Environ Model Assess DOI 10.1007/s10666-016-9535-1 Public Debt, Life Expectancy, and the Environment Nicolas Clootens 1 Received: 6 October 2015 / Accepted: 27 September 2016 © Springer International Publishing Switzerland 2016 Abstract The economic literature has shown that some countries may be trapped in what is called an ”environmen- tal poverty trap”: poor longevity implies little maintenance of the environment, which leads to high levels of pollution that in turn keeps life expectancy low. Since life expectancy is an important determinant of saving, these economies may not be able to grow. This article aims to provide policy recommendations to improve both environmental quality and growth in the context of debt consolidation. Notably, it studies how public debt and public maintenance may be used to escape from the environmental poverty trap. A welfare analysis is then undertaken to show that pub- lic debt is an instrument which helps to solve the capital over-accumulation problem and to achieve environmental objectives. Keywords Environmental quality · Life expectancy · Overlapping generations · Poverty trap · Public debt 1 Introduction Environmental care and the reduction of public debt are both linked to the future decisions of agents. Long-run fiscal objectives, such as reducing public debt and public budget deficits, may constitute a constraint on the promotion of environmental quality. Descriptive statistics show that the correlation coefficient between the mean of the Net General  Nicolas Clootens nicolas.clootens@univ-orleans.fr 1 Laboratoire d’Economie d’Orl´ eans (LEO), UMR CNRS 7322, University of Orl´ eans, Orl´ eans, France Government Debt ratio and the mean of the Environmental Performance Index (EPI) 1 was −0.161 for the period 2000– 2010. 2 That seems to confirm that a high public debt may be a constraint on the environmental preservation. The trade-off between environmental quality and public debt reduction depends on how people value the future. A rational agent with high life expectancy will place a greater value on the future and will be more willing to forego imme- diate welfare in favor of future gains. He/she will be more likely to decrease the public debt level and to preserve the environment. This argument is present in Ono and Maeda [22] who introduce the idea of private maintenance based on life expectancy. Ono and Maeda [23] show that under a perfect annuitization assumption, a higher life expectancy may promote both growth and environmental quality in an overlapping generations (OLG) framework. Life expectancy is in turn determined by environmen- tal quality. Indeed, the natural environment constitutes an important determinant of life expectancy through several channels, including climate, pollution, natural disasters, etc. For example, Laden et al. [18] find that a 10μg/m 3 increase in fine particulate air pollution gives rise to an additional mortality risk of approximately 15 %. Jouvet, Pestieau and Ponthiere [17] wrote one of the first papers studying the impact of environmental quality on life expectancy in an overlapping generations model. Mariani et al. [19] present two stylized facts about the relationship between life expectancy and the environment, which are positively correlated and both bimodally dis- tributed. They argue that these stylized facts are compatible with—and give support to—the assumption of a two-way 1 More details about the EPI may be found in [13]. 2 It is significant at the 1 % level. See Appendix A for more details about the statistics.