Changes in Optimal Pollution Taxes as Population Increases

A common concern is that if population is allowed to grow, current pollution problems will become even greater. While this may be the expected outcome in the absence of a system of efficiently charging for the right to pollute, it is shown that efficient pollution charges on their own may not provide a mechanism for compensating the original population for the adverse effects of increased pollution damage. Efficient pollution charges may have to be supplemented by other charges. The main results are obtained for pollution treated as an undepletable rather than a depletable externality.