The Externalities of Infrastructure Investment
DOI:
https://doi.org/10.26821/IJSRC.12.9.2024.120903Keywords:
Infrastructure Investment, Public Goods, Environmental ExternalityAbstract
In this paper, I analyze the relationship between infrastructure investment, environmental degradation and. I first present their theoretical link through the lens of the theory of externalities; in particular, investment in infrastructure is associated with a positive externality since infrastructure is a public good, but both the usage and the construction of infrastructure pose negative environmental externalities. I synthesize the relatively disparate literature on this topic, before jointly estimating these externalities using cross-country data. I find that a 1% increase in infrastructure investments is associated with a 1.04% increase in average GDP, and a 0.77% increase in greenhouse gas (GHGs) emissions. I find that a 1% higher tax rate on energy dampens the association of such investments on GHGs.
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Copyright (c) 2024 Aditi Shriram
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