Shallow lake economics run deep: nonlinear aspects of an economic-ecological interest conflict

Outcomes of the shallow lake long-term interest conflict in a number of different settings are presented, in particular in the contexts of quasi-static and dynamic social planning and of quasi-static non-cooperative play. Also the effect of trigger strategies in repeated quasi-static play is analysed. A characteristic feature of these interest conflicts, and of pollution problems in general, is the qualitative dichotomy in possible outcomes: the lake (or the ecosystem, or the climate) ends up in either a clean or in a polluted state, both of which, if attained, is stabilised by some kind of feedback mechanism. The social choice therefore always incorporates a qualitative aspect: the decision maker has to decide for or against production, for or against conserving the ecosystem.

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