A review of mathematical models in economic environmental problems

The paper presents a review of mathematical models used in economic analysis of environmental problems. This area of research combines macroeconomic models of growth, as dependent on capital, labour, resources, etc., with environmental models describing such phenomena like natural resources exhaustion or pollution accumulation and degradation. In simpler cases the models can be treated analytically and the utility function can be optimized using, e.g., such tools as the maximum principle. In more complicated cases calculation of the optimal environmental policies requires a computer solution. This revised version was published online in June 2006 with corrections to the Cover Date.