1. Variable Input u i (  j,t) Fixed input x i (  j,t) Technology i=1,2. Microunit (asset quality  j ) Variable Input u i (  j ’,t) Technology i=1,2. conserva tion effort WasteOutput Waste Pollution Stock s(t) Abatement  (t) Environmental damage abatement effort Figure 1: scheme of the pollution and abatement processes Fixed input x i (  j ’,t)... Production process Microunit (asset quality  j ’)

2. Figure 2: optimal technology choice when it’s optimal to diversify the land-use.

3. Figure 3: optimal technology choice when it is not optimal to diversify the land-use.

4. Figure 4: optimal technology choice. The modern technology is more profitable

5.   = 0 s + + - - Figure 5: The phase diagram in the (s,  ) space, where the stable path is upward slopping ss

6.   = 0 s + + - - Figure 6: The phase diagram in the (s,  ) space where the stable path is downward sloping ss

7. t  0 *  ’ * Figure 7: Optimal Intertemporal Restoration Policy. * u 0 u  u’ * t * * u 0 u  * t * * u1()u1()u2()u2() z  z’ * t * * z0z0 

8. t  0 *  ’ * Figure 8: Optimal Intertemporal Restoration Policy. * u’ u  u0u0 * t * * t u1()u1() u2()u2() z  z0z0 * t * * z’  u’ u  u0u0 * * *

9.   = 0 s + + - - = 0 social Figure 9: Comparison between the private and social equilibrium when the stable path is upward slopping s  social = 0 private s  private

10.   = 0 s + + - - = 0 social s  socials  private = 0 private Figure 10: Comparison between the private and social equilibrium when the stable path is downward slopping