Land use dynamics and the environment

Abstract

We build a model to study optimal land use, encompassing land use activi- ties, pollution and climate change. This benchmark set-up allows us to identify the spatial drivers behind the interaction between land use and the environment. Pollution generates local and global damages since it ows across locations follow- ing a Gaussian Plume. In contrast to the previous literature on spatial dynamics, we prove that the social optimum problem is well-posed, i.e., the solution exists and is unique. We close the paper with a numerical analysis which illustrates the richness of our model, and its global dynamics. We study the different drivers of spatial heterogeneity. In particular, abatement technology stands out as a fundamental tool to achieve steady state solutions.

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