise environmental externalities and steer societies towards low-carbon trajectories. Dynamic models capture how policy stringency, technological innovation and societal preferences coevolve over time, yielding multiple equilibria, threshold effects and possible oscillatory or chaotic behaviour. Empirical research documents that well-designed interventions can deliver both growth and environmental improvements by incentivising renewable energy, circular-economy practices and green innovation. At the global scale, coordination challenges emerge as jurisdictions compete or cooperate over regulatory regimes, affecting trade, capital flows and emission leakage. Understanding the interplay of economic expansion, policy feedbacks and technological change is vital for charting credible pathways to sustainable and inclusive prosperity.
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Economic Growth and Environmental Policy Dynamics publication trend
The graph below shows the total number of articles in economic growth and environmental policy dynamics across all publications each year (not limited to Nature Index journals).
Technical terms
Environmental externality: Cost or benefit arising from an economic activity that affects individuals or ecosystems not directly involved in the transaction.
Circular economy: Economic model focused on minimising waste and maximising the reuse, recycling and regeneration of materials.
Net zero carbon target: Commitment to balance anthropogenic greenhouse-gas emissions with an equivalent amount of removal or offsetting measures.
Environmental tax: Fiscal charge levied on pollution or resource extraction to internalise environmental costs and influence behaviour.
Bifurcation: Qualitative change in the long-term behaviour of a dynamic system in response to small variations in model parameters.
References
- Trilemma or Trinity? The nexus of economic growth, circular economy and net zero. Energy Economics (2024).
- Green transition and environmental quality: an evolutionary approach. Annals of Operations Research (2023).
- The role of taxation in an integrated economic-environmental model: a dynamical analysis. Decisions in Economics and Finance (2024).
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