Public Debt, Life Expectancy, and the Environment

The economic literature has shown that some countries may be trapped in what is called an environmental poverty trap: poor longevity implies little maintenance of the environment, which leads to high levels of pollution that in turn keeps life expectancy low. Since life expectancy is an important determinant of saving, these economies may not be able to grow. This article aims to provide policy recommendations to improve both environmental quality and growth in the context of debt consolidation. Notably, it studies how public debt and public maintenance may be used to escape from the environmental poverty trap. A welfare analysis is then undertaken to show that public debt is an instrument which helps to solve the capital over-accumulation problem and to achieve environmental objectives.