The use of dynamic models to address the problem of environmental degradation is central to environmental policy because decisions taken now affect not only the current generation but have a profound impact on the future. In this innovative book, Frank Hettich uses dynamic modelling to study the interactions between economic growth, environmental policy and tax reform. He incorporates pollution and abatement technologies into different endogenous growth models that take into account consumer preferences and physical and human capital accumulation. He focuses on the effects of environmental policy in closed and open economies in the short, medium and long term. He sheds light on the following questions: * what kind of environmental policy can reverse tendencies towards increasing pollution? * will tighter environmental policy inevitably reduce economic growth? * does environmental taxation provide an efficient source of revenue for governments? * how will higher preferences for a clean environment affect optimal growth rates? * what are the effects of international cooperation on growth, welfare and pollution? * does sustainable environmental development necessarily preclude economic growth? This book will interest all students and scholars of environmental economics and particularly those interested in the relationship between economic growth and environmental quality.