Work

Analysis of sustainable development: an overlapping generations model of agricultural households in developing countries

Year: 2026

Type: article

Abstract: This article examines the effectiveness of individual transferable quotas (ITQs) in promoting sustainable resource management within an overlapping generations economy where agricultural producers face credit constraints. The analysis shows that, although ITQs restore the social optimum when markets are complete, their effectiveness breaks down when credit constraints bind. Credit frictions create a wedge between the marginal product of the resource and its effective price, leading constrained agents to underinvest in quotas and generating resource misallocation. As a result, ITQs alone are insufficient to ensure environmental preservation without compromising welfare. The study therefore shows that policies improving credit access, such as loan guarantees, are necessary complements to ITQ systems if sustainable resource management is to be achieved.

Source: Environment and Development Economics

DOI: 10.1017/s1355770x26100746

Author: Abel L. Kutangila

Institution: Université de Sherbrooke

Language: English

Topic: Socioeconomics of Resources and Conservation

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Responsible consumption and production

Open Access status: hybrid

Estimated APC paid: $3,550