In this paper we analyze an economy in which self-protection choices made byeconomic agents to face environmental degradation generate environmental negativeexternalities on other agents. By self-protection choices we mean choices thatagents may do to protect themselves against some form of social degradation (e.g.crimes, lack of leisure, depletion of social capital) or environmental degradation(air and water pollution, loss of biodiversity, growing scarcity of green areas, etc.).The notion of self-protection choices is not new in the literature. Hirsch (1976)was the first to introduce the concept of defensive consumption, that is, consumptioninduced by a growth in negative externalities. The notion originally proposedby Hirsch concerned a wider set of choices than those induced by environmentaldeterioration. The concept, however, has become particularly popular in the environmentalliterature where there is a major debate on how the Gross National Productas a measure of welfare should be corrected to take into account defensive expendituresand environmental depletion.

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